<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December
31, 1993
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from
____ to ____
Commission File No. 0-5550
TELE-COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
State of Delaware 84-0588868
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5619 DTC Parkway
Englewood, Colorado 80111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 267-5500
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A common stock, par value $1.00 per share
Class B common stock, par value $1.00 per share
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. _____
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
________ ________
The aggregate market value of the voting stock held by nonaffiliates
of the Registrant, computed by reference to the last sales price of such stock,
as of the close of trading on February 1, 1994, was $11,190,678,971.
The number of shares outstanding of the Registrant's common stock (net
of shares held in treasury), as of February 1, 1994, was:
Class A common stock - 402,504,309 shares; and
Class B common stock - 47,258,787 shares.
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TELE-COMMUNICATIONS, INC.
1993 ANNUAL REPORT ON FORM 10-K
Table of Contents
Page
PART I ----
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . I-15
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . I-16
Item 4. Submission of Matters to a Vote of Security Holders. . . . . I-18
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters. . . . . . . . . . . . . . . II-1
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . II-2
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . II-4
Item 8. Financial Statements and Supplementary Data . . . . . . . . II-12
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . . . . . . II-12
PART III
Item 10. Directors and Executive Officers of the Registrant. . . . . III-1
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . III-4
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . . . . III-11
Item 13. Certain Relationships and Related Transactions. . . . . . . III-16
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K. . . . . . . . . . . . . . . . . . . IV-1
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PART I.
Item 1. Business.
(a) General Development of Business
Tele-Communications, Inc. ("TCI" or the "Company", which terms, as
used herein, include its consolidated subsidiaries unless the context indicates
otherwise) was incorporated in Delaware on August 20, 1968. The Company and
its predecessors have been engaged in the cable television business since the
early 1950's.
On January 31, 1994, TCI announced that TCI and Liberty Media
Corporation ("Liberty") had entered into a definitive agreement (the
"TCI/Liberty Agreement"), dated as of January 27, 1994 to combine the two
companies. As previously announced, the transaction will be structured as a
tax free exchange of Class A and Class B shares of both companies and preferred
stock of Liberty for like shares of a newly formed holding company, TCI/Liberty
Holding Company ("TCI/Liberty"). TCI shareholders will receive one share of
TCI/Liberty for each of their shares. Liberty common shareholders will receive
0.975 of a share of TCI/Liberty for each of their common shares. The
transaction is subject to the approval of both sets of shareholders as well as
various regulatory approvals and other customary conditions. Subject to timely
receipt of such approvals, which cannot be assured, it is anticipated the
closing of such transaction will take place during 1994.
(b) Financial Information about Industry Segments
The Company operates in the cable television industry. The Company
sold its motion picture theatre business and certain theatre-related real
estate assets in 1992. Amounts related to the motion picture theatre business
and certain theatre-related real estate assets are discontinued operations and
are set forth separately in the financial statements and related notes included
in Part II of this Report.
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(c) Narrative Description of Business
General. Cable television systems receive video, audio and data
signals transmitted by nearby television and radio broadcast stations,
terrestrial microwave relay services and communications satellites. Such
signals are then amplified and distributed by coaxial cable and optical fiber
to the premises of customers who pay a fee for the service. In many cases,
cable television systems also originate and distribute local programming.
Service Charges. The Company reconfigured its service offerings as
contemplated by the Cable Television Consumer Protection and Competition Act of
1992 (the "1992 Cable Act"). The Company offers a limited "basic service"
(primarily comprised of local broadcast signals and public, educational and
governmental access channels) and a broader "expanded" tier (primarily
comprised of specialized programming services, in such areas as health, family
entertainment, religion, news, weather, public affairs, education, shopping,
sports and music). The monthly fee for "basic" generally ranges from $8.00 to
$11.00, and the monthly service fee for the "expanded" tier generally ranges
from $10.00 to $12.00. The Company offers "premium services" (referred to in
the cable television industry as "Pay-TV" or "pay-per-view") to its customers.
Such services consist principally of feature films, as well as live and taped
sports events, concerts and other programming. The Company offers Pay-TV
services for a monthly fee generally ranging from $12.00 to $14.00 per service,
except for certain movie or sports services (such as various regional sports
networks and certain pay-TV channels) and pay-per-view movies offered
separately at $1.00 to $5.00 per month or per movie and certain pay-per- view
events offered separately at $10.00 to $40.00 per event. Charges are usually
discounted when multiple Pay-TV services are ordered. The Company does not
generally require basic subscribers to "buy-through" the "expanded" service
to receive a Pay-TV service in its systems.
The Company does not charge for additional outlets in a subscriber's
home. As further enhancements to their cable services, customers may generally
rent converters, with or without a remote control device, for a monthly charge
ranging from $0.50 to $3.00 each, as well as purchase a channel guide for a
monthly charge ranging from $0.85 to $2.00. Also a nonrecurring installation
charge (which is based upon the newly regulated hourly service charges for each
individual cable system) of up to $60.00 is usually charged.
Monthly fees for basic and Pay-TV services to commercial customers
vary widely depending on the nature and type of service. Except under the
terms of certain contracts to provide service to commercial accounts, customers
are free to discontinue service at any time without penalty. As noted below,
the Company's service offerings and rates were affected by rate regulations
issued by the Federal Communications Commission ("FCC") in the spring of 1993
and are expected to be further affected by revised regulations in 1994. See
Federal Regulation below.
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Subscriber Data. TCI operates its cable television systems either
directly through its regional operating divisions or indirectly through certain
subsidiaries or affiliated companies. Basic and Pay-TV customers served by TCI
and its consolidated subsidiaries are summarized as follows (amounts in
millions):
<TABLE>
<CAPTION>
Basic subscribers at December 31,
----------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Managed through the Company's
regional operating divisions (1) 9.8 9.4 6.4 5.1 4.2
TKR Cable II, Inc. and
TKR Cable III, Inc. (2) .3 .3 -- -- --
United Artists
Entertainment Company ("UAE") (3) -- -- 2.3 2.2 2.0
Other subsidiaries .6 .5 .2 1.2 1.6
---- ---- ---- ---- ----
10.7 10.2 8.9 8.5 7.8
==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Pay TV subscribers at December 31,
----------------------------------------
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Managed through the Company's
regional operating divisions (1) 9.5 8.8 6.1 3.3 3.2
TKR Cable II, Inc. and
TKR Cable III, Inc. (2) .2 .3 -- -- --
UAE (3) -- -- 2.2 1.8 1.6
Other subsidiaries .6 .5 .1 .7 1.0
---- ---- ---- ---- ----
10.3 9.6 8.4 5.8 5.8
==== ==== ==== ==== ====
</TABLE>
(1) In December of 1992, SCI Holdings, Inc. ("SCI") consummated a
transaction (the "Split-Off") that resulted in the ownership of its
cable television systems being split between its two stockholders,
which stockholders were Comcast Corporation and the Company. The
Split-Off was effected by the distribution of approximately 50% of the
net assets of SCI to three holding companies formed by the Company
(the "Holding Companies"). Immediately following the Split-Off, the
Company owned a majority of the common stock of the Holding Companies.
As such, the Company, which previously accounted for its investment in
SCI using the equity method, now consolidates its investment in the
Holding Companies. One of the Holding Companies, TKR Cable I, Inc.,
is managed through the Company's regional operating divisions.
(2) Management of the remaining two Holding Companies was assumed by an
affiliated company of TCI in December of 1992.
(3) Management assumed by the Company's regional operating divisions in
January of 1992.
This subscriber information does not include any amounts related to
cable television systems in which the Company has an investment accounted for
by the equity method or cost method. A basic customer may subscribe to one or
more Pay-TV services and the number of Pay-TV subscribers reflected represents
the total number of such subscriptions to Pay-TV services. TCI, its
subsidiaries and affiliates operate cable television systems throughout the
continental United States and Hawaii and, through certain joint ventures
accounted for under the equity method, have cable television systems and
investments in the United Kingdom and other parts of Europe.
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Programming. Generally, the Company does not currently produce any of
the programming for the premium motion picture services or for the specialized
basic cable television channels carried by its cable systems, but does hold
interests in certain cable programming entities, including Turner Broadcasting
System, Inc. (CNN, TBS and TNT), Liberty (Encore and certain regional sports
networks), Discovery Communications, Inc. (Discovery Channel and The Learning
Channel) and Reiss Media Enterprises, Inc. (Request-TV - a pay-per-view
service provider).
Additionally, during 1993, Encore QE Programming Corp. ("QEPC"), a
wholly-owned subsidiary of Encore Media Corporation ("EMC") entered into a
limited partnership agreement with TCI STARZ, Inc. ("TCIS"), a wholly-owned
subsidiary of TCI, for the purpose of developing, operating and distributing
STARZ!, a first-run premium programming service launched in 1994. QEPC is the
general partner and TCIS is the limited partner. Losses are allocated 1% to
QEPC and 99% to TCIS. Profits are allocated 1% to QEPC and 99% to TCIS until
certain defined criteria are met. Subsequently, profits are allocated 20% to
QEPC and 80% to TCIS. TCIS has the option, exercisable at any time and without
payment of additional consideration, to convert its limited partnership
interest to an 80% general partnership interest with QEPC's partnership
interest simultaneously converting to a 20% limited partnership interest. In
addition, during specified periods commencing April 1999 and April 2001,
respectively, QEPC may require TCIS to purchase, or TCIS may require QEPC to
sell, the partnership interest of QEPC in the partnership for a formula-based
price. EMC manages the service and has agreed to provide the limited
partnership with certain programming under a programming agreement whereby the
partnership will pay its pro rata share of the total costs incurred by EMC for
such programming.
The Company has entered into a joint venture with Time Warner
Entertainment Company, L.P. and Sega of America to produce and distribute The
Sega Channel, which would provide 50 video games per month to subscribers, of
which at least five would be educational in nature. The release pattern of
such games would be similar to the film industry, with its traditional cycle of
theatrical, pay-per-view, home video and Pay-TV. In the case of The Sega
Channel, a minimum number of video games would be available soon after they are
released for retail sale, but in limited form. Consumer testing of The Sega
Channel will be conducted in 12 test markets beginning in April of 1994.
On February, 1994, United Artists European Holdings, Ltd. ("UAEH"), a
wholly-owned subsidiary of the Company, merged all of the issued share capital
and loan stock of each of the following of its wholly-owned subsidiaries into
Flextech p.l.c. ("Flextech"), a United Kingdom cable programming corporation:
Bravo Classic Movies Limited, United Artists Limited (Children's Channel),
United Artists Investments Limited and United Artists Entertainment Limited
(Programming) (collectively, "The European Programming Assets"). In addition to
the European Programming Assets, UAEH agreed to make available to Flextech an
additional (Sterling Pound) 36.5 million in working capital. The working
capital will be provided as needed and will be used to fund Flextech's
programming interests through the early stages of their development.
Flextech's shares trade publicly on the Unlisted Securities Market of the
London Stock Exchange. In the Merger, UAEH received 52,356,707 ordinary shares
of Flextech stock, representing an approximate 60% interest in Flextech
subsequent to the closing of the Merger.
The Company has entered into long-term agreements with certain of its
program suppliers in order to obtain favorable rates for programming and to
protect the Company from unforeseen future increases in the Company's cost of
programming.
Local Franchises. Cable television systems generally are constructed
and operated under the authority of nonexclusive permits or "franchises"
granted by local and/or state governmental authorities. Federal law, including
the Cable Communications Policy Act of 1984 (the "1984 Cable Act") and the 1992
Cable Act, limits the power of the franchising authorities to impose certain
conditions upon cable television operators as a condition of the granting or
renewal of a franchise.
I-4
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Franchises contain varying provisions relating to construction and
operation of cable television systems, such as time limitations on commencement
and/or completion of construction; quality of service, including (in certain
circumstances) requirements as to the number of channels and broad categories
of programming offered to subscribers; rate regulation; provision of service to
certain institutions; provision of channels for public access and commercial
leased-use; and maintenance of insurance and/or indemnity bonds. The Company's
franchises also typically provide for periodic payments of fees, generally
ranging from 3% to 5% of revenue, to the governmental authority granting the
franchise. Franchises usually require the consent of the franchising authority
prior to a transfer of the franchise or a transfer or change in ownership or
operating control of the franchisee.
Subject to applicable law, a franchise may be terminated prior to its
expiration date if the cable television operator fails to comply with the
material terms and conditions thereof. Under the 1984 Cable Act, if a
franchise is lawfully terminated, and if the franchising authority acquires
ownership of the cable television system or effects a transfer of ownership to
a third party, such acquisition or transfer must be at an equitable price or,
in the case of a franchise existing on the effective date of the 1984 Cable
Act, at a price determined in accordance with the terms of the franchise, if
any.
In connection with a renewal of a franchise, the franchising authority
may require the cable operator to comply with different and more stringent
conditions than those originally imposed, subject to the provisions of the 1984
Cable Act and other applicable Federal, state and local law. The 1984 Cable
Act, as supplemented by the renewal provisions of the 1992 Cable Act,
establishes an orderly process for franchise renewal which protects cable
operators against unfair denials of renewals when the operator's past
performance and proposal for future performance meet the standards established
by the 1984 Cable Act. The Company believes that its cable television systems
generally have been operated in a manner which satisfies such standards and
allows for the renewal of such franchises; however, there can be no assurance
that the franchises for such systems will be successfully renewed as they
expire.
Most of the Company's present franchises had initial terms of
approximately 10 to 15 years. The duration of the Company's outstanding
franchises presently varies from a period of months to an indefinite period of
time. Approximately 1,400 of the Company's franchises expire within the next
five years. This represents approximately thirty-five percent of the
franchises held by the Company and involves approximately 3.8 million basic
subscribers.
Technological Changes. Cable operators have traditionally used
coaxial cable for transmission of television signals to subscribers. Optical
fiber is a technologically advanced transmission medium capable of carrying
cable television signals via light waves generated by a laser. The Company is
installing optical fiber in its cable systems at a rate such that in three
years TCI anticipates that it will be serving the majority of its customers
with state-of-the-art fiber optic cable systems. The systems, which facilitate
digital transmission of television signals as discussed below, will have
optical fiber to the neighborhood nodes with coaxial cable distribution
downstream from that point.
I-5
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Compressed digital video technology converts as many as ten analog
signals (now used to transmit video and voice) into a digital format and
compresses such signals (which is accomplished primarily by eliminating the
redundancies in television imagery) into the space normally occupied by one
analog signal. The digitally compressed signal will be uplinked to a
satellite, which will send the signal back down to a cable system's headend to
be distributed, via optical fiber and coaxial cable, to the customers home. At
the home, a set-top terminal will convert the digital channel back into analog
channels that can be viewed on a normal television set. The Company is
establishing a national center to uplink, encrypt and authorize the reception
of compressed digital television services. The Company intends to begin
offering such technology to its cable subscribers as the set-top terminals
become available for distribution. The Company is currently negotiating with
cable programmers to allow for the Company to digitize, encrypt and authorize
their signals although there can be no assurance that the terms will be
favorable to the Company.
The Company and Microsoft Corporation ("Microsoft") announced that
they have agreed in principle to jointly conduct a technology trial and a
market trial of various broadband interactive network services using upgraded
TCI cable television systems and certain Microsoft computer systems to provide
the services. The technology trial, which will be conducted among TCI and
Microsoft employees in the greater Seattle area commencing in the fourth
quarter of 1994, will test the reliability and scalability of Microsoft's
software architecture for interactive broadband networking and its operating
system software. The market trial will be conducted with TCI residential cable
customers in the Seattle and Denver areas, commencing in 1995, and will test
consumer reaction to and interaction with the system and service features.
The Company and three other cable operators own Teleport
Communications Group, Inc. ("Teleport"). Teleport and its owners currently are
negotiating with another cable operator the terms upon which it would acquire
an interest in Teleport. Teleport provides local telecommunications services
to businesses over fiber optic networks in 18 metropolitan areas throughout the
United States, including New York and San Francisco.
Competition. Cable television competes for customers in local markets
with other providers of entertainment, news and information. The competitors
in these markets include broadcast television and radio, newspapers, magazines
and other printed material, motion picture theatres, video cassettes and other
sources of information and entertainment including directly competitive cable
television operations. The passage of the 1992 Cable Act was designed to
increase competition in the cable television industry.
I-6
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There are alternative methods of distribution of the same or similar
video programming offered by cable television systems. Further, these
technologies have been encouraged by Congress and the FCC to offer services in
direct competition with existing cable systems. In addition to broadcast
television stations, the Company competes in a variety of areas with other
service providers that offer Pay-TV and other satellite-delivered programming
to subscribers on a direct over-the-air basis. Multi-channel programming
services are distributed by communications satellites directly to home
satellite dishes ("HSDs"). Cable programmers have developed marketing efforts
directed to HSD owners and numerous companies, including a subsidiary of the
Company called Netlink USA (one of the larger distributors to HSD owners), make
programming packages available to these viewers. The Company estimates that
there are currently in excess of 3.5 million HSDs in the United States, most of
which are in the 6 to 10 foot range. Medium power and higher power
communications satellites ("DBS") using higher frequencies transmit signals
that can be received by dish antennas much smaller in size. The Company has an
interest in an entity, Primestar Partners, that distributes a multi-channel
programming service via a medium power communications satellite to HSDs of
approximately 3 feet in size. Such service currently serves an estimated
70,000 HSDs in the United States. Two other service providers plan to offer
multi-channel programming services to HSDs in 1994 via a high power
communications satellite that will require a dish antenna of only approximately
18 inches. Additionally, such DBS operators have acquired the right to
distribute all of the significant cable television services. The Company's
application for a license to launch and operate a high power direct broadcast
satellite was granted by the FCC in 1992 and the satellite is currently under
construction. Competition from both medium and high power DBS services could
become substantial as developments in technology continue to increase satellite
transmitter power, and decrease the cost and size of equipment needed to
receive these transmission.
DBS has advantages and disadvantages as an alternative means of
distribution of video signals to the home. Among the advantages are that the
capital investment (although initially high) for the satellite and uplinking
segment of a DBS system is fixed and does not increase with the number of
subscribers receiving satellite transmissions; that DBS is not currently
subject to local regulation of service and prices or required to pay franchise
fees; and that the capital costs for the ground segment of a DBS system (the
reception equipment) are directly related to and limited by the number of
service subscribers. DBS's disadvantages presently include the inability to
tailor the programming package to the interests of different geographic
markets, such as providing local news, other local origination services and
local broadcast stations; signal reception being subject to line of sight
angles; and intermittent interference from atmospheric conditions and
terrestrially generated radio frequency noise. The effect of competition from
these services cannot be predicted. The Company nonetheless assumes that such
competition could be substantial in the near future.
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The 1984 Cable Act, FCC rules and the 1982 Federal court Consent
Decree (which settled the 1974 antitrust suit against AT&T) prohibit telephone
companies from providing video programming and other information services
directly to subscribers in their telephone service areas (except in limited
circumstances in rural areas). In Chesapeake & Potomac Telephone Company of
Virginia v. United States, the United States District Court for the Eastern
District of Virginia held on August 24, 1993 that the cross-entry prohibition
in the 1984 Cable Act is unconstitutional as a violation of the telephone
company's First Amendment right to free expression. The Court's decision has
been appealed to the United States Court of Appeals for the Fourth Circuit.
Since the Court rendered its decision, however, other telephone companies have
filed a number of actions in courts throughout the United States, similarly
seeking to invalidate the cross-entry prohibition. Certain proposals are also
pending before the FCC and Congress which would eliminate or relax these
restrictions on telephone companies. If the current cross-entry restrictions
are removed or relaxed, the Company could face increased competition from
telephone companies which, in most cases, have greater financial resources than
the Company. Certain major telephone companies have announced plans to acquire
cable television systems or provide video services to the home through fiber
optic technology.
The FCC authorized the provision of so-called "video-dialtone"
services by which independent video programmers may deliver services to the
home over telephone-provided circuits, thereby by-passing the local cable
system or other video provider. Under the FCC decision, which is now the
subject of reconsideration and a federal appellate challenge, such services
would require no local franchise agreement or payment to the city or local
governmental authority. Although telephone companies providing
"video-dialtone" under the existing rules are allowed only a limited financial
interest in programming services and must limit their role largely to that of a
traditional "common carrier," the current status of these rules is uncertain
under the Chesapeake & Potomac Telephone Company decision. Telephone companies
have filed numerous applications with the FCC for authorization to construct
video-dialtone systems and provide such services. This alternative means of
distribution of video services to the consumer's home represents a direct
competitive threat to the Company.
Another alternative method of distribution is the multi-channel
multi-point distribution systems ("MMDS"), which deliver programming services
over microwave channels received by subscribers with a special antenna. MMDS
systems are less capital intensive, are not required to obtain local franchises
or pay franchise fees, and are subject to fewer regulatory requirements than
cable television systems. Although there are relatively few MMDS systems in
the United States that are currently in operation or under construction,
virtually all markets have been licensed or tentatively licensed. The FCC has
taken a series of actions intended to facilitate the development of wireless
cable systems as alternative means of distributing video programming, including
reallocating the use of certain frequencies to these services and expanding the
permissible use of certain channels reserved for educational purposes. The
FCC's actions enable a single entity to develop an MMDS system with a potential
of up to 35 channels, and thus compete more effectively with cable television.
Developments in compression technology have significantly increased the number
of channels that can be made available from other over-the-air technologies.
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Within the cable television industry, cable operators may compete with
other cable operators or others seeking franchises for competing cable
television systems at any time during the terms of existing franchises or upon
expiration of such franchises in expectation that the existing franchise will
not be renewed. The 1992 Cable Act promotes the granting of competitive
franchises. An increasing number of cities are exploring the feasibility of
owning their own cable systems in a manner similar to city-provided utility
services. Currently one of the Company's franchises is being over built by a
city and in another franchise the franchising authority granted a second cable
franchise to a competing cable operator. The Company believes that this type
of competitive threat may increase in the future.
The Company also competes with Master Antenna Television ("MATV")
systems and Satellite MATV ("SMATV") systems, which provide multi-channel
program services directly to hotel, motel, apartment, condominium and similar
multi-unit complexes within a cable television system's franchise area,
generally free of any regulation by state and local governmental authorities.
In addition to competition for subscribers, the cable television
industry competes with broadcast television, radio, the print media and other
sources of information and entertainment for advertising revenue. As the cable
television industry has developed additional programming, its advertising
revenue has increased. Cable operators sell advertising spots primarily to
local and regional advertisers.
The Company has no basis upon which to estimate the number of cable
television companies and other entities with which it competes or may
potentially compete. There are a large number of individual and multiple
system cable television operators in the United States but, measured by the
number of basic subscribers, the Company is the largest provider of cable
television services.
The full extent to which other media or home delivery services will
compete with cable television systems may not be known for some time and there
can be no assurance that existing, proposed or as yet undeveloped technologies
will not become dominant in the future.
Regulation and Legislation. The operation of cable television systems
is extensively regulated through a combination of Federal legislation and FCC
regulations, by some state governments and by most local government franchising
authorities such as municipalities and counties. The regulation of cable
television systems at the federal, state and local levels is subject to the
political process and has been in constant flux over the past decade. This
process continues in the context of legislative proposals for new laws and the
adoption or deletion of administrative regulations and policies. Further
material changes in the law and regulatory requirements must be anticipated and
there can be no assurance that the Company's business will not adversely be
affected by future legislation, new regulation or deregulation.
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Federal Regulation. The 1984 Cable Act established national policy
and, in some cases, governing standards regarding the regulation of cable
television in the areas of ownership (including the ownership of other media of
mass communications), channel usage, franchising, subscriber charges and
services, subscriber privacy, equal employment opportunity ("EEO"), technical
standards and comprehensive reporting requirements. Among other things, the
1984 Cable Act (a) requires cable television systems with 36 or more
"activated" channels to reserve a percentage of such channels for commercial
use by unaffiliated third parties; (b) permits franchise authorities to require
the cable operator to provide channel capacity, equipment and facilities for
public, educational and governmental access; (c) limits the amount of fees
required to be paid by the cable operator to franchise authorities to a maximum
of 5% of annual gross revenues; and (d) regulates the revocation and renewal of
franchises as described above.
On October 5, 1992, Congress enacted the 1992 Cable Act. The 1992
Cable Act greatly expands federal and local regulation of the cable television
industry. Certain of the more significant areas of regulation imposed by the
1992 Cable Act are discussed below.
Rate Regulation. The FCC adopted certain rate regulations required by
the 1992 Cable Act and imposed a moratorium on certain rate increases. Such
rate regulations became effective on September 1, 1993. The rate increase
moratorium, which began on April 5, 1993, continues in effect through May 15,
1994 for franchise areas not subject to regulation. As a result of such
actions, the Company's basic and tier service rates and its equipment and
installation charges (the "Regulated Services") are now under the jurisdiction
of local franchising authorities and the FCC. Basic and tier service rates are
evaluated against competitive benchmark rates as published by the FCC, and
equipment and installation charges are based on actual costs. Any rates for
Regulated Services that exceeded the benchmarks were reduced as required by the
new rate regulations. The rate regulations do not apply to the relatively few
systems which are subject to "effective competition" or to services offered on
an individual service basis, such as premium movie and pay-per-view services.
The Company's new rates for Regulated Services, which were implemented
September 1, 1993, are subject to review by the FCC if a complaint has been
filed or the appropriate local franchising authority if such authority has been
certified.
On February 22, 1994, the FCC announced that it had adopted revised
benchmark rate regulations pursuant to which those cable systems electing not
to make a cost-of-service showing will be required to set their rates for
Regulated Services at a level equal to the higher of the FCC's revised
benchmark rates or the operator's September 30, 1992 rates minus 17 percent.
Thus, the revised benchmarks may result in additional rate reductions of up to
7 percent beyond the maximum reductions established under the FCC's initial
benchmark regulations. Although the text of the FCC's revised benchmark
regulations has not been released, it is currently anticipated that the rules
will take effect on or about May 15, 1994.
The FCC has indicated that certain systems with relatively low rates
for Regulated Services (defined as systems whose rates would be below the
benchmark after subtracting 17% from their September 30, 1992 rates), and
systems owned by small operators (i.e. operators whose systems serve a total
of 15,000 or fewer subscribers) will not be required immediately to reduce
their regulated rates by the full 17 percent. However, to the extent that such
systems do not reduce regulated rates by the full 17 percent, such lesser rate
reductions will be offset against future inflation adjustments pending
completion of additional cost studies by the FCC.
The FCC's benchmark rate regulations permit cable operators to adjust
rates to account for inflation and increases in certain external costs,
including increases in programming costs and compulsory copyright fees, to the
extent such increases exceed the rate of inflation. However, these increases
may be required to be offset by a productivity factor.
I-10
<PAGE> 13
The revised rules adopted by the FCC on February 22, 1994 also modify
the regulation of packaged a-la-carte programming services. The FCC previously
had indicated that a-la-carte services (i.e. program services which are
available to subscribers on an individual basis rather than as part of a
regulated service tier) could be packaged without being regulated under certain
conditions. However, the FCC indicated that under its revised rules it will
examine such "packaged a la carte" offerings on a case- by-case basis to
determine whether they constitute evasions of its rate regulations.
The revised benchmark regulations also provide a mechanism for
adjusting rates when regulated tiers are affected by channel additions or
deletions. The FCC has indicated that cable operators adding or deleting
channels on a regulated tier will be required to adjust the per-channel
benchmark for that tier based on the number of channels offered after the
addition or deletion. The FCC also stated that the additional programming
costs resulting from channel additions will be accorded the same external
treatment as other program cost increases, and that cable operators will be
permitted to recover a mark-up on their programming expenses.
On February 22, 1994 the FCC also adopted interim "cost-of-service"
rules governing attempts by cable operators to justify higher than benchmark
rates based on unusually high costs. The FCC stated that under its interim
cost-of-service rules, a cable operator may recover through rates for Regulated
Services its normal operating expenses plus an interim rate of return
equal to 11.25 percent, which rate may be subject to change in the future.
However, the FCC has presumptively excluded from the rate-base acquisition
costs above the book value of tangible assets and of allowable intangible
assets at the time of acquisition, has declined to prescribe depreciation rates
and has suggested that the rules will have limited usefulness for cable
operators. The FCC also adopted rules governing transactions between
cost-of-service regulated cable operators and their affiliates.
The texts of the FCC's revised benchmark and cost-of-service
regulations have not been released. In addition, key portions of these
regulations are subject to change during the course of ongoing rulemaking
proceedings before the FCC. Further, the revised rate regulations have been
challenged in court. However, based on the foregoing, the Company believes the
new rate regulations will have a material adverse effect on its net earnings.
The FCC also announced it intends to adopt an experimental incentive
plan which would provide cable operators with incentives to upgrade their
systems and offer new services.
I-11
<PAGE> 14
Regulation of Carriage of Broadcast Stations. The 1992 Cable Act
granted broadcasters a choice of "must carry" rights or "retransmission
consent" rights. As of October of 1993, cable operators were required to
secure permission from broadcasters that elected retransmission consent rights
before retransmitting the broadcaster's signals. Established "superstations"
were not granted such rights. Local and distant broadcasters can require cable
operators to make payments as a condition to carriage of such broadcasters'
station on a cable system. The 1992 Cable Act imposed obligations to carry
"local" broadcast stations if such stations chose a "must carry" right as
distinguished from the "retransmission consent" right described above. The
rules adopted by the FCC provided for mandatory carriage by cable systems after
September 1, 1993, of all local full-power commercial television broadcast
signals (up to one-third of all channels) including the signals of stations
carrying home-shopping programming, and, depending on a cable system's channel
capacity, all non-commercial local television broadcast signals, or at the
option of commercial broadcasters after October 6, 1993, the right to deny such
carriage unless the broadcaster consented. Although similar "must carry"
regulations adopted by the FCC have been held unconstitutional by federal
appellate courts on two prior occasions and the Supreme Court declined review,
the "must carry" provisions of the 1992 Cable Act were upheld by a three-judge
panel of the United States District Court of Columbia in Turner Broadcasting
System, Inc. v. FCC on April 8, 1993. The Supreme Court granted certiorari on
September 28, 1993 to review the District Court's decision and oral argument
was held on January 12, 1994. It is anticipated a decision will be issued later
this year. The Company is currently retransmitting the signals of broadcasters
who chose a "must carry" right and the signals of broadcasters electing
negotiated "retransmission consent" rights.
Ownership Regulations. The 1992 Cable Act required the FCC to (i)
promulgate rules and regulations establishing reasonable limits on the number
of cable subscribers which may be served by a multiple systems cable operator;
(2) prescribe rules and regulations establishing reasonable limits on the
number of channels on a cable system that will be allowed to carry programming
in which the owner of such cable system has an attributable interest; and (3)
consider the necessity and appropriateness of imposing limitations on the
degree to which multichannel video programming distributors (including cable
operators) may engage in the creation or production of video programming. On
September 23, 1993, the FCC adopted regulations establishing a 30 percent limit
on the number of homes passed nationwide that a cable operator may reach
through cable systems in which it holds an attributable interest (attributable
for these purposes if its ownership interest therein is five percent or greater
or if there are any common directors) with an increase to 35 percent if the
additional cable systems are minority controlled. However, the FCC stayed the
effectiveness of its ownership limits pending the appeal of a September 16,
1993 decision by the United States District Court for the District of Columbia
which, among other things, found unconstitutional the provision of the 1992
Cable Act requiring the FCC to establish such ownership limits. If the
ownership limits are determined on appeal to be constitutional, they may affect
the Company's ability to acquire interests in additional cable systems in the
future.
I-12
<PAGE> 15
On September 23, 1993, the FCC also adopted regulations limiting
carriage by a cable operator of national programming services in which that
operator holds an attributable interest (using the same attribution standards
as were adopted for its limits on the number of homes passed nationwide that a
cable operator may reach through its cable systems) to 40 percent of the first
75 activated channels on each of the operator's systems. The rules provide for
the use of two additional channels or a 45 percent limit whichever is greater,
provided that the additional channels carry minority controlled programming
services. The regulations also grandfather existing carriage arrangements
which exceed the channel limits, but require new channel capacity to be devoted
to unaffiliated programming services until the system achieves compliance with
the regulations. Channels beyond the first 75 activated channels are not
subject to such limitations, and the rules do not apply to local or regional
programming services. These rules, which currently are subject to petitions
for reconsideration pending before the FCC, may limit carriage of programming
services in which the Company or Liberty has an interest on certain systems of
cable operators affiliated with the Company.
In the same rulemaking, the FCC concluded that additional restrictions
on the ability of multichannel distributors to engage in the creation or
production of video programming presently are unwarranted.
Under the 1992 Cable Act and the FCC's regulations, cable operators
may not hold a license for an MMDS nor acquire a SMATV system within the same
geographic area in which it provides cable service. Additionally, cable
operators are prohibited, subject to certain exceptions, from selling a cable
system within 3 years of acquisition or construction of such cable system.
Buy-through Prohibition. The 1992 Cable Act prohibits cable systems
which have addressable converters or certain other security devices in place
from requiring cable subscribers to purchase service tiers above basic as a
condition to purchasing premium movie channels or pay-per-view. If cable
systems do not have such security devices in place, they are given up to 10
years to comply. The Company has, however, generally complied with the
provision in its systems, regardless of addressability.
Program Acquisition. On April 2, 1993, the FCC adopted regulations
implementing the program access provisions of the 1992 Cable Act. Essentially,
these regulations are designed to insure that video programming distributors
competing with cable operators have access to cable television programming
services at non-discriminatory prices and will limit unfair practices,
programming contracts, and discriminatory contract terms (including excessive
volume discounts).
The rules apply the prohibition against "unfair" practices to all
programmers whether vertically integrated or not. If a vertically integrated
program supplier is challenged for price discrimination, it must justify the
price differential based on several factors. New exclusive contracts involving
vertically integrated programmers will be prohibited in most cases unless the
FCC first determines the contract serves the public interest. However,
existing service contracts executed prior to June 1, 1990 granting exclusive
rights will remain in effect. The FCC allowed a transition period until the
fall of 1993 to bring other existing programming contracts into compliance with
the regulations.
Customer Service/Technical Standard. As required by the 1992 Cable
Act, the FCC has adopted comprehensive regulations establishing minimum
standards for customer service and technical system performance. Franchising
authorities are allowed to enforce stricter customer service requirements than
the FCC standards.
I-13
<PAGE> 16
The 1992 Cable Act contains numerous other regulatory provisions which
together with the 1984 Cable Act create a comprehensive regulatory framework.
Violation by a cable operator of the statutory provisions or the rules and
regulations of the FCC can subject the operator to substantial monetary
penalties and other significant sanctions such as suspension of licenses and
authorizations, issuance of cease and desist orders and imposition of penalties
that could be of severe consequence to the conduct of a cable operator's
business.
Many of the specific obligations imposed on the operation of cable
television systems under these laws and regulations are complex, burdensome and
increase the Company's costs of doing business. Numerous petitions have been
filed with the FCC seeking reconsideration of various aspects of the
regulations implementing the Cable Act. Petitions for judicial review of
regulations adopted by the FCC, as well as other court challenges to the 1992
Cable Act and the FCC's regulations, also remain pending. The Company is
uncertain how the courts and/or FCC will ultimately rule or whether such
rulings will materially change any existing rules or statutory requirements.
Further, virtually all of these laws and regulations are subject to revision at
the discretion of the appropriate governmental authority.
The Company has two-way communications stations, microwave relay
stations and receive-only earth stations for reception of satellite signals,
which are individually licensed by the FCC for a specific term. Such licenses
are essential to the conduct of the Company's business and must periodically be
renewed by the Company. No assurance can be given that such renewals will be
granted by the FCC.
Pursuant to lease agreements with local public utilities, the cable
facilities in most of the Company's cable television systems are generally
attached to utility poles or are in underground ducts controlled by the utility
owners. The rates and conditions imposed on the Company for such attachments
or occupation of utility space are generally subject to regulation by the FCC
or, in some instances, by state agencies, and are subject to change.
Copyright Regulations. The Copyright Revision Act of 1976 (the
"Copyright Act") provides cable television operators with a compulsory license
for retransmission of broadcast television programming without having to
negotiate with the stations or individual copyright owners for retransmission
consent for the programming. However, see Regulation of Carriage of Broadcast
Stations regarding the imposition of retransmission consent for broadcast
stations. The availability of the compulsory license is conditioned upon the
cable operators' compliance with applicable FCC regulations, certain reporting
requirements and payment of appropriate license fees, including interest
charges for late payments, pursuant to the schedule of fees established by the
Copyright Act and regulations promulgated thereunder. The Copyright Act also
empowers the Copyright Office to periodically review and adjust copyright
royalty rates based on inflation and/or petitions for adjustments due to
modifications of FCC rules. The FCC has recommended to Congress the abolition
of the compulsory license for cable television carriage of broadcast signals, a
proposal that has received substantial support from members of Congress. Any
material change in the existing statutory copyright scheme could significantly
increase the costs of programming and could have an adverse effect on the
business interests of the Company.
I-14
<PAGE> 17
State and Local Regulation. Cable television systems are generally
licensed or "franchised" by local municipal or county governments and, in some
cases, by centralized state authorities with such franchises being given for
fixed periods of time subject to extension or renewal largely at the discretion
of the issuing authority. The specific terms and conditions of such franchises
vary significantly depending on the locality, population, competitive services,
and a host of other factors. While this variance takes place even among
systems of essentially the same size in the same state, franchises generally
are comprehensive in nature and impose requirements on the cable operator
relating to all aspects of cable service including franchise fees, technical
requirements, channel capacity, consumer service standards, "access" channel
and studio facilities, insurance and penalty provisions and the like. Local
franchise authorities generally control the sale or transfer of cable systems
to third parties and, although the 1992 Cable Act sought to limit such transfer
review, the transfer process still affords local governmental officials some
power to affect the disposition of the cable property as well as to obtain
other concessions from the operator. The franchising process, like the federal
regulatory climate, is highly politicized and no assurances can be given that
the Company's franchises will be extended or renewed or that other problems
will not be engendered at the local level. There appears to be a growing trend
for local authorities to impose more stringent requirements on cable operators
often increasing the costs of doing business. The 1984 Cable Act grants
certain protective procedures in connection with renewal of cable franchises,
which procedures were further clarified by the renewal provisions of the 1992
Cable Act.
GENERAL
Legislative, administrative and/or judicial action may change all or
portions of the foregoing statements relating to competition and regulation.
The Company has not expended material amounts during the last three
fiscal years on research and development activities.
There is no one customer or affiliated group of customers to whom
sales are made in an amount which exceeds 10% of the Company's consolidated
revenue.
Compliance with Federal, state and local provisions which have been
enacted or adopted regulating the discharge of material into the environment or
otherwise relating to the protection of the environment has had no material
effect upon the capital expenditures, results of operations or competitive
position of the Company.
At December 31, 1993, the Company had approximately 24,000 employees.
Of these employees, approximately 500 were located in its corporate
headquarters and most of the balance were located at the Company's various
facilities in the communities in which the Company owns and/or operates cable
television systems.
(d) Financial Information about Foreign & Domestic Operations and Export
Sales
The Company has neither material foreign operations nor export sales.
Item 2. Properties.
The Company owns its executive offices in a suburb of Denver,
Colorado. It leases most of its regional and local operating offices. The
Company owns many of its head-end and antenna sites. Its physical cable
television properties, which are located throughout the United States, consist
of system components, motor vehicles, miscellaneous hardware, spare parts and
other components.
I-15
<PAGE> 18
The Company's cable television facilities are, in the opinion of
management, suitable and adequate by industry standards. Physical properties
of the Company are not held subject to any major encumbrance.
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which the Company
is a party or to which any of its property is subject, except as follows:
Viacom International, Inc. v. Tele-Communications, Inc., Liberty Media
Corporation, Satellite Services, Inc., Encore Media Corporation, NetLink USA,
Comcast Corporation, and QVC Network, Inc. This suit was filed on September
23, 1993 in the United States District Court for the Southern District of New
York, and the complaint was amended on November 9, 1993. The amended complaint
alleges that the Company violated the antitrust laws of the United States and
the State of New York, violated the 1992 Cable Act, breached an affiliation
agreement, and tortiously interfered with the Viacom Inc.-Paramount
Communications, Inc. ("Paramount") merger agreement and with plaintiff's
prospective business advantage. The amended complaint further alleges that
even if plaintiff is ultimately successful in its bid to acquire Paramount, its
competitive position will still be diminished because the Company, through
Liberty, will have forced plaintiff to expend additional financial resources to
consummate the acquisition. Plaintiff is seeking permanent injunctive relief
and actual and punitive or treble damages of an undisclosed amount. Plaintiff
claims that the Company, along with Liberty, has conspired to use its monopoly
power in cable television markets to weaken unaffiliated programmers and deny
access to essential facilities necessary for distributing programming to cable
television systems. Plaintiff also alleges that the Company has conspired to
deny essential technology necessary for distributing programming to owners of
home satellite dishes. Plaintiff claims that the Company is engaging in these
alleged conspiracies in an attempt to monopolize alleged national markets for
non-broadcast television programming and distribution. Based upon the facts
available, management believes that, although no assurance can be given as to
the outcome of this action, the ultimate disposition should not have a material
adverse effect upon the financial condition of the Company.
Ranlee Communications, Inc. v. United Artists Telecommunications, Inc.
and United Artists Communications, Inc. This matter was filed in the United
States District Court for the Eastern District of New York in September of
1989. Plaintiff alleges that defendant United Artists Telecommunications,
Inc., by and through its parent United Artists Communications, Inc., the
predecessor company of UAE (now a wholly-owned subsidiary of TCI), entered into
an agreement with plaintiff wherein plaintiff was engaged as a manager to
order, install and supervise telephone switching systems throughout the United
States, and to order, install and supervise pay telephones in the Greater New
York Metropolitan area, and that the defendants did wrongfully and in bad faith
terminate the contract. Plaintiff seeks damages in excess of $100 million.
Discovery has been completed. The defendants have filed a motion for summary
judgement which is pending. Based upon the facts available, management
believes that, although no assurance can be given as to the outcome of this
action, the ultimate disposition should not have a material adverse effect upon
the financial condition of the Company.
I-16
<PAGE> 19
On November 10, 1992, a complaint, captionedThe City of Chicago
Heights, Illinois and Walter J. Pietrucha v. Nick Lobue, et. al., was filed in
the Circuit Court of Cook County, Illinois. The complaint named numerous
defendants including former public officials of the City of Chicago Heights and
various companies that entered into contracts with the City during the period
from 1976 to 1991, and alleged that such contracts were procured or maintained
in violation of Illinois state law through a series of bribes, kickbacks and
breaches of fiduciary duties. With respect to the Company, the complaint
alleged that an unidentified attorney obtained a 15-year cable television
franchise for the City of Chicago Heights on behalf of a subsidiary of the
Company in 1981 as a result of bribes and illegal kickbacks made to certain of
the public officials named as defendants in the action. Effective December 30,
1993, a settlement agreement was executed which resolved all claims against the
Company. Pursuant to that settlement agreement, plaintiffs' claims against the
Company were dismissed with prejudice on January 27, 1994. This represents the
final resolution of this matter and, accordingly, this case will not be
reported in future filings.
Tyrone Belgrave, et al., vs. Tele-Communications, Inc., et al. On
February 8, 1994, Tyrone Belgrave and 26 other current or former employees of
United Cable Television of Baltimore Limited Partnership filed suit in the
Circuit Court for Baltimore City against Tele-Communications, Inc., TCI East,
Inc., UCTC of Baltimore, Inc., and United Cable Television of Baltimore Limited
Partnership. The action alleges, inter alia, false imprisonment, assault,
employment defamation, intentional infliction of emotional distress, invasion
of privacy, wrongful discharge, and discrimination on the basis of race. The
complaint also seeks divestiture of the Baltimore City cable franchise from the
Company. Six counts in the complaint each seek compensatory damages of
$1,000,000 per plaintiff, and punitive damages of $5,000,000 per plaintiff.
Three other counts in the complaint each seek compensatory damages of
$1,000,000 per plaintiff and punitive damages of $5,000,000 per plaintiff per
defendant. The Company intends to contest the case. Based upon the facts
available, management believes that, although no assurance can be given as
to the outcome of this action, the ultimate disposition should not have a
material adverse effect upon the financial condition of the Company.
Euan Fannell v. Tele-Communications, Inc., et al. On February 8,
1994, Euan Fannell, the former general manager of UCTC of Baltimore, Inc. filed
suit in the Circuit Court for Baltimore City against Tele-Communications, Inc.,
TCI East, Inc., UCTC of Baltimore, Inc., and United Cable Television of
Baltimore Limited Partnership. The suit alleges, inter alia, employment
defamation, intentional infliction of emotional distress, invasion of privacy,
breach of contract, and discrimination on the basis of race. The complaint
also seeks divestiture of the Baltimore City cable franchise of the Company.
The plaintiff seeks $10,000,000 in compensatory damages and $50,000,000 in
punitive damages with respect to the intentional infliction of emotional
distress claim; and $10,000,000 in compensatory damages and $50,000,000 in
punitive damages with respect to each of five other counts. The Company
intends to contest the case. Based upon the facts available, management
believes that, although no assurance can be given as to the outcome of this
action, the ultimate disposition should not have a material adverse effect
upon the financial condition of the Company.
I-17
<PAGE> 20
Leonie Palumbo, et al. v. Tele-Communications, Inc., et al. On
February 8, 1994, Leonie Palumbo, a former employee of TCI East, Inc., filed a
class action suit in the United States District Court for the District of
Columbia against Tele-Communications, Inc., John Malone, and J.C. Sparkman.
The action alleges, on behalf of a class of past, present and future black
employees of the Company, and all past, present and future black applicants for
employment with the Company, discrimination on the basis of race. The
complaint seeks unspecified compensation and punitive damages as well as
injunctive relief for these violations. The Company intends to contest the
action. Based upon the facts available, management believes that, although
no assurance can be given as to the outcome of this action, the ultimate
disposition should not have a material adverse effect upon the financial
condition of the Company.
Les Dunnaville v. United Artists Cable, et al. On February 9, 1994,
Les Dunnaville and Jay Sharrieff, former employees of United Cable Television
of Baltimore Limited Partnership, filed an amended complaint in the Circuit
Court for Baltimore City against United Cable Television of Baltimore Limited
Partnership, TCI Cablevision of Maryland, Tele-Communications, Inc. and three
company employees, Roy Harbert, Tony Peduto, and Richard Bushie (the suit was
initially filed on December 3, 1993, but the parties agreed on December 30,
1993 that no responsive pleading would be due pending filing of an amended
complaint). The action alleges, inter alia, intentional interference with
contract, tortious interference with prospective advantage, defamation, false
light, invasion of privacy, intentional infliction of emotional distress, civil
conspiracy, violation of Maryland's Fair Employment Practices Law, and
respondeat superior with respect to the individual defendants. Six counts in
the complaint each seek compensatory damages of $1,000,000 and punitive damages
of $1,000,000; the intentional infliction of emotional distress count seeks
compensatory damages of $1,000,000 and punitive damages of $2,000,000; and the
count which alleges violation of Maryland's Fair Employment Practices Law seeks
damages of $500,000. The Company intends to contest the action. Based upon
the facts available, management believes that, although no assurance can be
given as to the outcome of this action, the ultimate disposition should not
have a material adverse effect upon the financial condition of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
I-18
<PAGE> 21
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Shares of the Company's Class A and Class B common stock are traded in
the over-the-counter market on the Nasdaq National Market under the symbols
TCOMA and TCOMB, respectively. The following table sets forth the range of
high and low sales prices of shares of Class A and Class B common stock for the
periods indicated as furnished by Nasdaq. The prices have been rounded up to
the nearest eighth, and do not include retail markups, markdowns, or
commissions.
<TABLE>
<CAPTION>
Class A Class B
-------------- --------------
High Low High Low
---- --- ---- ---
<S> <C> <C> <C> <C>
1992:
----
First quarter 18-1/8 15-3/8 17-3/4 15-1/2
Second quarter 20 16-1/8 19-1/2 16-1/4
Third quarter 20-7/8 16-3/4 20-3/4 17
Fourth quarter 22 16-1/2 21-3/4 16-1/2
1993:
----
First quarter 25-1/2 20-3/4 25-1/2 21
Second quarter 24 17-1/2 24 18-3/8
Third quarter 26-3/4 21-5/8 27 22
Fourth quarter 33-1/4 24-7/8 40 25-1/2
</TABLE>
As of January 31, 1994, there were 7,663 holders of record of the
Company's Class A common stock and 692 holders of record of the Company's Class
B common stock (which amounts do not include the number of shareholders whose
shares are held of record by brokerage houses but include each brokerage house
as one shareholder).
The Company has not paid cash dividends on its Class A or Class B
common stock and has no present intention of so doing. Payment of cash
dividends, if any, in the future will be determined by the Company's Board of
Directors in light of the Company's earnings, financial condition and other
relevant considerations. Certain loan agreements contain provisions that limit
the amount of dividends, other than stock dividends, that the Company may pay
(see note 6 to the consolidated financial statements). See also related
discussion under the caption Management's Discussion and Analysis of Financial
Condition and Results of Operations.
II-1
<PAGE> 22
Item 6. Selected Financial Data.
The following tables present selected information relating to the
financial condition and results of operations of the Company for the past five
years.
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------
1993 1992 * 1991 * 1990 * 1989 *
------ ------ ------ ------ ------
amounts in millions
<S> <C> <C> <C> <C> <C>
Summary Balance Sheet Data:
- --------------------------
Property and
equipment, net $ 4,935 4,562 4,081 4,156 3,692
Franchise
costs, net $ 9,197 9,300 8,104 7,348 6,811
Net assets of
discontinued
operations $ -- -- 242 54 580
Total assets $16,520 16,310 15,166 14,106 13,560
Debt $ 9,900 10,285 9,455 8,922 8,007
Stockholders' equity $ 2,112 1,726 1,570 748 840
Shares outstanding
(net of treasury shares):
Class A common stock 403 382 370 310 305
Class B common stock 47 48 49 48 48
</TABLE>
(continued)
II-2
<PAGE> 23
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------------------
1993 1992* 1991 * 1990 * 1989 *
------ ------ ------ ------ ------
amounts in millions, except per share data
<S> <C> <C> <C> <C> <C>
Summary of
- ----------
Operations Data:
---------------
Revenue $ 4,153 3,574 3,214 2,940 2,358
Operating income $ 916 864 674 546 455
Earnings (loss) from:
Continuing operations $ (7) 7 (78) (191) (262)
Discontinued operations -- (15) (19) (63) (3)
------- ------ ------ ------ ------
(7) (8) (97) (254) (265)
Dividend requirement on
redeemable preferred
stocks (2) (15) -- -- --
------- ----- ------ ------ ------
Net loss attributable
to common shareholders $ (9) (23) (97) (254) (265)
======= ====== ====== ====== ======
Loss attributable to
common shareholders
per common share:
Continuing operations $ (.02) (.01) (.22) (.54) (.74)
Discontinued operations -- (.04) (.05) (.18) (.01)
------- ------ ------ ------ ------
$ (.02) (.05) (.27) (.72) (.75)
======= ====== ====== ====== ======
Weighted average common
shares outstanding 433 424 360 355 353
</TABLE>
____________________
*Restated and reclassified - see notes to consolidated financial statements
included in Part II of this Report.
II-3
<PAGE> 24
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Summary of Operation
The following table sets forth, for the periods indicated, the
percentage relationship that certain items bear to revenue and the percentage
increase or decrease of the dollar amount of such items as compared to the
prior period. This summary provides trend data relating to the Company's normal
recurring operations. Other items of significance are discussed separately
under the captions "Other Income and Expense", "Income Taxes" and "Net Loss"
below. Amounts set forth below reflect the Company's motion picture theatre
exhibition industry segment as discontinued operations. Additionally, amounts
set forth below have been restated to reflect the Company's implementation of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("Statement No. 109").
<TABLE>
<CAPTION>
Relationship to Period to Period
Revenue Increase
Years ended Years ended
December 31, December 31,
------------------------ -----------------
1993 1992 1991 1992-93 1991-92
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Revenue 100.0% 100.0% 100.0% 16.2% 11.2%
Operating costs and
expenses before
depreciation and
amortization 56.0 54.4 55.5 19.5% 9.1%
Depreciation and amortization 21.9 21.4 23.5 19.2% 1.1%
----- ----- -----
Operating income 22.1% 24.2% 21.0% 6.0% 28.2%
===== ===== =====
</TABLE>
Revenue increased by approximately 16.2% from 1992 to 1993. Such
increase was the result of an acquisition in late 1992 (10%), growth in
subscriber levels within the Company's cable television systems (4%) and
increases in prices charged for cable services (3%), net of a decrease in
revenue (1%) due to rate reductions required by rate regulation implemented
pursuant to the Cable Television Consumer Protection and Competition Act of
1992 (the "1992 Cable Act"). Revenue increased 11.2% from 1991 to 1992.
Approximately 3% to 5% of such increase resulted from growth in subscriber
levels within the Company's cable television systems and additional services
sold to existing customers and 5% to 7% resulted from increases in prices
charged for cable services. In 1994, the Company anticipates that it will
experience a decrease in the price charged for those services that are subject
to rate regulation under the 1992 Cable Act. See related discussion below.
Operating costs and expenses have historically remained relatively
constant as a percentage of revenue. However, operating costs and expenses
increased in 1993 primarily as a result of an acquisition in late 1992.
Additionally, in 1993, the Company incurred certain one-time direct charges
relating to the implementation of the new Federal Communications Commission
("FCC") regulations, as further described below. The Company made several
separate grants (in 1992 and 1993) of stock options issued in tandem with stock
appreciation rights. The Company recorded compensation relating to such stock
appreciation rights of $31 million and $1 million in 1993 and 1992,
respectively.
II-4
<PAGE> 25
In 1992, the Company experienced an improvement in its operating costs
and expenses due primarily to certain efficiencies and cost savings arising
from the integration of the operations and management of United Artists
Entertainment Company ("UAE") upon TCI's acquisition in late 1991 of the
remaining minority interests in the equity of UAE. Additionally, during 1992,
the Company streamlined its operating structure through the consolidation of
three of its regional operating divisions into two divisions. In connection
with the consolidation of these divisional offices, the Company incurred
restructuring charges of approximately $8 million which are reflected in the
accompanying consolidated financial statements for the year ended December 31,
1992.
The Company cannot determine whether and to what extent increases in
the cost of programming will effect its operating costs. Additionally, the
Company cannot predict how these increases in the cost of programming will
affect its revenue but intends to recover additional costs to the extent
allowed by the FCC's rate regulations as described below.
Effective April 1, 1993, based upon changes in FCC regulations, the
Company revised its estimate of the useful lives of certain distribution
equipment to correspond to the Company's anticipated remaining period of
ownership of such equipment. The revision resulted in a decrease in net
earnings of approximately $12 million (or $.03 per share) for the year ended
December 31, 1993.
On October 5, 1992, Congress enacted the 1992 Cable Act. In 1993, the
FCC adopted certain rate regulations required by the 1992 Cable Act and imposed
a moratorium on certain rate increases. Such rate regulations became effective
on September 1, 1993. The rate increase moratorium, which began on April 5,
1993, continues in effect through May 15, 1994 for franchise areas not subject
to regulation. As a result of such actions, the Company's basic and tier
service rates and its equipment and installation charges (the "Regulated
Services") are subject to the jurisdiction of local franchising authorities and
the FCC. Basic and tier service rates are evaluated against competitive
benchmark rates as published by the FCC, and equipment and installation charges
are based on actual costs. Any rates for Regulated Services that exceeded the
benchmarks were reduced as required by the 1993 rate regulations. The rate
regulations do not apply to the relatively few systems which are subject to
"effective competition" or to services offered on an individual service basis,
such as premium movie and pay-per-view services.
The Company's new rates for Regulated Services, which were implemented
September 1, 1993, are subject to review by the FCC if a complaint has been
filed or the appropriate local franchising authority if such authority has been
certified. The Company estimated that, on an annualized basis, implementation
of the 1993 rate regulations would result in a reduction to revenue ranging
from $140 million to $160 million. The Company experienced a $44 million
revenue reduction during the four months ended December 31, 1993 and incurred
$21 million in one-time direct expenses in connection with the implementation
of the FCC's regulations.
II-5
<PAGE> 26
On February 22, 1994, the FCC announced that it had adopted revised
benchmark rate regulations which will apply to rates and charges for Regulated
Services on and after the effective date of these rules. After its initial
review of the effect of the FCC further rate reductions, the Company estimated
that its revenue could be further decreased by approximately $144 million on an
annualized basis. The estimate was based upon the FCC Executive Summary dated
February 22, 1994 which stated that those cable television systems electing not
to make a cost-of-service showing will be required to set their rates for
Regulated Services at a level equal to the higher of the FCC's revised
benchmark rates or the operator's September 30, 1992 rates minus 17 percent.
Thus, the revised benchmarks may result in additional rate reductions of up to
7 percent beyond the maximum reductions established under the FCC's initial
benchmark regulations. Although the text of the FCC's benchmark regulation has
not been released, it is currently anticipated that the rules will take effect
on or about May 15, 1994. The actual reduction in revenue may differ
depending on the terms of the final regulations and the completion of a more
detailed analysis of the new rate regulations and the Company's rates and
services.
The estimated reductions in revenue resulting from the FCC's actions
in 1993 and 1994 are prior to any possible mitigating factors (none of which is
assured) such as (i) the provision of alternate service offerings (ii) the
implementation of rate adjustments to non-regulated services and (iii) the
utilization of cost-of-service methodologies, as described below.
The FCC's benchmark rate regulations permit cable operators to adjust
rates to account for inflation and increases in certain external costs,
including increases in programming costs and compulsory copyright fees, to the
extent such increases exceed the rate of inflation. However, these increases
may be required to be offset by a productivity factor.
The revised benchmark regulations also provide a mechanism for
adjusting rates when regulated tiers are affected by channel additions or
deletions. The FCC has indicated that cable operators adding or deleting
channels on a regulated tier will be required to adjust the per-channel
benchmark for that tier based on the number of channels offered after the
addition or deletion. The FCC also stated that the additional programming
costs resulting from channel additions will be accorded the same external
treatment as other program cost increases, and that cable operators will be
permitted to recover a mark-up on their programming expenses.
On February 22, 1994, the FCC also adopted interim "cost-of-service"
rules governing attempts by cable operators to justify higher than benchmark
rates based on unusually high costs. Under this methodology, cable operators
may recover, through the rates they charge for Regulated Service, their normal
operating expenses plus an interim rate of return of 11.25%, which rate may be
subject to change in the future.
Based on the foregoing, the Company believes that the 1993 and 1994
rate regulations will have a material adverse effect on its results of
operations.
Other Income and Expens
The Company's weighted average interest rate on borrowings was 7.2%,
7.6% and 9.0% during 1993, 1992 and 1991, respectively. At December 31, 1993,
after considering the net effect of various interest rate hedge and exchange
agreements (see note 6 to the consolidated financial statements) aggregating
$1,322 million, the Company had $5,123 million (or 52%) of fixed-rate debt with
a weighted average interest rate of 9.0% and $4,777 million (or 48%) of
variable-rate debt with interest rates approximating the prime rate (6% at
December 31, 1993).
II-6
<PAGE> 27
The Company is a partner in certain joint ventures that are currently
operating and constructing cable television and telephone systems in the United
Kingdom and other parts of Europe. These joint ventures, which are accounted
for under the equity method, have generated losses of which the Company's share
in 1993 and 1992 amounted to $47 million and $37 million, respectively,
including $3 million and $6 million in 1993 and 1992, respectively, resulting
from foreign currency transaction losses. In contrast to the Company's
domestic operations, the Company's results of operations in the United Kingdom
and Europe will continue to be subject to fluctuations in the applicable
foreign currency exchange rates. At December 31, 1993, the Company's
stockholders' equity includes a cumulative foreign currency translation loss of
$29 million.
The Company sold certain investments and other assets for an aggregate
net pre-tax gain of $42 million, $9 million and $43 million in 1993, 1992 and
1991, respectively.
During 1993, 1992 and 1991, the Company recorded losses of $17
million, $67 million and $7 million, respectively, from early extinguishment of
debt during such periods. Included in the 1992 amount was $52 million from the
extinguishment of the SCI Holdings, Inc. ("SCI") indebtedness (see note 4 to
the consolidated financial statements). There may be additional losses
associated with early extinguishments of debt in the future.
Interest and dividend income was $34 million, $69 million and $53
million in 1993, 1992 and 1991, respectively. Included in the 1992 and 1991
amounts was $30 million and $26 million, respectively, earned on the preferred
stock investment that was repurchased by a subsidiary of SCI in 1992 (see note
4 to the consolidated financial statements). In connection with such
repurchase, the Company received a premium amounting to $14 million which has
been separately reflected in the accompanying consolidated statement of
operations.
Income Taxes
The Company has adopted Statement No. 109. Statement No. 109 changed
the Company's method of accounting for income taxes from the deferred method to
the asset and liability method. The Company restated its financial statements
for the years beginning January 1, 1986 through December 31, 1992. The effect
of the implementation of Statement No. 109 at December 31, 1992 was a $2
million decrease in receivables, $48 million net increase in investments, $178
million net increase in property and equipment, $2,901 million net increase in
franchise costs, $2 million increase in other assets, $34 million increase in
other liabilities, $2,865 million increase in deferred taxes payable and $228
million decrease in accumulated deficit. Under Statement No. 109, the effect
on deferred taxes of a change in tax rates is recognized in the consolidated
statement of operations in the period that includes the enactment.
New tax legislation was enacted in the third quarter of 1993 which,
among other matters, increased the corporate Federal income tax rate from 34%
to 35%. The Company has reflected the tax rate change in its consolidated
statements of operations in accordance with the treatment prescribed by
Statement No. 109. Such tax rate change resulted in an increase of $76 million
to the Company's income tax expense and deferred income tax liability.
II-7
<PAGE> 28
Net Loss
The Company's loss (before preferred stock dividends) of $7 million
for the year ended December 31, 1993 represented a decrease of $14 million as
compared to the Company's earnings from continuing operations of $7 million for
the corresponding period of 1992. Such decline was due primarily to an
increase in income tax expense arising from the aforementioned tax rate change
enacted in the third quarter of 1993, an increase in compensation relating to
stock appreciation rights and the reduction of interest and dividend income
resulting from the disposition at the end of 1992 of a preferred stock
investment, net of an increase in gain on disposition of assets, a reduction in
loss from early extinguishment of debt and a reduction in minority interest in
earnings of consolidated subsidiaries attributable to the repurchase of certain
preferred stock of a consolidated subsidiary.
The Company's earnings from continuing operations (before preferred
stock dividends) for 1992 of $7 million represented an improvement as compared
to the Company's net loss from continuing operations of $78 million for the
corresponding period of 1991 due primarily to improved operating results by the
Company in its cable television business. Also, the general decline in
interest rates had a positive impact on the Company's net results.
On March 28, 1991, the Company contributed its interests in certain of
its cable television programming businesses and cable television systems to
Liberty Media Corporation ("Liberty") in exchange for several different classes
and series of preferred stock of Liberty. On that same date, Liberty issued
shares of its common stock to TCI shareholders (certain of whom were TCI
officers and directors) who tendered shares of TCI Class A and Class B common
stock pursuant to an exchange offer (see note 3 to the accompanying
consolidated financial statements). Due to the significant economic interest
held by TCI through its ownership of Liberty preferred stock and Liberty common
stock and other related party considerations, TCI has accounted for its
investment in Liberty under the equity method. The Company does not recognize
any income relating to dividends, including preferred stock dividends, and the
Company has continued to record earnings or losses generated by the interests
contributed to Liberty (by recognizing 100% of Liberty's earnings or losses
before deducting preferred stock dividends). Consequently, the contribution of
such assets to Liberty has had no effect on the net reported results of the
Company. For a discussion of the proposed merger of Liberty and TCI, see
Liquidity and Capital Resources below.
On May 12, 1992, the Company sold its motion picture theatre business
and certain theatre-related real estate assets (see note 12 to the accompanying
consolidated financial statements). Accordingly, the operations of the
Company's motion picture theatre exhibition industry segment have been
reclassified and reflected as "discontinued operations" in the accompanying
consolidated financial statements.
Inflation has not had a significant impact on the Company's results of
operations during the three-year period ended December 31, 1993.
Recent Accounting Pronouncements
In November of 1992, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" ("Statement No. 112"). As the
Company's present accounting policies generally are in conformity with the
provisions of Statement No. 112, the Company does not believe that Statement
No. 112 will have a material effect on the Company. Statement No. 112 is
effective for years beginning after December 31, 1994.
II-8
<PAGE> 29
In May 1993, the FASB issued Statement of Financial Accounting
Standards No. 114, "Accounting by Creditors for Impairment of a Loan"
("Statement No. 114"). As the Company's present accounting policies generally
are in conformity with the provisions of Statement No. 114, the Company does
not expect that Statement No. 114 will have a material effect on the Company's
consolidated financial statements. Statement No. 114 is effective for years
beginning after December 15, 1994.
In May 1993, the FASB issued Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," effective for fiscal years beginning after December 15, 1993.
Under the new rules, debt securities that the Company has both the positive
intent and ability to hold to maturity are carried at amortized cost. Debt
securities that the Company does not have the positive intent and ability to
hold to maturity and all marketable equity securities are classified as
available-for-sale or trading and carried at fair value. Unrealized holding
gains and losses on securities classified as available- for sale are carried as
a separate component of shareholders' equity. Unrealized holding gains and
losses on securities classified as trading are reported in earnings.
The Company holds no material debt securities. Marketable equity
securities are currently reported by the Company at the lower of cost or market
("LOCOM") and net unrealized losses are reported in earnings. The Company will
apply the new rules starting in the first quarter of 1994. Application of the
new rules will result in an estimated increase of approximately $300 million in
stockholders' equity as of January 1 1994, representing the recognition of
unrealized appreciation, net of taxes, for the Company's investment in equity
securities determined to be available-for-sale, previously carried at LOCOM.
Liquidity and Capital Resource
On January 31, 1994, TCI announced that TCI and Liberty had entered
into a definitive agreement (the "TCI/Liberty Agreement"), dated as of January
27, 1994 to combine the two companies. As previously announced, the
transaction will be structured as a tax free exchange of Class A and Class B
shares of both companies and preferred stock of Liberty for like shares of a
newly formed holding company, TCI/Liberty Holding Company ("TCI/Liberty"). TCI
shareholders will receive one share of TCI/Liberty for each of their shares.
Liberty common shareholders will receive 0.975 of a share of TCI/Liberty for
each of their common shares. The transaction is subject to the approval of
both sets of shareholders as well as various regulatory approvals and other
customary conditions. Subject to timely receipt of such approvals, which
cannot be assured, it is anticipated the closing of such transaction will take
place during 1994.
The Company generally finances acquisitions and capital expenditures
through net cash provided by operating and financing activities. Although
amounts expended for acquisitions and capital expenditures exceed net cash
provided by operating activities, the borrowing capacity resulting from such
acquisitions, construction and internal growth has been and is expected to
continue to be adequate to fund the shortfall. See the Company's consolidated
statements of cash flows included in the accompanying consolidated financial
statements.
II-9
<PAGE> 30
The Company had approximately $1.4 billion in unused lines of credit
at December 31, 1993, excluding amounts related to lines of credit which
provide availability to support commercial paper. Although the Company was in
compliance with the restrictive covenants contained in its credit facilities at
said date, additional borrowings under the credit facilities are subject to the
Company's continuing compliance with such restrictive covenants (which relate
primarily to the maintenance of certain ratios of cash flow to total debt and
cash flow to debt service, as defined). Based upon preliminary calculations,
the Company believes that the aforementioned 1993 and 1994 rate regulations
will not materially impact the availability under its lines of credit or its
ability to repay indebtedness as it matures. See note 6 to the accompanying
consolidated financial statements for additional information regarding the
material terms of the Company's lines of credit.
In October of 1992, the Company received full investment grade status
by all accredited rating agencies. Such ratings added to the Company's ability
to sell publicly greater amounts of fixed-rate debt securities with longer
maturities. The increased maturities of the debt securities sold by the
Company and the use of the proceeds of such sales to decrease bank borrowings
are expected to improve the Company's liquidity due to decreased principal
payments required in the next five years.
During the year ended December 31, 1993, the Company sold $3 billion
of publicly-placed fixed-rate senior notes with interest rates ranging from
4.81% to 9.25% and maturity dates ranging from 1995 to 2023. The proceeds from
the sale of these notes were used to repay variable-rate bank debt.
On October 28, 1993, the Company called for redemption all of its
remaining Liquid Yield OptionTM Notes. In connection with such call for
redemption, Notes aggregating $405 million were converted into 18,694,377
shares of Class A common stock and Notes aggregating less than $1 million were
redeemed together with accrued interest to the redemption date. Prior to the
aforementioned redemption, Notes aggregating $6 million were converted into
259,537 shares of TCI Class A common stock during 1993.
One measure of liquidity is commonly referred to as "interest
coverage." Interest coverage, which is measured by the ratio of operating
income before depreciation, amortization and other non-cash operating expenses
($1,858 million, $1,637 million and $1,430 million in 1993, 1992 and 1991,
respectively) to interest expense ($731 million, $718 million and $826 million
in 1993, 1992 and 1991, respectively), is determined by reference to the
consolidated statements of operations. The Company's interest coverage ratio
was 254%, 228% and 173% for 1993, 1992 and 1991, respectively. Management of
the Company believes that the foregoing interest coverage ratio is adequate in
light of the consistency and nonseasonal nature of its cable television
operations and the relative predictability of the Company's interest expense,
more than half of which results from fixed rate indebtedness. The Company's
improved operating results in 1993 and 1992 and a general decline in interest
rates during 1992 led to an improvement in the Company's interest coverage
ratio.
As security for borrowings under one of its credit facilities, the
Company pledged a portion of the common stock it holds of Turner Broadcasting
System, Inc. ("TBS") having a value of approximately $643 million at December
31, 1993. Borrowings under this credit facility (which amounted to $250
million at December 31, 1993) are due in August of 1994. On or before such
date, the Company expects to repay these borrowings.
II-10
<PAGE> 31
Approximately thirty-five percent of the franchises held by the
Company, involving approximately 3.8 million basic subscribers, expire within
five years. There can be no assurance that the franchises for the Company's
systems will be renewed as they expire although the Company believes that its
cable television systems generally have been operated in a manner which
satisfies the standards established by the Cable Communications Policy Act of
1984 for franchise renewal. However, in the event they are renewed, the
Company cannot predict the impact of any new or different conditions that might
be imposed by the franchising authorities in connection with such renewals.
The Company is upgrading and installing optical fiber in its cable
systems at a rate such that in three years TCI anticipates that it will be
serving the majority of its customers with state-of-the-art fiber optic cable
systems. The Company made capital expenditures of $947 million in 1993 and the
Company's capital budget for 1994 is $1.2 billion to provide for the continued
rebuilding of its cable systems. The Company has suspended $500 million of its
1994 capital spending pending further clarification of the FCC's February 22,
1994 revised benchmark regulations and the FCC's announced intention to adopt
an experimental incentive plan which would provide cable operators with
incentives to upgrade their systems and offer new services.
The Company is obligated to pay fees for the license to exhibit
certain qualifying films that are released theatrically by various motion
picture studios from January 1, 1993 through December 31, 2002 (the "Film
License Obligations"). The aggregate minimum liability under certain of the
license agreements is approximately $105 million. The aggregate amount of
the Film License Obligations under other license agreements is not currently
estimable because such amount is dependent upon the number of qualifying
films produced by the motion picture studios, the amount of United States
theatrical film rentals for such qualifying films, and certain other factors.
Nevertheless, the Company's aggregate payments under the Film License
Obligations could prove to be significant.
The Company believes that it has complied in all material respects
with the provisions of the 1992 Cable Act, including its rate setting
provisions. However, the Company's rates for regulated services are subject to
review. If, as a result of this process, a system cannot substantiate its
rates, it could be required to retroactively reduce its rates to the
appropriate benchmark and refund the excess portion of rates received since
September 1, 1993. The amount of refunds, if any, which could be payable by
the Company in the event that systems' rates are successfully challenged by
franchising authorities is not currently estimable.
The Company's various partnerships and other affiliates accounted for
under the equity method generally fund their acquisitions, required debt
repayments and capital expenditures through borrowings under and refinancing of
their own credit facilities (which are generally not guaranteed by the Company)
and through net cash provided by their own operating activities.
Certain subsidiaries' loan agreements contain restrictions regarding
transfers of funds to the parent company in the form of loans, advances or cash
dividends. The amount of net assets of such subsidiaries exceeds the Company's
consolidated net assets. However, net cash provided by operating activities of
other subsidiaries which are not restricted from making transfers to the parent
company have been and are expected to continue to be sufficient to enable the
parent company to meet its cash obligations.
II-11
<PAGE> 32
Management believes that net cash provided by operating activities,
the Company's ability to obtain additional financing (including its available
lines of credit and its access to public debt markets as an investment grade
debt security issuer) and proceeds from disposition of assets will provide
adequate sources of short-term and long-term liquidity in the future.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements of the Company are filed under
this Item, beginning on Page II-13. The financial statement schedules required
by Regulation S-X are filed under Item 14 of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
II-12
<PAGE> 33
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Tele-Communications, Inc.:
We have audited the accompanying consolidated balance sheets of
Tele-Communications, Inc. and subsidiaries as of December 31, 1993 and 1992,
and the related consolidated statements of operations, stockholders' equity,
and cash flows for each of the years in the three-year period ended December
31, 1993. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of
Tele-Communications, Inc. and subsidiaries as of December 31, 1993 and 1992,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1993, in conformity with generally
accepted accounting principles.
As discussed in notes 1 and 10 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1993 to adopt the
provisions of the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."
/s/ KPMG PEAT MARWICK
KPMG Peat Marwick
Denver, Colorado
March 21, 1994
II-13
<PAGE> 34
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1993 and 1992
<TABLE>
<CAPTION>
Assets 1993 1992*
- ------ ------ ------
amounts in millions
<S> <C> <C>
Cash $ 1 34
Trade and other receivables, net 232 201
Investment in Liberty Media Corporation
("Liberty") (note 3) 489 432
Investment in other affiliates, accounted for under
the equity method, and related receivables (note 4) 645 721
Investment in Turner Broadcasting System, Inc.
(note 5) 491 491
Property and equipment, at cost:
Land 73 71
Distribution systems 6,629 6,075
Support equipment and buildings 818 712
------- ------
7,520 6,858
Less accumulated depreciation 2,585 2,296
------- ------
4,935 4,562
------- ------
Franchise costs 10,620 10,467
Less accumulated amortization 1,423 1,167
------- ------
9,197 9,300
------- ------
Other assets, at cost, net of amortization 530 569
------- ------
$16,520 16,310
======= ======
</TABLE>
*Reclassified and restated - see notes 1, 3 and 10.
(continued)
II-14
<PAGE> 35
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Consolidated Balance Sheets, continued
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity 1993 1992*
- ------------------------------------ ------ ------
amounts in millions
<S> <C> <C>
Accounts payable $ 124 99
Accrued interest 157 94
Other accrued expenses 500 465
Debt (note 6) 9,900 10,285
Deferred income taxes (note 10) 3,310 3,164
Other liabilities 114 87
------- ------
Total liabilities 14,105 14,194
------- ------
Minority interests in equity
of consolidated subsidiaries 285 280
Redeemable preferred stocks (note 7) 18 110
Stockholders' equity (note 8):
Preferred stock, $1 par value.
Authorized 10,000,000 shares, issued
and outstanding 6,201 and 4,778,595
shares of redeemable preferred stocks
in 1993 and 1992 -- --
Class A common stock, $1 par value.
Authorized 1,000,000,000 shares;
issued 481,837,347 shares in 1993
and 461,722,382 shares in 1992 482 462
Class B common stock, $1 par value.
Authorized 100,000,000 shares;
issued 47,258,787 shares in 1993
and 47,708,677 shares in 1992 47 48
Additional paid-in capital 2,293 1,909
Cumulative foreign currency translation adjustment (29) (19)
Accumulated deficit (348) (341)
------- ------
2,445 2,059
Treasury stock, at cost (79,335,038
shares of Class A common stock) (333) (333)
------- ------
Total stockholders' equity 2,112 1,726
------- ------
Commitments and contingencies (note 11)
$16,520 16,310
======= ======
</TABLE>
*Restated and reclassified - see notes 1, 3 and 10.
See accompanying notes to consolidated financial statements.
II-15
<PAGE> 36
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 * 1991 *
------ ------ ------
amounts in millions,
except per share amounts
<S> <C> <C> <C>
Revenue (note 3) $4,153 3,574 3,214
Operating costs and expenses:
Operating (note 3) 1,190 1,028 1,021
Selling, general and administrative (note 4) 1,105 909 763
Compensation relating to stock
appreciation rights (note 8) 31 1 --
Restructuring charge -- 8 --
Depreciation 622 512 529
Amortization 289 252 227
------ ----- -----
3,237 2,710 2,540
------ ----- -----
Operating income 916 864 674
Other income (expense):
Interest expense (731) (718) (826)
Interest and dividend income 34 69 53
Share of earnings of Liberty (note 3) 4 22 40
Share of losses of other affiliates (note 4) (76) (105) (60)
Gain on disposition of assets, net 42 9 43
Premium received on redemption of
preferred stock investment (note 4) -- 14 --
Loss on early extinguishment of debt
(notes 4 and 6) (17) (67) (7)
Minority interests in earnings
of consolidated subsidiaries, net (5) (41) (24)
Other, net (6) (2) (1)
------ ----- -----
(755) (819) (782)
------ ----- -----
Earnings (loss) from continuing
operations before income taxes 161 45 (108)
Income tax benefit (expense) (note 10) (168) (38) 30
------ ----- -----
Earnings (loss) from continuing operations (7) 7 (78)
Loss from discontinued operations,
net of income taxes (note 12) -- (15) (19)
------ ----- -----
Net loss (7) (8) (97)
Dividend requirement on redeemable
preferred stocks (2) (15) --
------- ----- -----
Net loss attributable to
common shareholders $ (9) (23) (97)
====== ===== =====
Loss attributable to common shareholders
per common share (note 1):
Continuing operations $ (.02) (.01) (.22)
Discontinued operations -- (.04) (.05)
------ ----- -----
$ (.02) (.05) (.27)
====== ===== =====
</TABLE>
*Restated and reclassified - see notes 1, 3 and 10.
See accompanying notes to consolidated financial statements.
II-16
<PAGE> 37
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
Cumulative
foreign
Common stock Additional currency Total
------------ paid-in translation Accumulated Treasury stockholders'
Class A Class B capital adjustment deficit * stock equity *
------- ------- ---------- ----------- --------- -------- -------------
amounts in millions
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1991 $ 310 48 626 -- (236) -- 748
Net loss -- -- -- -- (97) -- (97)
Issuance of common stock upon
conversion of debentures -- -- 4 -- -- -- 4
Issuance of common stock upon
exercise of options -- 2 3 -- -- -- 5
Income tax effect of stock option
deduction -- -- 7 -- -- -- 7
Retirement of common stock upon
redemption of Liberty preferred
stock (5) -- (86) -- -- -- (91)
Issuance of shares of Class A
common stock for an acquisition 1 -- 10 -- -- -- 11
Issuance of common stock
upon acquisition of remaining
minority interest in UAE 143 -- 1,190 -- -- (333) 1,000
Acquisition and retirement
of common stock -- (1) (16) -- -- -- (17)
----- --- ----- ---- ---- ---- -----
Balance at December 31, 1991 449 49 1,738 -- (333) (333) 1,570
Net loss -- -- -- -- (8) -- (8)
Conversion of public debentures
(note 6) 7 -- 105 -- -- -- 112
Issuance of common stock upon
exercise of options 1 -- 13 -- -- -- 14
Issuance of Class A common stock
for acquisition and
investment 5 -- 93 -- -- -- 98
Dividends on redeemable
preferred stocks -- -- (15) -- -- -- (15)
Foreign currency translation
adjustment -- -- -- (19) -- -- (19)
Acquisition and retirement
of common stock -- (1) (25) -- -- -- (26)
----- --- ----- ---- ---- ---- -----
Balance at December 31, 1992 462 48 1,909 (19) (341) (333) 1,726
Net loss -- -- -- -- (7) -- (7)
Issuance of common stock
upon conversion of notes
(note 6) 20 -- 383 -- -- -- 403
Issuance of common stock upon
exercise of options -- -- 7 -- -- -- 7
Dividends on redeemable
preferred stocks -- -- (2) -- -- -- (2)
Foreign currency translation
adjustment -- -- -- (10) -- -- (10)
Acquisition and retirement
of common stock -- (1) (4) -- -- -- (5)
----- --- ----- ---- ---- ---- -----
Balance at December 31, 1993 $ 482 47 2,293 (29) (348) (333) 2,112
===== === ===== ==== ==== ==== =====
</TABLE>
*Restated - see notes 1, 3 and 10.
See accompanying notes to consolidated financial statements.
II-17
<PAGE> 38
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 * 1991 *
------ ------ ------
amounts in millions
(see note 2)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (7) (8) (97)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Discontinued operations -- 15 19
Restructuring charge -- 8 --
Payment of restructuring charge (8) -- --
Depreciation and amortization 911 764 756
Share of earnings of Liberty (4) (22) (40)
Share of losses of other affiliates 76 105 60
Gain on disposition of assets (42) (9) (43)
Premium received on preferred stock
investment redemption -- (14) --
Payment of premium received on preferred
stock investment redemption 14 -- --
Loss on early extinguishment of debt 17 67 7
Compensation relating to
stock appreciation rights 31 1 --
Payment for stock appreciation rights -- (80) (45)
Minority interests in earnings 5 41 24
Deferred income tax expense (benefit) 139 28 (39)
Amortization of debt discount 27 27 16
Noncash interest and dividend income (7) (40) (28)
Other noncash charges -- -- (2)
Changes in operating assets and liabilities,
net of the effect of acquisitions:
Change in receivables (32) (3) (36)
Change in accrued interest 63 -- (14)
Change in other accruals and payables 68 77 45
------- ----- -----
Net cash provided by
operating activities 1,251 957 583
------- ----- -----
Cash flows from investing activities:
Cash paid for acquisitions (158) (1,256) (399)
Capital expended for property and equipment (947) (526) (566)
Cash proceeds from disposition of assets 149 66 103
Cash proceeds from disposition of
discontinued operations -- 220 --
Discontinued operations -- 9 31
Additional investments in and loans to
affiliates and others (361) (205) (192)
Payment received on preferred stock
investment redemption 183 -- --
Return of capital from affiliates 1 1 34
Repayment of loans by affiliates and others 62 32 35
Other investing activities (99) (155) (138)
------- ----- -----
Net cash used in
investing activities (1,170) (1,814) (1,092)
------- ----- -----
</TABLE>
(continued)
II-18
<PAGE> 39
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 * 1991 *
------ ------ ------
amounts in millions
(see note 2)
<S> <C> <C> <C>
Cash flows from financing activities:
Borrowings of debt 6,305 5,354 5,918
Repayments of debt (6,321) (4,435) (5,412)
Borrowings of short-term notes to affiliate -- -- 22
Repayment of short-term notes to affiliate -- (22) --
Sales of equity securities of subsidiaries -- -- 9
Preferred stock dividends of subsidiaries (6) (6) (19)
Preferred stock dividends (2) (15) --
Repurchase of preferred stock (92) (5) --
Issuances of common stock 6 7 2
Repurchases of common stock (4) (19) (9)
------- ----- -----
Net cash provided (used) by
financing activities (114) 859 511
------- ----- -----
Net increase (decrease) in cash (33) 2 2
Cash at beginning of year 34 32 30
------- ----- -----
Cash at end of year $ 1 34 32
======= ===== =====
</TABLE>
*Restated and reclassified - see notes 1, 3 and 10.
See accompanying notes to consolidated financial statements.
II-19
<PAGE> 40
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1993, 1992 and 1991
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of
Tele-Communications, Inc. and those of all majority-owned subsidiaries
("TCI" or the "Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
Restated Financial Statements for Implementation of Statement of
Financial Accounting Standards No. 109, "Accounting fo Income Taxes"
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 ("Statement No. 109"), "Accounting for
Income Taxes" and has applied the provisions of Statement No. 109
retroactively to January 1, 1986. The accompanying 1992 and 1991
consolidated financial statements and related notes have been restated
to reflect the implementation of Statement No. 109. See note 10.
Receivable
Receivables are reflected net of an allowance for doubtful accounts.
Such allowance at December 31, 1993 and 1992 was not material.
Investment
Investments in which the ownership interest is less than 20% are
generally carried at cost. Investments in marketable equity securities
are carried at the lower of aggregate cost or market and any declines in
value which are other than temporary are reflected as a reduction in the
Company's carrying value of such investment. For those investments in
affiliates in which the Company's voting interest is 20% to 50%, the
equity method of accounting is generally used. Under this method, the
investment, originally recorded at cost, is adjusted to recognize the
Company's share of the net earnings or losses of the affiliates as they
occur rather than as dividends or other distributions are received,
limited to the extent of the Company's investment in, advances to and
guarantees for the investee. The Company's share of net earnings or
losses of affiliates includes the amortization of purchase adjustments.
Property and Equipment
Property and equipment is stated at cost, including acquisition costs
allocated to tangible assets acquired. Construction costs, including
interest during construction and applicable overhead, are capitalized.
During 1993, 1992 and 1991, interest capitalized was not material.
(continued)
II-20
<PAGE> 41
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Depreciation is computed on a straight-line basis using estimated
useful lives of 3 to 15 years for distribution systems and 3 to 40 years
for support equipment and buildings. Beginning in April of 1993, based
upon changes in FCC regulations, the Company revised its estimate of
useful lives of certain distribution equipment to correspond to the
Company's anticipated remaining period of ownership of such equipment.
This revision resulted in a decrease to net earnings of approximately
$12 million ($.03 per share) for the year ended December 31, 1993.
Repairs and maintenance are charged to operations, and renewals and
additions are capitalized. At the time of ordinary retirements, sales
or other dispositions of property, the original cost and cost of removal
of such property are charged to accumulated depreciation, and salvage,
if any, is credited thereto. Gains or losses are only recognized in
connection with the sales of properties in their entirety. However,
recognition of gains on sales of properties to affiliates accounted for
under the equity method is deferred in proportion to the Company's
ownership interest in such affiliates.
Franchise Costs
Franchise costs include the difference between the cost of acquiring
cable television systems and amounts assigned to their tangible assets.
Such amounts are generally amortized on a straight-line basis over 40
years. Costs incurred by the Company in obtaining franchises are being
amortized on a straight-line basis over the life of the franchise,
generally 10 to 20 years.
Minority Interests
Recognition of minority interests' share of losses of consolidated
subsidiaries is limited to the amount of such minority interests'
allocable portion of the common equity of those consolidated
subsidiaries. Further, the minority interests' share of losses is not
recognized if the minority holders of common equity of consolidated
subsidiaries have the right to cause the Company to repurchase such
holders' common equity.
Included in minority interests in equity of consolidated subsidiaries
are $50 million and $46 million at December 31, 1993 and 1992,
respectively, of preferred stocks (and accumulated dividends thereon) of
certain subsidiaries. The current dividend requirements on these
preferred stocks aggregate $6 million per annum and such dividend
requirements are reflected as minority interests in the accompanying
consolidated statements of operations.
Foreign Currency Translatio
All balance sheet accounts of foreign investments are translated at the
current exchange rate as of the end of the accounting period. Statement
of operations items are translated at average currency exchange rates.
The resulting translation adjustment is recorded as a separate component
of stockholders' equity.
(continued)
II-21
<PAGE> 42
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Loss Per Common Shares
The loss per common share for 1993, 1992 and 1991 was computed by
dividing net loss by the weighted average number of common shares
outstanding during such periods (432.6 million, 424.1 million and 359.9
million for 1993, 1992 and 1991, respectively). Common stock
equivalents were not included in the computation of weighted average
shares outstanding because their inclusion would be anti-dilutive.
Reclassification
Certain amounts have been reclassified for comparability with the 1993
presentation.
(2) Supplemental Disclosures to Consolidated Statements of Cash Flows
Cash paid for interest was $641 million, $689 million and $829 million
for 1993, 1992 and 1991, respectively. Also, during these years, cash
paid for income taxes was not material.
Significant noncash investing and financing activities are as follows:
Years ended December 31,
------------------------
1993 1992 1991
---- ---- ----
amounts in millions
Acquisitions:
Fair value of assets acquired $ 172 1,231 1,877
Liabilities assumed, net of current assets (7) 21 (12)
Deferred tax asset (liability)
recorded in acquisitions (7) 7 (337)
Minority interests in equity
of acquired entities -- -- (3)
Value of TCI preferred stock issued
in acquisitions -- -- (115)
Value of TCI common stock issued
in acquisitions -- (3) (1,011)
------ ----- ------
Cash paid for acquisitions $ 158 1,256 399
====== ===== ======
Value of TCI Class A common stock issued
as part of purchase price of equity
investment $ -- 95 --
====== ===== ======
Note received upon disposition of assets $ -- 15 --
====== ===== ======
Contribution of certain interests
to Liberty in exchange for
preferred stock (see note 3) $ -- -- 530
====== ===== ======
Common stock received upon
redemption of preferred stock
of Liberty (see note 3) $ -- -- 91
====== ===== ======
(continued)
II-22
<PAGE> 43
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years ended December 31,
------------------------
1993 1992 1991
---- ---- ----
amounts in millions
Receipt of notes receivable upon
disposition of Liberty common stock
and preferred stock (note 3) $ 182 -- --
====== ===== =====
Noncash capital contribution to
Community Cable Television ("CCT")
(note 3) $ 22 -- --
====== ===== =====
Noncash exchange of equity investment
for consolidated subsidiary and
equity investment $ 22 -- --
====== ===== =====
Contribution of assets to an affiliate $ -- -- 108
====== ===== =====
Effect of foreign currency translation
adjustment on book value of
foreign equity investments $ 10 19 --
====== ===== =====
Common stock issued upon conversion
of notes (with accrued
interest through conversion) $ 403 112 4
====== ===== =====
Common stock surrendered in lieu
of cash upon exercise of
stock options $ 1 7 3
====== ===== =====
Note payable issued for
repurchase of common stock $ -- -- 5
====== ===== =====
Exchange of preferred stock investment
for marketable equity securities $ -- -- 156
====== ===== =====
Deferred tax liability resulting from
stock option deduction $ -- -- 7
====== ===== =====
(3) Investment in Liberty
As of January 27, 1994, TCI and Liberty entered into a definitive
agreement to combine the two companies. The transaction will be
structured as a tax free exchange of Class A and Class B shares of both
companies and preferred stock of Liberty for like shares of a newly
formed holding company, TCI/Liberty Holding Company ("TCI/Liberty").
TCI shareholders will receive one share of TCI/Liberty for each of their
shares. Liberty common shareholders will receive 0.975 of a share of
TCI/Liberty for each of their common shares. The transaction is subject
to the approval of both sets of shareholders as well as various
regulatory approvals and other customary conditions. Subject to timely
receipt of such approvals, which cannot be assured, it is anticipated
the closing of such transaction will take place during 1994.
(continued)
II-23
<PAGE> 44
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
TCI owns 3,477,778 shares of Liberty Class A common stock (after giving
effect to the repurchase by Liberty during the year ended December 31,
1993 of 927,900 shares of Class A common stock) and 55,070 shares of
Liberty Class E, 6% Cumulative Redeemable Exchangeable Junior Preferred
Stock received in January of 1993 upon conversion of the Liberty Class A
Redeemable Convertible Preferred Stock. Such common shares represent
less than 5% of the outstanding Class A common stock of Liberty.
Of the remaining classes of preferred stock of Liberty held by the
Company, one class entitles TCI to elect a number of members of
Liberty's board of directors equal to no less than 11% of the total
number of directors and another class is exchangeable for TCI common
stock.
Due to the significant economic interest held by TCI through its
ownership of Liberty preferred stock and Liberty common stock and other
related party considerations, TCI has accounted for its investment in
Liberty under the equity method. Accordingly, the Company has not
recognized any income relating to dividends, including preferred stock
dividends, and the Company has continued to record the earnings or
losses generated by the interests contributed to Liberty (by recognizing
100% of Liberty's earnings or losses before deducting preferred stock
dividends).
On December 30, 1991, TCI Liberty, Inc. ("TCIL"), a wholly-owned
subsidiary of TCI, entered into a Commercial Paper Purchase Agreement
with Liberty whereby TCIL could from time to time sell short-term notes
to Liberty from TCIL of up to an aggregate amount of $100 million. TCIL
borrowed $22 million from Liberty on December 31, 1991, pursuant to the
Commercial Paper Purchase Agreement. The full amount, including
interest, was repaid on January 15, 1992. Interest rates on the
short-term notes were determined by the parties by reference to
prevailing money-market rates. This agreement was terminated on March
23, 1993.
During 1992, the Company and Liberty formed Community Cable Television
("CCT"), a general partnership created for the purpose of acquiring and
operating cable television systems with Tele-Communications of Colorado,
Inc. ("TCIC"), an indirect wholly-owned subsidiary of TCI, owning a
49.999% interest and Liberty Cable Partner, Inc. ("LCP"), an indirect
wholly-owned subsidiary of Liberty, owning a 50.001% interest.
Pursuant to an amendment to the CCT General Partnership Agreement (the
"Amendment"), certain non-cash contributions previously made to CCT were
rescinded, TCIC contributed to CCT a $10,590,000 promissory note of TCI
Development Corporation ("TCID") as of the date of the originally
contributed assets, LCP agreed to contribute its equity and debt
interests in Daniels & Associates Partners Limited ("DAPL"), a general
partner of Mile Hi Cablevision Associates, Ltd. ("Mile Hi"), to CCT
immediately prior to the closing of the acquisition of Mile Hi described
below which closed on March 15, 1993. TCIC also agreed to contribute, at
the time of the contribution by LCP of its DAPL interests, a TCID
promissory note in the amount of $66,900,000.
(continued)
II-24
<PAGE> 45
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
On March 12, 1993, the CCT General Partnership Agreement was further
amended (the "Second Amendment"). Under the Second Amendment, LCP agreed
to contribute its Mile Hi partnership interest but not a loan receivable
from Mile Hi in the amount of $50 million (including accrued interest)
(the "Mile Hi Note") (both of which it received upon the liquidation of
DAPL on March 12, 1993 as described below) to CCT in exchange for
50.001% of a newly created Class B partnership interest in CCT. TCIC
agreed to contribute a $21,795,000 promissory note from TCID in exchange
for 49.999% of the Class B partnership interests in place of the
$66,900,000 note which was to be contributed under the Amendment. On
March 15, 1993, each party made its respective contribution required by
the Second Amendment.
On June 3, 1993, Liberty and TCI completed the transactions
contemplated by a recapitalization agreement (the "Recapitalization
Agreement"). Pursuant to the Recapitalization Agreement, Liberty
repurchased 927,900 shares of Liberty Class A common stock owned by TCI
and repurchased all of the outstanding shares of the Liberty Class C
Redeemable Exchangeable Preferred Stock. The total purchase price of
$194 million was paid through the delivery of cash amounting to $12
million and promissory notes of Liberty in the aggregate principal
amount of $182 million.
In connection with the Recapitalization Agreement, TCIC and LCP entered
into an Option-Put Agreement (the "Option-Put Agreement"), which was
amended on November 30, 1993. Under the amended Option-Put Agreement,
between June 30, 1994 and September 28, 1994, and between January 1,
1996 and January 31, 1996, TCIC will have the option to purchase all of
LCP's interest in CCT and the Mile Hi Note for an amount equal to $77
million plus interest accruing at the rate of 11.6% per annum on such
amount from June 3, 1993. Between April 1, 1995 and June 29, 1995, and
between January 1, 1997 and January 31, 1997, LCP will have the right to
require TCIC to purchase LCP's interest in CCT and the Mile Hi Note for
an amount equal to $77 million plus interest on such amount accruing at
the rate of 11.6% per annum from June 3, 1993.
Under a separate agreement, on June 3, 1993, TCI Holdings, Inc.
("TCIH"), a wholly-owned subsidiary of TCI, purchased a 16% limited
partnership interest in Intermedia Partners from LCP and all of LCP's
interest in a special allocation of income and gain of $7 million under
the partnership agreement of Intermedia Partners for a purchase price of
approximately $9 million. TCIH also received an option to purchase LCP's
remaining 6.37% limited partnership interest in Intermedia Partners
prior to December 31, 1995 for a price equal to $4 million plus interest
at 8% per annum from June 3, 1993.
(continued)
II-25
<PAGE> 46
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In September of 1993, Encore QE Programming Corp. ("QEPC"), a
wholly-owned subsidiary of Encore Media Corporation ("EMC"), a 90% owned
subsidiary of Liberty, entered into a limited partnership agreement with
TCI Starz, Inc. ("TCIS"), a wholly- owned subsidiary of TCI, for the
purpose of developing, operating and distributing STARZ!, a first-run
movie premium programming service launched in 1994. QEPC is the general
partner and TCIS is the limited partner. Losses are allocated 1% to QEPC
and 99% to TCIS. Profits are allocated 1% to QEPC and 99% to TCIS until
certain defined criteria are met. Subsequently, profits are allocated
20% to QEPC and 80% to TCIS. TCIS has the option, exercisable at any
time and without payment of additional consideration, to convert its
limited partner interest to an 80% general partner interest with QEPC's
partnership interest simultaneously converting to a 20% limited
partnership interest. In addition, during specific periods commencing
April 1999 and April 2001, respectively, QEPC may require TCIS to
purchase, or TCIS may require QEPC to sell, the partnership interest of
QEPC in the partnership for a formula-based price. EMC is paid a
management fee equal to 20% of "managed costs" as defined, in order to
manage the service. EMC manages the service and has agreed to provide
the limited partnership with certain programming under a programming
agreement whereby the partnership will pay its pro rata share of the
total costs incurred by EMC for such programming. The Company accounts
for the partnership as a consolidated subsidiary. (See note 11).
On March 15, 1993, Mile Hi Cable Partners, L.P. ("New Mile Hi")
acquired all the general and limited interests in Mile Hi Cablevision
Associates, Ltd. ("Mile Hi"), the owner of the cable television system
serving Denver, Colorado. New Mile Hi is a limited partnership formed
among CCT (78% limited partnership interest), Daniels Cablevision, Inc.
("DCI") (1% limited partner) and P & B Johnson Corp. ("PBJC") (21%
general partnership interest), a corporation controlled by Robert L.
Johnson, a member of Liberty's board of directors. As a result of the
acquisition, New Mile Hi is a consolidated subsidiary of Liberty for
financial reporting purposes.
Prior to the acquisition, LCP indirectly owned a 32.175% interest in
Mile Hi through its ownership of a limited partnership interest in DAPL,
one of Mile Hi's general partners. The other partners in Mile Hi were
Time Warner Entertainment Company, L.P., various individual investors
and Mile Hi Cablevision, Inc., a corporation in which all the other
partners in Mile Hi were the shareholders.
DAPL was liquidated on March 12, 1993, at which time LCP received a
liquidating distribution consisting of its proportionate interest in
DAPL's partnership interest in Mile Hi, representing the aforementioned
32.175% interest in Mile Hi. The subsidiary of Liberty also received a
note payable from Mile Hi in the approximate amount of $50 million
(including accrued interest) (the "Mile Hi Note") in novation of a loan
receivable from DAPL in an equal amount.
(continued)
II-26
<PAGE> 47
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The total value of the acquisition was approximately $180 million. Of
that amount, approximately $70 million was in the form of Mile Hi debt
paid at the closing. Another $50 million was in the form of the Mile Hi
Note, which debt was assumed by New Mile Hi and then by CCT. Of the
remaining $60 million, approximately $40 million was paid in cash to
partners in Mile Hi in exchange for their partnership interests. The
remaining $20 million of interest in Mile Hi was acquired by New Mile Hi
through the contribution by Liberty's subsidiary to CCT and by CCT to
New Mile Hi of the 32.175% interest in Mile Hi received in the DAPL
liquidation and by DCI's contribution to New Mile Hi of a 0.4% interest
in Mile Hi.
Of the estimated $110 million in cash required by New Mile Hi to
complete the transaction, $105 million was loaned to New Mile Hi by CCT
and $5 million was provided by PBJC as a capital contribution to New
Mile Hi. Of the $5 million contributed by PBJC, approximately $4 million
was provided by CCT through loans to Mr. Johnson and trusts for the
benefit of his children. CCT funded its loans to New Mile Hi and the
Johnson interests by drawing down $93 million under its revolving credit
facility and by borrowing $16 million from TCIC in the form of a
subordinated note.
Liberty's investment in Mile Hi, which was previously accounted for
under the cost method, was received from TCI in the March 28, 1991
transaction whereby TCI contributed its interests in certain programming
businesses and cable television systems in exchange for several
different classes and series of preferred stock of Liberty.
Liberty adopted Statement No. 109 in 1993 and has applied the
provisions of Statement No. 109 retroactively to March 28, 1991.
During the year ended December 31, 1992, Liberty increased its economic
and voting interest in Lenfest Communications, Inc. ("LCI") to 50%
and, accordingly, adopted the equity method of accounting. Liberty's
investment in LCI, which was previously accounted for under the cost
method, was received from TCI in March of 1991. Additionally, LCI
adopted Statement No. 109 in 1993 and has applied its provisions on a
retroactive basis.
As a result of the aforementioned acquisition of Mile Hi and the
implementation of Statement No. 109 by Liberty and LCI, the Company
restated the carrying amount of its investment in Liberty preferred
stock at December 31, 1992 through an increase of $19 million. Included
in the restated balance is the recognition of previously reserved
interest income on the Mile Hi Note. These restatements resulted in an
increase of $6 million to the Company's results of operations for the
year ended December 31, 1992, a decrease of $2 million for the year
ended December 31, 1991 and an increase of $7 million for prior years.
(continued)
II-27
<PAGE> 48
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Also, during the year ended December 31, 1992, Liberty increased its
economic and voting interest in Columbia Associates, L.P. ("Columbia")
to 39.609% and, accordingly, adopted the equity method of accounting.
Liberty's investment in Columbia, which was previously accounted for
under the cost method, was received from TCI in March of 1991.
On December 31, 1992, Liberty sold certain notes receivable of
Intermedia Partners to TCI for $36,300,000 in cash.
The Company purchases sports and other programming from certain
subsidiaries of Liberty. Charges to TCI (which are based upon customary
rates charged to others) for such programming were $44 million, $44
million and $25 million for the years ended December 31, 1993 and 1992
and the period from March 29, 1991 through December 31, 1991
respectively. Such amounts are included in operating expenses in the
accompanying consolidated statements of operations. Certain subsidiaries
of Liberty purchase from TCI, at TCI's cost plus an administrative fee,
certain pay television and other programming. In addition, a
consolidated subsidiary of Liberty pays a commission to TCI for
merchandise sales to customers who are subscribers of TCI's cable
systems. Aggregate commission and charges for such programming were $11
million, $3 million and $2 million for the years ended December 31, 1993
and 1992 and the period from March 29, 1991 through December 31, 1991,
respectively. Such amounts are recorded in revenue in the accompanying
consolidated statements of operations.
Summarized unaudited financial information of Liberty as of December
31, 1993 and 1992 and for the years ended December 31, 1993 and 1992 and
the period from March 29, 1991 through December 31, 1991 is as follows:
December 31,
------------
Consolidated Financial Position 1993 1992
------------------------------- ---- ----
amounts in millions
Cash and cash equivalents $ 91 96
Investment in TCI common stock 104 104
Receivable from TCI -- 5
Other investments and related receivables 372 453
Other assets, net 870 172
------ ----
Total assets $1,437 830
====== ====
Debt $ 446 167
Deferred income taxes 2 15
Other liabilities 307 54
Minority interests 175 10
Redeemable preferred stocks 155 155
Stockholders' equity 352 429
------ ----
Total liabilities and stockholders' equity $1,437 830
====== ====
(continued)
II-28
<PAGE> 49
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Consolidated Operations 1993 1992 1991
----------------------- ---- ---- ----
amounts in millions
Revenue $1,153 157 85
Operating expenses (1,105) (144) (74)
Depreciation and amortization (49) (16) (10)
------ ----- ----
Operating income (loss) (1) (3) 1
Interest expense (31) (7) (5)
Other, net 36 32 44
------ ---- ----
Net earnings $ 4 22 40
====== ==== ====
(4) Investments in Other Affiliates
Investments in affiliates, other than Liberty (see note 3), accounted
for under the equity method, amounted to $567 million and $650 million
at December 31, 1993 and 1992, respectively.
On December 2, 1992, SCI Holdings, Inc. ("SCI") consummated a
transaction (the "Split-Off") that resulted in the ownership of its
cable systems being split between its two stockholders, which
stockholders were Comcast Corporation ("Comcast") and the Company.
Prior to the Split-Off, the Company had an investment in the common
stock of SCI and the preferred stock of its wholly-owned subsidiary,
Storer Communications, Inc. ("Storer").
The Split-Off, which permitted refinancing of substantially all of the
publicly held debt of SCI and the preferred stock of SCI's wholly-owned
subsidiary, Storer, was effected by the distribution of approximately
50% of the net assets of SCI to three holding companies formed by the
Company (the "Holding Companies").
Prior to the Split-off, the Company contributed its SCI common stock to
the Holding Companies in exchange for 100% of such Holding Companies'
common stock. The amount of SCI common stock contributed to each of the
Holding Companies was based upon the proportionate value of net assets
to be received by each of the Holding Companies in the Split-Off. SCI
then merged into Storer and the SCI common stock held by the Holding
Companies was converted into Storer common stock.
(continued)
II-29
<PAGE> 50
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Also prior to the Split-Off, (i) the Holding Companies incurred
long-term debt aggregating approximately $1.1 billion and contributed
substantially all of the resulting proceeds to Storer and (ii) a
consolidated subsidiary of TCI redeemed approximately $476 million of
its debt securities held by Storer with proceeds of its separate
financing, and an affiliate of Comcast redeemed approximately $274
million of its debt securities held by Storer. In turn, Storer utilized
substantially all of the proceeds of such contributions and redemptions
to repurchase its preferred stock and extinguished all of its debt. The
Company's share of Storer's loss on early extinguishment of debt was $52
million and such amount is included in loss on early extinguishment of
debt in the accompanying consolidated statements of operations.
Additionally, the Company received a premium, amounting to $14 million,
on the repurchase of the Storer preferred stock. Such amount is
reflected separately in the accompanying consolidated financial
statements.
In the Split-Off, Storer redeemed its common stock held by the Holding
Companies in exchange for 100% of the capital stock of certain operating
subsidiaries of Storer.
Immediately following the Split-Off, the Company owned a majority of
the common stock of the Holding Companies and Comcast owned 100% of the
common stock of Storer. As such, the Company, which previously accounted
for its investment in SCI using the equity method, now consolidates its
investment in the Holding Companies. The tangible assets of the Holding
Companies were recorded at predecessor cost.
In connection with the Company's 1988 acquisition of an equity interest
in SCI, a subsidiary of the Company issued certain debt and equity
securities to Storer for $650 million. Such debt securities were
redeemed and the equity securities were received by one of the Holding
Companies in the Split-Off. Interest charges and preferred stock
dividend requirements on these debt and equity securities, prior to the
Split-Off, aggregated $81 million and $89 million for the period ended
December 2, 1992 and the year ended December 31, 1991. The Company's
share of losses of SCI, prior to the Split-Off for the period ended
December 2, 1992 and the year ended December 31, 1991 amounted to $51
million and $54 million, as adjusted for the effect of interest and
dividends accounted for by Storer as capital transactions due to their
related party nature.
The Company had a management consulting agreement with Storer which
provided for the operational management of certain of Storer's cable
television systems by TCI. This agreement provided for a management fee
based on 3.5% of the revenue of those cable television systems managed
by the Company. The Company also entered into a programming service
agreement with Storer whereby the Company, for a fee, managed Storer's
purchases of programming. The total management fees under the consulting
and programming service agreements, prior to the Split-Off, amounted to
$7 million in each of the period from January 1 1992 through December 2,
1992 and the year ended December 31, 1991 (which amounts are recorded as
a reduction of selling, general and administrative expenses in the
accompanying consolidated statements of operations).
(continued)
II-30
<PAGE> 51
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Company is a partner in certain joint ventures, accounted for under
the equity method, which have operations in the United Kingdom and other
parts of Europe. These joint ventures, which are currently operating and
constructing cable television and telephone systems, have generated
losses to the Company in 1993 and 1992 amounting to $47 million and $37
million, including $3 million and $6 million in 1993 and 1992,
respectively, resulting from foreign currency transaction losses.
Summarized unaudited financial information for affiliates other than
Liberty (including those contributed to Liberty through March 28, 1991),
is as follows:
December 31,
-------------
1993 1992
---- ----
Combined Financial Position amounts in millions
---------------------------
Property and equipment, net $1,059 757
Franchise costs, net 266 211
Other assets, net 727 467
------ ------
Total assets $2,052 1,435
====== ======
Debt $ 593 661
Due to TCI 78 71
Other liabilities 338 185
Owners' equity 1,043 518
------ ------
Total liabilities and equity $2,052 1,435
====== ======
Years ended December 31,
------------------------
1993 1992 1991
---- ---- ----
Combined Operations amounts in millions
-------------------
Revenue $ 713 1,224 1,461
Operating expenses (648) (786) (993)
Depreciation and amortization (127) (303) (329)
------ ------ ------
Operating income (loss) (62) 135 139
Interest expense (37) (295) (374)
Other, net 98 (234) (47)
----- ------ ------
Net loss $ (1) (394) (282)
====== ====== ======
Certain of the Company's affiliates are general partnerships and any
subsidiary of the Company that is a general partner in a general
partnership is, as such, liable as a matter of partnership law for all
debts (other than non-recourse debts) of that partnership in the event
liabilities of that partnership were to exceed its assets.
(continued)
II-31
<PAGE> 52
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(5) Investment in Turner Broadcasting System, Inc.
In 1987, the Company and several other cable television operators
purchased shares of two classes of preferred stock of Turner
Broadcasting System, Inc. ("TBS"). During 1991, TBS made an offer to
exchange shares of one class of its preferred stock (and accrued
dividends thereon) for shares of TBS common stock and, as a result, the
Company received common shares valued at $178 million. Shares of the
other class of preferred stock have voting rights and are convertible
into shares of TBS common stock. The holders of those preferred shares,
as a group, are entitled to elect seven of fifteen members of the board
of directors of TBS, and the Company appoints three such
representatives. However, voting control over TBS continues to be held
by its chairman of the board and chief executive officer (an unrelated
third party). The Company's total holdings of TBS common and preferred
stocks represent an approximate 12% voting interest for those matters
for which preferred and common stock vote as a single class.
The Company's investment in TBS common stock had an aggregate market
value of $803 million and $628 million (which exceeded cost by $485
million and $310 million) at December 31, 1993 and 1992, respectively.
In addition, the Company's investment in TBS preferred stock had an
aggregate market value of $954 million and $746 million, based upon the
common market value, (which exceeded cost by $781 million and $573
million) at December 31, 1993 and 1992, respectively.
In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," effective for fiscal years
beginning after December 15, 1993. Under the new rules, debt securities
that the Company has both the positive intent and ability to hold to
maturity are carried at amortized cost. Debt securities that the Company
does not have the positive intent and ability to hold to maturity and
all marketable equity securities are classified as available-for-sale or
trading and carried at fair value. Unrealized holding gains and losses
on securities classified as available-for sale are carried as a separate
component of shareholders' equity. Unrealized holding gains and losses
on securities classified as trading are reported in earnings.
The Company holds no material debt securities. Marketable equity
securities are currently reported by the Company at the lower of cost or
market ("LOCOM") and net unrealized losses are reported in earnings. The
Company will apply the new rules starting in the first quarter of 1994.
Application of the new rules will result in an estimated increase of
approximately $300 million in stockholders' equity as of January 1 1994,
representing the recognition of unrealized appreciation, net of taxes,
for the Company's investment in equity securities determined to be
available-for-sale, previously carried at LOCOM.
(continued)
II-32
<PAGE> 53
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) Debt
Debt is summarized as follows:
Weighted-average December 31,
interest rate at -------------
December 31, 1993 1993 1992
----------------- ---- ----
amounts in millions
Parent company debt:
Senior notes 8.6% $ 5,052 1,960
Liquid Yield OptioTM Notes (a) -- 386
Bank credit facilities 6.0% 80 500
Commercial paper 4.1% 44 50
Other debt 2 1
------ -----
5,178 2,897
Debt of subsidiaries:
Bank credit facilities 4.6% 3,264 5,526
Commercial paper -- 12
Notes payable 10.3% 1,321 1,732
Convertible notes (b) 9.5% 47 48
Other debt 90 70
------ ------
$ 9,900 10,285
======= ======
(a) These subordinated notes, which were stated net of unamortized
discount of $764 million at December 31, 1992, were issued
through a public offering. On October 28, 1993, the Company
called for redemption all of its remaining Liquid Yield OptionTM
Notes. In connection with such call for redemption, Notes
aggregating $405 million were converted into 18,694,377 shares
of Class A common stock and Notes aggregating less than $1
million were redeemed together with accrued interest to the
redemption date. Prior to the aforementioned redemption, Notes
aggregating $6 million were converted into 259,537 shares of TCI
Class A common stock during 1993.
(b) These convertible notes, which are stated net of unamortized
discount of $197 million and $201 million on December 31, 1993
and 1992, respectively, mature on December 18, 2021. The notes
require (so long as conversion of the notes has not occurred) an
annual interest payment through 2003 equal to 1.85% of the face
amount of the notes. During the year ended December 31, 1993,
certain of these notes were converted into 819,000 shares of
Class A common stock. At December 31, 1993, the notes were
convertible, at the option of the holders, into an aggregate of
41,060,990 shares of Class A common stock.
During the year ended December 31, 1992, TCI called for redemption all
of its 7% convertible subordinated debentures. Debentures aggregating
$114 million were converted into 6,636,881 shares of Class A common
stock and the remaining debentures were redeemed at 104.2% of the
principal amount together with accrued interest to the redemption date.
(continued)
II-33
<PAGE> 54
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Company's bank credit facilities and various other debt instruments
generally contain restrictive covenants which require, among other
things, the maintenance of certain earnings, specified cash flow and
financial ratios (primarily the ratios of cash flow to total debt and
cash flow to debt service, as defined), and include certain limitations
on indebtedness, investments, guarantees, dispositions, stock
repurchases and dividend payments.
As security for borrowings under one of its credit facilities, the
Company pledged a portion of the common stock (with a quoted market
value of approximately $643 million at December 31, 1993) it holds of
TBS.
In order to provide interest rate protection on a portion of its
variable rate indebtedness, the Company has entered into various
interest rate exchange agreements pursuant to which it pays fixed
interest rates, ranging from 7.7% to 9.9%, on notional amounts of $608
million. The Company has also entered into various other exchange
agreements, pursuant to which it pays variable interest rates on
notional amounts of $2,275 million. The Company is exposed to credit
losses for the periodic settlements of amounts due under these interest
rate exchange agreements in the event of nonperformance by the other
parties to the agreements. However, the Company does not anticipate
nonperformance by the counterparties and, in any event, such amounts
were not material at December 31, 1993.
The Company has also entered into various interest rate hedge
agreements on notional amounts of $345 million which fix the maximum
variable interest rates, at rates ranging from 10% to 11%. The term of
such agreements is approximately two years.
TCI and certain of its subsidiaries are required to maintain unused
availability under bank credit facilities to the extent of outstanding
commercial paper. Also, TCI and certain of its subsidiaries pay fees,
ranging from 1/4% to 1/2% per annum, on the average unborrowed portion
of the total amount available for borrowings under bank credit
facilities.
The fair value of the Company's debt is estimated based on the quoted
market prices for the same or similar issues or on the current rates
offered to the Company for debt of the same remaining maturities. The
fair value of debt, which has a carrying value of $9,900 million, was
$10,572 million at December 31, 1993.
The fair value of the interest rate exchange agreements is the
estimated amount that the Company would pay or receive to terminate the
agreements at December 31, 1993, taking into consideration current
interest rates and assuming the current creditworthiness of the
counterparties. The Company would receive $13 million at December 31,
1993 upon termination of the agreements.
(continued)
II-34
<PAGE> 55
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Annual maturities of debt for each of the next five years are as follows:
Parent Total
------ -----
amounts in millions
1994 $ 69* 927*
1995 212 705
1996 210 993
1997 151 885
1998 349 799
* Includes $44 million of commercial paper.
(7) Redeemable Preferred Stocks
December 31,
-----------------
1993 1992
------ ------
amounts in millions
12-7/8% Cumulative Compounding
Preferred Stock, Series A;
issued and outstanding 4,772,394
shares in 1992 (a) $ -- 92
6-3/4% Convertible Preferred Stock,
Series B; issued and outstanding
6,201 shares at December 31, 1992 (b) -- 18
4-1/2% Convertible Preferred Stock,
Series C; issued and outstanding
6,201 shares at December 31, 1993 (b) 18 --
---- ----
$ 18 110
==== ====
(a) The 12-7/8% Cumulative Compounding Preferred Stock was stated
at its redemption value of $19.25 per share. Dividends were
cumulative and accrued at 12-7/8% of the redemption value. In
October of 1992, the Company acquired and retired 250,000 shares
of this preferred stock in the open market for a purchase price
of $19.56 per share. All remaining outstanding shares of such
preferred stock were redeemed on February 1, 1993 for a
redemption price of $19.25 per share plus all unpaid dividends
accrued thereon.
(continued)
II-35
<PAGE> 56
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(b) The 4-1/2% Convertible Preferred Stock is stated at its
redemption value of $3,000 per share, and each share is
convertible into 204 shares of TCI Class A common stock. In
1993, the Company designated this Series C Convertible
Preferred Stock with all of the same attributes of the Series B
Convertible Preferred Stock except that dividends on each share
of the Series C stock accrued on a daily basis at the rate of 4-
1/2% per annum instead of 6-3/4% per annum, and such Series C
stock was not subject to optional redemption by the Company
until after January 10, 1994. During the year ended December
31, 1993, the shares so designated were exchanged for the
existing Series B shares. Subsequent to December 31, 1993, all
of the Series C shares were converted into 1,265,004 shares of
TCI Class A common stock.
(8) Stockholders' Equity
Common Stock
The Class A common stock has one vote per share and the Class B common
stock has ten votes per share. Each share of Class B common stock is
convertible, at the option of the holder, into one share of Class A
common stock.
Employee Benefit Plans
The Company has an Employee Stock Purchase Plan ("ESPP") to provide
employees an opportunity for ownership in the Company and to create a
retirement fund. Terms of the ESPP provide for employees to contribute
up to 10% of their compensation to a trust for investment in TCI common
stock. The Company, by annual resolution of the Board of Directors,
contributes up to 100% of the amount contributed by employees. Certain
of the Company's subsidiaries have their own employee benefit plans.
Contributions to all plans aggregated $16 million, $13 million and $12
million for 1993, 1992 and 1991, respectively.
(continued)
II-36
<PAGE> 57
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Stock Options
Two officers (one of whom is also a director) each held an option to
acquire 200,000 shares of Class A common stock at an adjusted purchase
price of $10.00 per share. One of such officers received payment of
$550,000 from the Company in December of 1991 upon cancellation of a
portion of his option covering 100,000 shares. The amount paid was based
on the then market value of Class A common stock of $15.50 per share.
The same officer received payments of $512,500 and $569,000 from the
Company (based on the then market value of Class A common stock of
$20.25 and $21.375 per share) in July and December of 1992,
respectively, in cancellation of the remainder of his option covering
100,000 shares of TCI Class A common stock. The other officer received
payment of $2,276,000 from the Company in December of 1992 upon
cancellation of his option covering 200,000 shares of TCI Class A common
stock. The amount paid was based on the then market value of Class A
common stock of $21.375 per share.
The Company had an Incentive Stock Option Plan ("ISOP") which has
expired. Options granted under the ISOP (prior to its expiration) have
an option price equal to the fair market value on the date of grant, are
all currently exercisable and expire five years from the date of grant.
Options to purchase 217,008 shares of TCI Class A common stock are
outstanding at December 31, 1993, with a price of $17.25 per share.
During the years ended December 31, 1993, 1992 and 1991, options to
acquire 96,242, 321,406 and 78,642 shares, respectively were exercised
at prices ranging from $10.00 to $17.25 per share and options for
25,000, 12,000 and 15,000 shares, respectively, were cancelled.
TCI assumed certain stock options previously granted by UAE to certain
of its employees. These options, which are currently exercisable,
represent the right, as of December 31, 1993, to acquire 167,328 shares
of TCI Class A common stock at adjusted purchase prices ranging from
$8.83 to $18.63 per share. During the year ended December 31, 1993, no
options were exercised or cancelled. No additional options may be
granted by UAE.
(continued)
II-37
<PAGE> 58
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Company has adopted the 1992 Stock Incentive Plan (the "Plan"). The
Plan provides for awards to be made with respect to a maximum of 10
million shares of Class A common stock. Awards may be made as grants of
stock options, stock appreciation rights, restricted shares, stock units
or any combination thereof. On November 11, 1992, stock options in
tandem with stock appreciation rights to purchase 4,020,000 shares of
Class A common stock were granted pursuant to the Plan to certain
officers and other key employees at a purchase price of $16.75 per
share. Such options become exercisable and vest evenly over five years,
first became exercisable beginning November 11, 1993 and expire on
November 11, 2002. During the year ended December 31, 1993, stock
options covering 50,000 shares of Class A common stock were cancelled
upon termination of employment. On October 12, 1993, stock options in
tandem with stock appreciation rights to purchase 1,355,000 shares of
TCI Class A common stock were granted pursuant to the Plan to certain
officers and other key employees at a purchase price of $16.75 per
share. On November 12, 1993, an additional grant of stock options in
tandem with stock appreciation rights to purchase 600,000 shares of TCI
Class A common stock were granted to two officers at a purchase price of
$16.75 per share. Such options become exercisable and vest evenly over
four years, first become exercisable beginning October 12, 1994 and
expire on October 12, 2003. Separately from the Plan, an additional
grant of stock options in tandem with stock appreciation rights to
purchase 2,000,000 shares of TCI Class A common stock at a purchase
price of $16.75 per share was made on November 12, 1993 to an individual
who thereafter became a director of the Company. Twenty percent of such
options vested and became exercisable immediately and the remainder
become exercisable evenly over 4 years. The options expire October 12,
1998. Estimates of the compensation relating to these grants have been
recorded through December 31, 1993, but are subject to future adjustment
based upon market value and, ultimately, on the final determination of
market value when the rights are exercised.
Two officers (who are also directors) each held an option, expiring
December 31, 1991, to acquire 1,200,000 shares of Class B common stock
at an adjusted purchase price of $1.10 per share. In June of 1991, one
of the aforementioned officers exercised in full his option to acquire
1,200,000 shares of Class B common stock by delivery of 80,000 shares of
Class B common stock valued at $16.50 per share and, on the same date,
sold 400,000 of such option shares (at a price of $16.50 per share) to
TCI for cash and a short-term note. In December of 1991, the other
officer exercised his option to purchase 900,000 shares of Class B
common stock by delivery of 63,871 shares of Class A common stock valued
at $15.50 per share. Such officer agreed to forego exercising the
balance of his option to purchase 300,000 shares of Class B common stock
in exchange for the payment by the Company of $4,320,000 as compensation
to be applied towards federal and state income taxes withheld by the
Company for his account.
Other
The excess of consideration received on debentures converted or options
exercised over the par value of the stock issued is credited to
additional paid-in capital.
(continued)
II-38
<PAGE> 59
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
At December 31, 1993, there were 50,635,330 Class A shares of TCI
common stock reserved for issuance under exercise privileges related to
options and convertible debt securities described in this note 8 and in
notes 6 and 7. In addition, one share of Class A common stock is
reserved for each share of Class B common stock.
(9) Transactions with Officers and Directors
On December 10, 1992, pursuant to a restricted stock award agreement,
an officer, who is also a director, of the Company was transferred the
right, title and interest in and to 124.03 shares (having a liquidation
value of $4 million) of the 12% Series B cumulative compounding
preferred stock of WestMarc Communications, Inc. (a wholly-owned
subsidiary of the Company) owned by the Company. Such preferred stock is
subject to forfeiture in the event of certain circumstances from the
date of grant through February 1, 2002, decreasing by 10% on February 1
of each year.
On December 14, 1992, an officer, who is also a director, sold 100,000
shares of Class B common stock to the Company for $2,138,000.
(10) Income Taxes
TCI files a consolidated Federal income tax return with all of its 80%
or more owned subsidiaries. Consolidated subsidiaries in which the
Company owns less than 80% each file a separate income tax return. TCI
and such subsidiaries calculate their respective tax liabilities on a
separate return basis which are combined in the accompanying
consolidated financial statements.
The Financial Accounting Standards Board Statement No. 109 requires a
change from the deferred method of accounting for income taxes of APB
Opinion No. 11 to the asset and liability method of accounting for
income taxes. Under the asset and liability method of Statement No. 109,
deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled. Under
Statement No. 109, the effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that
includes the enactment date.
The Company adopted Statement No. 109 in 1993 and has applied the
provisions of Statement No. 109 retroactively to January 1, 1986. The
Company restated its financial statements for the years beginning
January 1, 1986 through December 31, 1992. The effect of the
implementation of Statement No. 109 at December 31, 1992 was a $2
million decrease in receivables, $48 million net increase in
investments, $178 million net increase in property and equipment, $2,901
million net increase in franchise costs, $2 million increase in other
assets, $34 million increase in other liabilities, $2,865 million
increase in deferred taxes payable and $228 million decrease in
accumulated deficit.
(continued)
II-39
<PAGE> 60
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The financial statements for the years ended December 31, 1992 and 1991
have been restated to comply with the provisions of Statement No. 109.
The following summarizes the impact of applying Statement No. 109 on net
loss and loss per common share for the years ended December 31, 1992
and 1991:
December 31,
--------------------
1992 1991
------- --------
amounts in millions
Net loss as previously reported $ (34) (103)
Effect of restatements:
Liberty, including the effects
of Mile Hi and LCI (note 3) 6 (2)
Statement No. 109 20 8
------- -------
As restated $ (8) (97)
======= =======
Per share amounts as previously reported $ (.12) (.29)
Effect of restatements:
Liberty, including the effects
of Mile Hi and LCI (note 3) .02 --
Statement No. 109 .05 .02
------- -------
As restated $ (.05) (.27)
======= =======
Income tax benefit (expense) attributable to income or loss from
continuing operations for the years ended December 31, 1993, 1992 and
1991 consists of:
Current Deferred Total
------- -------- -------
amounts in millions
Year ended December 31, 1993:
Federal $ (14) (119) (133)
State and local (15) (20) (35)
------- ------- -------
$ (29) (139) (168)
======= ======= =======
Year ended December 31, 1992:
Federal $ -- (24) (24)
State and local (10) (4) (14)
------- ------- -------
$ (10) (28) (38)
======= ======= =======
Year ended December 31, 1991:
Federal $ (2) 33 31
State and local (7) 6 (1)
------- ------- -------
$ (9) 39 30
======= ======= =======
(continued)
II-40
<PAGE> 61
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The significant components of deferred income tax benefit (expense) for
the years ended December 31, 1993, 1992 and 1991 are as follows:
Years ended
December 31,
-----------------------
1993 1992 1991
----- ------ ------
amounts in millions
Deferred tax benefit (expense)
(exclusive of effects of other
components listed below) $ (63) (28) 39
Adjustment to deferred tax assets and
liabilities for enacted change in
tax rates (76) -- --
----- ----- -----
$(139) (28) 39
===== ===== =====
Income tax benefit (expense) attributable to income or loss from
continuing operations differs from the amounts computed by applying the
Federal income tax rate of 35% in 1993 and 34% in 1992 and 1991 as a
result of the following:
Years ended
December 31,
-----------------------
1993 1992 1991
----- ------ ------
amounts in millions
Computed "expected" tax benefit (expense) $ (56) (15) 37
Adjustment to deferred tax assets and
liabilities for enacted change in
Federal income tax rate (84) -- --
Dividends excluded for income tax purposes 4 10 13
Amortization not deductible for tax purposes (12) (8) (7)
Minority interest in earnings of
consolidated subsidiaries (1) (14) (13)
Recognition of losses of consolidated
partnership (8) -- --
State and local income taxes, net of Federal
income tax benefit (23) (9) 1
Other 4 (2) (1)
------ ------ ------
$ (168) (38) 30
====== ====== ======
(continued)
II-41
<PAGE> 62
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Note to Consolidated Financial Statements
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1993 and 1992 are presented below:
December 31,
---------------------
1993 1992
------ ------
amounts in millions
Deferred tax assets:
Net operating loss carryforwards $ 590 665
Less - valuation allowance (90) (88)
Investment tax credit carryforwards 140 140
Less - valuation allowance (36) (34)
Alternative minimum tax credit
carryforwards 19 11
Investments in affiliates, due principally
to losses of affiliates recognized for
financial statement purposes in excess
of losses recognized for income tax
purposes 266 321
Future deductible amounts principally due
due to non-deductible accruals 27 19
Other 13 5
------ ------
Net deferred tax assets 929 1,039
------ ------
Deferred tax liabilities:
Property and equipment, principally
due to differences in depreciation 1,193 1,136
Franchise costs, principally due to
differences in amortization 2,784 2,720
Investment in affiliates, due principally
to undistributed earnings of affiliates 256 332
Other 6 15
------ ------
Total gross deferred tax liabilities 4,239 4,203
------ ------
Net deferred tax liability $3,310 3,164
====== ======
The valuation allowance for deferred tax assets as of December 31, 1993
was $126 million. Such balance increased by $4 million from December
31, 1992. Subsequently recognized tax benefits relating to the
valuation allowance for deferred tax assets as of December 31, 1993
will be recorded as reductions of franchise costs.
At December 31, 1993, the Company had net operating loss carryforwards
for income tax purposes aggregating approximately $1,071 million of
which, if not utilized to reduce taxable income in future periods, $8
million expires through 1998, $17 million in 2001, $76 million in 2002,
$153 million in 2003, $132 million in 2004, $384 million in 2005 and
$301 million in 2006. Certain subsidiaries of the Company had
additional net operating loss carryforwards for income tax purposes
aggregating approximately $368 million and these net operating losses
are subject to certain rules limiting their usage.
(continued)
II-42
<PAGE> 63
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
At December 31, 1993, the Company had remaining available investment tax
credits of approximately $85 million which, if not utilized to offset
future Federal income taxes payable, expire at various dates through
2005. Certain subsidiaries of the Company had additional investment tax
credit carryforwards aggregating approximately $55 million and these
investment tax credit carryforwards are subject to certain rules limiting
their usage.
Certain of the Federal income tax returns of TCI and its subsidiaries
which filed separate income tax returns are presently under examination
by the Internal Revenue Service ("IRS") for the years 1979 through 1992.
In the opinion of management, any additional tax liability, not
previously provided for, resulting from these examinations, ultimately
determined to be payable, should not have a material adverse effect on
the consolidated financial position of the Company. The Company pursued
a course of action on certain issues (primarily the deductibility of
franchise cost amortization) the IRS had raised and such issues were
argued before the United States Tax Court. During 1990, the Company
received a favorable decision regarding these issues. The IRS appealed
this decision but the Company prevailed in the appeal. The IRS may
further appeal the decision to the Supreme Court until March 27, 1994.
New tax legislation was enacted in the third quarter of 1993 which,
among other matters, increased the corporate Federal income tax rate from
34% to 35%. The Company has reflected the tax rate change in its
consolidated statements of operations in accordance with the treatment
prescribed by Statement No. 109. Such tax rate change resulted in an
increase of $76 million to income tax expense and deferred income tax
liability.
(11) Commitments and Contingencies
On October 5, 1992, Congress enacted the 1992 Cable Act. In 1993, the
FCC adopted certain rate regulations required by the 1992 Cable Act and
imposed a moratorium on certain rate increases. Such rate regulations
became effective on September 1, 1993. The rate increase moratorium,
which began on April 5, 1993, continues in effect through May 15, 1994.
As a result of such actions, the Company's basic and tier service rates
and its equipment and installation charges (the "Regulated Services") are
subject to the jurisdiction of local franchising authorities and the FCC.
Basic and tier service rates are evaluated against competitive
benchmark rates as published by the FCC, and equipment and installation
charges are based on actual costs. Any rates for Regulated Services that
exceeded the benchmarks were reduced as required by the 1993 rate
regulations. The rate regulations do not apply to the relatively few
systems which are subject to "effective competition" or to services
offered on an individual service basis, such as premium movie and
pay-per-view services. Subsequent to September 1, 1993, any cable system
charging basic cable rates that exceed the FCC's benchmark rate may be
required to substantiate its rates by demonstrating its cost of providing
basic cable services to subscribers. If, as a result of this process, a
system cannot substantiate its rates, it could be required to
retroactively reduce its rates to the appropriate benchmark and refund
the excess portion of rates received since September 1, 1993.
(continued)
II-43
<PAGE> 64
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Company believes that it has complied in all material respects with
the provisions of the 1992 Cable Act, including its rate setting
provisions. However, since the Company's rates for regulated services
are subject to review, the Company may be subject to a refund liability.
The amount of refunds, if any, which could be payable by the Company in
the event that systems' rates are successfully challenged by franchising
authorities is not currently estimable.
In connection with the acquisition from TCI of a 19.9% minority interest
in Heritage Communications, Inc. ("Heritage") by Comcast, Comcast has the
right, through December 31, 1994, to require TCI to purchase or cause to
be purchased from Comcast all shares of Heritage directly or indirectly
owned by Comcast for either cash or assets or, at TCI's election, shares
of TCI common stock. The purchase price of the shares of Heritage
directly or indirectly owned by Comcast will be determined by external
appraisal.
The Company is obligated to pay fees for the license to exhibit certain
qualifying films that are released theatrically by various motion picture
studios from January 1, 1993 through December 31, 2002 (the "Film License
Obligations"). The aggregate minimum liability under certain of the
license agreements is approximately $105 million. The aggregate amount
of the Film License Obligations under other license agreements is not
currently estimable because such amount is dependent upon the number
of qualifying films produced by the motion picture studios, the amount of
United States theatrical film rentals for such qualifying films, and
certain other factors. Nevertheless, the Company's aggregate payments
under the Film License Obligations could prove to be significant.
The Company has guaranteed notes payable and other obligations of
affiliated and other companies with outstanding balances of approximately
$237 million at December 31, 1993.
The Company leases business offices, has entered into pole rental
agreements and uses certain equipment under lease arrangements. Minimum
rental expense under such arrangements, net of sublease rentals, amounted
to $59 million, $57 million and $52 million for 1993, 1992 and 1991,
respectively.
Future minimum lease payments under noncancellable operating leases for
each of the next five years are summarized as follows (amounts in
millions):
<TABLE>
<Caption
Years ending
December 31,
------------
<S> <C>
1994 $16
1995 12
1996 9
1997 7
1998 6
</TABLE>
It is expected that, in the normal course of business, expiring leases
will be renewed or replaced by leases on other properties; thus, it is
anticipated that future minimum lease commitments will not be less than
the amount shown for 1994.
(continued)
II-44
<PAGE> 65
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(12) Discontinued Operations
The Company sold its motion picture theatre business and certain
theatre-related real estate assets on May 12, 1992. The selling price
(including liabilities assumed) was approximately $680 million. In
connection with the disposition, the Company paid $92.5 million for
certain preferred stock of the buyer. No gain or loss was recognized in
connection with this transaction as the net assets of discontinued
operations were reflected at their net realizable value.
Operating results for the theatre operations for the period from January
1, 1992 through May 12, 1992 and the year ended December 31, 1991 are
reported separately in the consolidated statements of operations under
the caption "Loss from discontinued operations" and include:
<TABLE>
<CAPTION>
1992 1991
------ ------
amounts in millions
<S> <C> <C>
Revenue $ 211 613
Loss before income taxes $ (16) (18)
Income tax benefit (expense) $ 1 (1)
Net loss $ (15) (19)
</TABLE>
(continued)
II-45
<PAGE> 66
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(13) Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
------- ------- ------- -------
amounts in millions,
1993: except per share amounts
- ----
<S> <C> <C> <C> <C>
Revenue $1,018 1,042 1,044 1,049
Operating income:
As previously reported $ 247 255 248
Adjustment to revise estimate of useful
lives of certain distribution equipment -- (6) (6)
Adjustment to properly reflect compensation
relating to stock appreciation rights -- (3) (6)
----- ---- -----
As adjusted $ 247 246 236 187
====== ==== ===== ====
Gain (loss) on disposition of assets $ 40 5 4 (7)
Income tax benefit (expense):
As previously reported $ (38) (21) (116)
Adjustment to revise estimate of useful
lives of certain distribution equipment -- 3 3
Adjustment to properly reflect compensation
relating to stock appreciation rights -- 1 2
Adjustment to income taxes upon
revision of Statement No. 109 -- -- (3)
------ ---- ----
As adjusted $ (38) (17) (114) 1
====== ==== ==== ====
Net earnings (loss):
As previously reported $ 53 31 (55)
Adjustment to revise estimate of useful
lives of certain distribution equipment -- (3) (3)
Adjustment to properly reflect compensation
relating to stock appreciation rights -- (2) (4)
Adjustment to income taxes upon
revision of Statement No. 109 -- -- (3)
------ ---- ----
As adjusted $ 53 26 (65) (21)
====== ==== ==== ====
Primary and fully diluted earnings (loss)
attributable to common shareholder per
common and common equivalent share:
As previously reported $ .11 .07 (.13)
Adjustment to revise estimate of useful
lives of certain distribution equipment -- (.01)
Adjustment to properly reflect compensation
relating to stock appreciation rights -- -- (.01)
Adjustment to income taxes upon revision
of Statement No. 109 -- -- --
------ ---- ----
As adjusted $ .11 (.06) (.14) (.05)
====== ==== ==== ====
</TABLE>
(continued)
II-46
<PAGE> 67
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
<TABLE>
<CAPTION>
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter
------- ------- ------- -------
amounts in millions,
1992: except per share amounts
- ----
<S> <C> <C> <C> <C>
Revenue $ 856 879 896 943
Operating income:
As previously reported $ 197 225 242 226
Adjustment to amortization upon revision
of Statement No. 109 (2) (1) -- (23)
----- ---- ---- ----
As adjusted $ 195 224 242 203
===== ==== ==== ====
Gain (loss) on disposition of assets $ 3 (3) (1) 10
Income tax benefit (expense):
As previously reported $ 1 (15) 6 (49)
Adjustment to income taxes for the
restatement of share of earnings
of Liberty (note 3) -- (3) (5) 3
Adjustment to revise/implement
Statement No. 109 1 -- -- 23
----- ---- ---- ----
As adjusted $ 2 (18) 1 (23)
===== ==== ==== ====
Earnings (loss) from continuing operations:
As previously reported $ (18) 9 63 (51)
Adjustment to restate share of earnings
of Liberty (note 3) -- 4 7 (5)
Adjustment to amortization, share of
earnings of affiliates and income taxes
upon revision/implementation of
Statement No. 109 (1) (1) -- --
----- ---- ---- ----
As adjusted $ (19) 12 70 (56)
===== ==== ==== ====
Loss from discontinued operations $ -- (15) -- --
===== ==== ==== ====
Net earnings (loss):
As previously reported $ (18) (6) 63 (51)
Adjustment to restate share of earnings
of Liberty (note 3) -- 4 7 (5)
Adjustment to amortization, share of
earnings of affiliates and income taxes
upon revision/implementation of
Statement No. 109 (1) (1) -- --
----- ---- ---- ----
As adjusted $ (19) (3) 70 (56)
===== ==== ==== ====
Primary and fully diluted earnings (loss)
attributable to common shareholders per
common and common equivalent share:
Continuing operations:
As previously reported $(.05) .01 .13 (.12)
Adjustment to restate share of earnings
of Liberty (note 3) -- .01 .01 (.01)
Adjustment to amortization, share of
earnings of affiliates and income taxes
upon revision/implementation of
Statement No. 109 (.01) -- -- --
----- ---- ---- ----
As adjusted (.06) .02 .14 (.13)
Discontinued operations -- (.03) -- --
----- ----- ---- ----
$(.06) (.01) .14 (.13)
===== ==== ==== ====
</TABLE>
II-47
<PAGE> 68
PART III.
Item 10. Directors and Executive Officers of the Registrant.
The following lists the directors and executive officers of TCI, their
birth dates, a description of their business experience and positions held with
the Company as of February 1, 1994. Directors are elected to staggered
three-year terms with one-third elected annually. The date the present term of
office expires for each director is the date of the Annual Meeting of the
Company's stockholders held during the year footnoted opposite their names. All
officers are appointed for an indefinite term, serving at the pleasure of the
Board of Directors.
<TABLE>
<CAPTION>
Name Positions
- ---------- ---------------------
<S> <C>
Bob Magness (2) Chairman of the Board of TCI since 1973 and is Chairman of the Board of a number of the Company's
Born June 3, 1924 subsidiaries; also a director of Republic Pictures Corporation, Turner Broadcasting System, Inc. and
Liberty Media Corporation ("Liberty"); TCI director since 1968.
John C. Malone (3) Chief Executive Officer of TCI since March of 1992 and President of TCI since 1973; is President and a
Born March 7, 1941 director of most of the Company's subsidiaries; also a director of Liberty, Turner Broadcasting System,
Inc., BET Holdings, Inc., and The Bank of New York; TCI director since 1973.
Donne F. Fisher (1) Appointed Executive Vice President of TCI in December of 1991. Was previously Senior Vice President
Born May 24, 1938 since 1982 and Treasurer since 1970 of TCI. Vice President, Treasurer and a director of most of the
Company's subsidiaries; also a director of General Communication, Inc.; TCI director since 1980.
John W. Gallivan (2) Chairman of the Board of Kearns-Tribune Corporation, a newspaper publishing concern; also a director
Born June 28, 1915 of Silver King Mining Company; TCI director since 1980.
Kim Magness (1) TCI director since 1985; manages family business interests, mostly in ranching and in breeding
Born May 17, 1952 Arabian horses, and is Chairman and President of a company developing liners for irrigation canals.
Robert A. Naify (3) TCI director since 1987; also President and a director of The Todd-AO Corporation.
Born February 17, 1922
Jerome H. Kern (2) Appointed TCI director in December of 1993. Also is Assistant Secretary of TCI. Senior partner with
Born June 1, 1937 the law firm of Baker & Botts, L.L.P.. since September of 1992. Prior to joining Baker & Botts, L.L.P..,
was senior partner with the Law Offices of Jerome H. Kern from January 1, 1992 to September 1, 1992 and,
prior to that, was senior partner with the law firm of Shea & Gould from 1986 through December 31, 1991.
</TABLE>
(continued)
III-1
<PAGE> 69
<TABLE>
<CAPTION>
Name Positions
- ------------- ------------------
<S> <C>
J. C. Sparkman Appointed TCI Executive Vice President in 1987.
Born September 12, 1932
Fred A. Vierra Appointed Executive Vice President of TCI as of December of 1991. Was President, Chief Operating Officer
Born November 9, 1931 and a director of United Artists Entertainment Company ("UAE") from May of 1989 through December of 1991.
President and Chief Operating Officer of United Cable Television Corporation from 1982 to May of 1989.
Brendan R. Clouston Appointed Executive Vice President and Chief Operating Officer of TCI in March of 1992. Previously Senior
Born April 28, 1953 Vice President of TCI since December of 1991. From January of 1987 through December of 1991, held various
executive positions with UAE and its predecessor, United Artists Communications, Inc. ("UACI"), most
recently Executive Vice President and Chief Financial Officer.
Gary K. Bracken Controller of the Company since 1969. Appointed Senior Vice President in December of 1991. Was
Born July 29, 1939 named Vice President and Principal Accounting Officer in 1982.
Stephen M. Brett Appointed TCI Senior Vice President and General Counsel as of December of 1991. Appointed
Born September 20, 1940 Secretary of TCI in 1994. From August of 1988 through December of 1991, was Executive Vice
President-Legal and Secretary of UAE and its predecessor, UACI.
Barry P. Marshall Appointed Chief Operating Officer of TCI Cable Management Corporation, the Company's primary operating
Born March 4, 1946 subsidiary, in March of 1992, where he directly oversees all of TCI's regional operating divisions. From
1986 to March of 1992, was Vice President and Chief Operating Officer of the Company's largest regional
operating division.
Larry E. Romrell Joined a predecessor of TCI in 1961; appointed Senior Vice President of TCI in 1991. From 1972 to the
Born December 30, 1939 present, held various executive positions with WestMarc Communications, Inc. ("WestMarc"), and is
currently President and Chief Executive Officer of WestMarc, a wholly-owned subsidiary of TCI.
Bernard W. Schotters Joined TCI in 1983. Appointed Senior Vice President-Finance and Treasurer in December of 1991.
Born November 25, 1944 Was appointed Vice President-Finance in 1984.
Robert N. Thomson Joined TCI as Vice President of Government Affairs in January of 1987. Appointed Senior Vice
Born December 19, 1943 President-Communications and Policy Planning in 1991.
</TABLE>
_______________________________
(1) Director's term expires in 1994.
(2) Director's term expires in 1995.
(3) Director's term expires in 1996.
(continued)
III-2
<PAGE> 70
In February of 1994, Paul J. O'Brien, a director of the Company since
1968, passed away. Mr. O'Brien was the publisher of the "Salt Lake Tribune" and
Secretary, Treasurer and a director of Kearns-Tribune Corporation, a newspaper
publishing concern. Mr. O'Brien was also Secretary of TCI since 1968.
There are no family relations, of first cousin or closer, among the
above named individuals, by blood, marriage or adoption, except that Bob
Magness and Kim Magness are father and son, respectively.
During the past five years, none of the above persons have had any
involvement in such legal proceedings as would be material to an evaluation of
his ability or integrity.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that, during the year ended December 31, 1993, all Section 16(a)
filing requirements applicable to its officers, directors and greater than
ten-percent beneficial owners were complied with, except that one report,
covering diminimus shareholdings, was incorrectly completed by Mr. Barry P.
Marshall, Chief Operating Officer of TCI Cable Management Corporation and such
filing was subsequently amended.
III-3
<PAGE> 71
Item 11. Executive Compensation.
(a) Summary Compensation Table. The following table shows, for the
years ended December 31, 1993, 1992 and 1991 all forms of compensation (other
than Other Annual Compensation and All Other Compensation, amounts for which
are only reported for the years ended December 31, 1993 and 1992), for the
Chief Executive Officer and each of the four most highly compensated executive
officers of the Company, whose total annual salary and bonus exceeded $100,000
for the year ended December 31, 1993:
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------------- ------ -------
Other
Annual Restricted
Compen- Stock Options/ LTIP All Other
sation Award(s) SARs Payouts Compensation
Position Year Salary ($) Bonus ($) ($)(4) ($) (#) ($) ($)
- -------- ---- ---------- --------- ------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John C. Malone 1993 $800,000 (1) --- $ 2,726 --- --- --- $17,500 (7)(8)
President and Chief 1992 $490,385 (1) --- $ 2,595 --- 1,000,000(6) --- $17,999 (7)(8)
Executive Officer 1991 $450,000 (1) --- --- --- ---
Bob Magness 1993 $800,000 --- --- --- --- --- $ 2,500 (8)
Chairman of the Board 1992 $488,250 --- $ 2,355 --- 1,000,000(6) --- $ 2,000 (8)
1991 $450,000 --- --- --- ---
J. C. Sparkman 1993 $738,000 (2) --- $ 2,823 --- --- --- $15,000 (7)
Executive Vice 1992 $431,622 (2) --- $ 2,595 --- 100,000(6) --- $15,286 (7)
President 1991 $349,423 --- --- ---
Brendan R. Clouston 1993 $519,231 --- $ 263 --- 500,000(5) --- $15,000 (7)
Executive Vice 1992 $279,476 --- --- --- 500,000(6) --- $ 8,728 (7)
President and 1991 $249,222 --- --- --- --- ---
Chief Operating
Officer
Fred A. Vierra 1993 $623,617 (3) --- $ 263 --- 100,000(5) --- $15,000 (7)
Executive Vice 1992 $422,300 (3) --- --- --- 100,000(6) --- $ 8,728 (7)
President 1991 $373,961 --- --- --- --- ---
</TABLE>
____________________
(1) Includes deferred compensation of $150,000.
(2) Includes deferred compensation of $188,000 and $31,333 in 1993 and
1992, respectively.
(3) Includes deferred compensation of $250,000 and $41,667 in 1993 and
1992, respectively.
(4) Includes amounts reimbursed during the year for the payment of taxes.
(5) For additional information regarding this award, see Option/SAR Grants
Table below.
(continued)
III-4
<PAGE> 72
(6) On November 11, 1992, pursuant to the Company's 1992 Stock Incentive
Plan (the "Plan"), certain executive officers and other key employees
were granted 4,020,000 options in tandem with stock appreciation
rights to acquire share of TCI Class A common stock at a purchase
price of $16.75 per share. Such options vest and become exercisable
evenly over 5 years, first became exercisable beginning on November
11, 1993 and expire on November 11, 2002. Notwithstanding the vesting
schedule as set forth in the option agreement, the option shares shall
become available for purchase if grantee's employment with the Company
(a) shall terminate by reason of (i) termination by the Company
without cause (ii) termination by grantee for good reason (as defined
in the agreement) or (iii) disability, (b) shall terminate pursuant to
provisions of a written employment agreement, if any, between the
grantee and the Company which expressly permits the grantee to
terminate such employment upon occurrence of specified events (other
than the giving of notice and passage of time), or (c) if grantee dies
while employed by the Company. Further, the option shares will become
available for purchase in the event of an Approved Transaction, Board
Change or Control Purchase (each as defined in the Plan), unless in
the case of an Approved Transaction, the Compensation Committee under
the circumstances specified in the Plan determines otherwise.
(7) Includes dollar value of annual Company contributions to the TCI
Employee Stock Purchase Plan ("ESPP") in which all named executive
officers are fully vested. Directors who are not employees of the
Company are ineligible to participate in the ESPP. The ESPP, a defined
contribution plan, enables participating employees to acquire a
proprietary interest in the Company and benefits upon retirement.
Under the terms of the ESPP, employees are eligible for participation
after one year of service. The ESPP's normal retirement age is 65
years. Participants may contribute up to 10% of their compensation and
the Company (by annual resolution of the Board of Directors) may
contribute up to 100% of the participants' contributions. The ESPP
includes a salary deferral feature in respect of employee
contributions. Forfeitures (due to participants' withdrawal prior to
full vesting) are used to reduce the Company's otherwise determined
contributions. Generally, participants acquire a vested right in TCI
contributions as follows:
<TABLE>
<CAPTION>
Years of service Vesting Percentage
---------------- ------------------
<S> <C>
Less than 1 0
1-2 20
2-3 30
3-4 45
4-5 60
5-6 80
6 or more 100
</TABLE>
Participant contributions are fully vested. Although TCI has not
expressed an intent to terminate the ESPP, it may do so at any time.
The ESPP provides for full and immediate vesting of all participants
rights upon termination.
(8) Includes fees paid to directors for attendance at each meeting of the
Board of Directors ($500 per meeting).
(continued)
III-5
<PAGE> 73
(b) Option/SAR Grants Table. The following table shows all
individual grants of stock options and stock appreciation rights ("SARs")
granted to each of the named executive officers during the year ended December
31, 1993:
<TABLE>
<CAPTION>
% of Total
Options/ Options/SARs Market
SARs Granted Exercise or Price on Grant Date
Granted to Employees Base Price Grant Date Expiration Present Value
Name (#)(1) in Fiscal Year(1) ($/Sh) ($/Sh)(2) Date ($)(3)
- ---- -------- ----------------- ----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
John C. Malone --- --- --- --- --- ---
Bob Magness --- --- --- --- --- ---
J.C. Sparkman --- --- --- --- --- ---
Brendan R. Clouston 500,000 25.6% $16.75 $29.125 October 12, 2003 $8,340,000
Fred A. Vierra 100,000 5.1% $16.75 $29.125 October 12, 2003 $1,668,000
</TABLE>
_________________________
(1) On October 12, 1993, pursuant to the Plan, certain executive
officers and other key employees were granted 1,355,000 options in
tandem with stock appreciation rights to acquire shares of TCI Class A
common stock at a purchase price of $16.75 per share. On November 12,
1993, an additional grant of stock options in tandem with stock
appreciation rights to purchase an aggregate of 600,000 shares of TCI
Class A common stock was made to Messrs. Clouston and Vierra at a
purchase price of $16.75 per share. Such options vest evenly over four
years, become exercisable beginning on October 12, 1994 and expire on
October 12, 2003. Notwithstanding the vesting schedule as set forth in
the option agreement, the option shares shall become available for
purchase if grantee's employment with the Company (a) shall terminate
by reason of (i) termination by the Company without cause (ii)
termination by the grantee for good reason (as defined in the
agreement) or (iii) disability, (b) shall terminate pursuant to
provisions of a written employment agreement, if any, between the
grantee and the Company which expressly permits the grantee to
terminate such employment upon occurrence of specified events (other
than the giving of notice and passage of time), or (c) if grantee dies
while employed by the Company. Further, the option shares will become
available for purchase in the event of an Approved Transaction, Board
Change or Control Purchase (each as defined in the Plan), unless in the
case of an Approved Transaction, the Compensation Committee under the
circumstances specified in the Plan determines otherwise.
(2) Represents the closing market price per share of TCI Class A common
stock on November 12, 1993.
(3) The values shown are based on the Black-Scholes model and are stated in
current annualized dollars on a present value basis. The key
assumptions used in the model for purposes of this calculation
include the following: (a) a 6.5% discount rate; (b) a volatility
factor based upon the Company's historical trading pattern; (c) the
10-year option term; and (d) the closing price of the Company's
common stock on March 18, 1994. The actual value an executive may
realize will depend upon the extent to which the stock price exceeds
the exercise price on the date the option is exercised. Accordingly,
the value, if any, realized by an executive will not necessarily be
the value determined by the model.
III-6
<PAGE> 74
(c) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR
Value Table. The following table shows each exercise of stock options and SARs
during the year ended December 31, 1993 by each of the named executive officers
and the December 31, 1993 year-end value of unexercised options and SARs on an
aggregated basis:
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at at
December 31, December 31,
1993 (#) 1993 ($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable
----- --------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
John C. Malone
Exercisable --- --- 200,000 $ 2,700,000
Unexercisable --- --- 800,000 $10,800,000
Bob Magness
Exercisable --- --- 200,000 $ 2,700,000
Unexercisable --- --- 800,000 $10,800,000
J.C. Sparkman
Exercisable --- --- 20,000 $ 270,000
Unexercisable --- --- 80,000 $ 1,080,000
Brendan R. Clouston
Exercisable --- --- 100,000 $ 1,350,000
Unexercisable --- --- 900,000 $12,150,000
Fred A. Vierra
Exercisable --- --- 9,714 $ 193,794
Exercisable --- --- 20,000 $ 270,000
Unexercisable --- --- 180,000 $ 2,430,000
</TABLE>
(d) Compensation of directors. The standard arrangement by which the
Company's directors are compensated for all services (including any amounts
payable for committee participation or special assignments) as a director is as
follows: each director receives a fee of $500 plus travel expenses for
attendance at each meeting of the Board of Directors and each director who is
not a full-time employee of TCI receives additional compensation of $30,000 per
year.
Effective on November 1, 1992, the Company created a deferred compensation
plan for all non-employee directors. Each director may elect to defer receipt
of all, but not less than all, of the annual compensation (excluding meeting
fees and reimbursable expenses) payable to the director for serving on the
Company's Board of Directors for each calendar year for which such deferral is
elected. An election to defer may be made as to the compensation payable for a
single calendar year or period of years. Any compensation deferred shall be
credited to the director's account on the last day of the quarter for which
compensation has accrued. Such deferred compensation will bear interest from
the date credited to the date of payment at a rate of 8% per annum in 1993 and
120% of the applicable federal long-term rate thereafter, compounded annually.
(continued)
III-7
<PAGE> 75
A director may elect payment of deferred compensation to be made at a
specified year in the future or upon termination of the director's service as
director of the Company. Each director may elect payment in a lump sum, three
substantially equal consecutive annual installments or five substantially equal
consecutive annual installments. In the event that a director dies prior to
payment of all the amounts payable pursuant to the plan, any amounts remaining
in the director's deferred compensation account, together with accrued interest
thereon, shall be paid to the director's designated beneficiary. Mr. Naify
elected to defer his 1993 compensation and elected to defer his 1994
compensation under this plan.
There are no other arrangements whereby any of the Company's directors
received compensation for services as a director during 1993 in addition to or
in lieu of that specified by the aforedescribed standard arrangement.
(e) Employment Contracts and Termination of Employment and Change of
Control Arrangements. Effective November 1, 1992 the employment agreements
between the Company and Mr. Magness and Dr. Malone, as amended, were further
amended and restated. The term of each agreement is extended daily so that the
remainder of the employment term shall at all times on and prior to the
effective date of the termination of employment as provided by each agreement
be five years. Dr. Malone's and Mr. Magness' employment agreements provide for
annual salaries of $800,000. Additionally, these employment agreements provide
for personal use of the Company's aircraft and flight crew, limited to an
aggregate value of $35,000 per year.
Dr. Malone's employment agreement provides, among other things, for
deferral of a portion (40% in 1993 and not in excess of 40% thereafter) of the
monthly compensation payable to him. Pursuant to a letter agreement entered
into between Dr. Malone and the Company subsequent to the date of his
employment agreement, Dr. Malone deferred $150,000 in 1993 in lieu of 40% of
his compensation for such year. The deferred amounts will be payable in monthly
installments over a 20-year period commencing on the termination of Dr.
Malone's employment, together with interest thereon at the rate of 8% per annum
compounded annually from the date of deferral to the date of payment. The
amendment also provides for the payment of certain benefits, discussed below.
Dr. Malone's employment agreement provides that he will devote 80% of his
business time to the Company.
Mr. Magness' and Dr. Malone's agreements described above also provide that
upon termination of such executive's employment by the Company (other than for
cause, as defined in the agreement), or if Bob Magness or Dr. Malone elects to
terminate the agreement because of a change in control of the Company, all
remaining compensation due under the agreement for the balance of the
employment term shall be immediately due and payable.
Dr. Malone's and Mr. Magness' agreements provide that during their
employment with the Company and for a period of two years following the
effective date of their termination of employment with the Company, unless
termination results from a change in control of the Company, they will not be
connected with any entity in any manner, as defined in the agreement, which
competes in a material respect with the business of the Company, except that
Dr. Malone may serve as Chairman of the Board of Liberty. However, the
agreements provide that both executives may own securities of any corporation
listed on a national securities exchange or quoted in the Nasdaq System to the
extent of an aggregate of 5% of the amount of such securities outstanding, but
Dr. Malone and Mr. Magness may own securities of Liberty without regard to the
aforementioned percentage limitation.
(continued)
III-8
<PAGE> 76
Dr. Malone's agreement also provides that in the event of termination of
his employment with the Company, he will be entitled to receive 240 consecutive
monthly payments of $15,000 (increased at the rate of 12% per annum compounded
annually from January 1, 1988 to the date payment commences), the first of
which will be payable on the first day of the month succeeding the termination
of Dr. Malone's employment. In the event of Dr. Malone's death, his
beneficiaries will be entitled to receive the foregoing monthly payments. The
Company currently owns a whole-life insurance policy on Dr. Malone, the face
value of which is sufficient to meet its obligation under the salary
continuation arrangement. The premiums payable by the Company on such insurance
policy are currently being funded through earnings on the policy. Dr. Malone
has no interest in this policy.
The Company pays a portion of the annual premiums (equal to the "PS-58"
costs) on three whole-life insurance policies of which Dr. Malone is the
insured and trusts for the benefit of members of his family are the owners. The
Company is the designated beneficiary of the proceeds of such policies less an
amount equal to the greater of the cash surrender value thereof at the time of
Dr. Malone's death and the amount of the premiums paid by the policy owners.
Effective November 1, 1992, the Company entered into an employment
agreement with Mr. Sparkman which will expire on December 31, 1997, providing
for a salary of $738,000 per year. Mr. Sparkman's employment agreement provides
for the deferral of approximately 25.47% of each monthly payment so as to
result in the deferral of payment of Mr. Sparkman's salary at the rate of
$188,000 per annum. The deferred amounts will be payable in monthly
installments over a 120-month period commencing on the later of January 1, 1998
and the termination of Mr. Sparkman's full-time employment with the Company,
together with interest thereon at the rate of 8% per annum compounded annually
from the date of deferral to the payment date. Additionally, Mr. Sparkman's
employment agreement provides for personal use of the Company's aircraft and
flight crew, limited to an aggregate value of $35,000 per year.
Effective November 1, 1992, the Company entered into an employment
agreement with Mr. Vierra which will expire on December 31, 1997, providing for
a salary of $650,000 per year. Mr. Vierra's employment agreement provides for
the deferral of approximately 38.46% of each monthly payment so as to result in
the deferral of payment of Mr. Vierra's salary at the rate of $250,000 per
annum. The deferred amounts will be paid in monthly installments over a
240-month period commencing on the later of January 1, 1998 and the termination
of Mr. Vierra's full-time employment with the Company, together with interest
thereon at the rate of 8% per annum compounded annually from the date of
deferral to the payment date. Additionally, Mr. Vierra's employment agreement
provides for personal use of the Company's aircraft and flight crew, limited to
an aggregate value of $35,000 per year.
Messrs. Sparkman's and Vierra's employment agreements each provide that
upon termination by the Company without cause, all remaining compensation due
under such agreements for the balance of the employment term would become
immediately due and payable to such executive. Upon the death of any such
executive during the employment term, the Company will pay to such executive's
beneficiaries a lump sum in an amount equal to the lesser of (i) the
compensation due under such executive's employment agreement for the balance of
the employment term and (ii) one year's compensation. In the event of such
executive's disability, the Company will continue to pay such executive his
annual salary as and when it would have otherwise become due until the first to
occur of the end of the employment term or the date of such executive's death.
(continued)
III-9
<PAGE> 77
The Company will pay Mr. Sparkman 240 consecutive monthly payments of
$6,250 (increased at the rate of 12% per annum compounded annually from January
1, 1988) commencing upon the termination of his employment. In the event Mr.
Sparkman dies prior to the payment of all monthly payments, the remainder of
such payments shall be made to Mr. Sparkman's designated beneficiaries. The
Company owns a whole-life insurance policy on Mr. Sparkman, the face value of
which is sufficient to meet its obligations under this salary continuation
arrangement. The premiums payable by the Company on such insurance policy are
currently being funded through earnings on the policies. Mr. Sparkman has no
interest in this policy.
Dr. Malone and Mr. Sparkman each deferred a portion of their monthly
compensation under their previous employment agreements. Such deferred
compensation (together with interest thereon at the rate of 13% per annum
compounded annually from the date of deferral to the date of payment) will
continue to be payable under the terms of the previous agreements. The rate at
which interest accrues on such previously deferred compensation was established
in 1983 pursuant to such earlier agreements.
Messrs. Sparkman's and Vierra's agreements provide that during their
employment with the Company and for a period of two years following the
effective date of their termination of employment with the Company, they will
not be connected with any entity in any manner, as defined in the agreement,
which competes in a material respect with the business of the Company. However,
the agreements provide that such executives may own securities of any
corporation listed on a national securities exchange or quoted in the NASDAQ
System to the extent of an aggregate of 5% of the amount of such securities
outstanding. If such executives terminate employment with the Company prior to
the expiration of each respective employment term or if the Company terminates
each executive's employment for cause, as defined in the agreements, then the
noncompetition clause of the agreements shall apply to the longer of the
previously described two year period or the period beginning on the effective
date of termination of employment through December 31, 1997.
(f) Additional information with respect to Compensation Committee
Interlocks and Insider Participation in Compensation Decisions.
The members of the Company's compensation committee during 1993 were
Messrs. Robert A. Naify and Paul J. O'Brien, both directors of the Company. Mr.
O'Brien was also Secretary of the Company. Except as described above, neither
Mr. Naify nor Mr. O'Brien are or were officers of the Company or any of its
subsidiaries. However, Mr. Naify was the President and Co-Chief Executive
Officer of UACI from 1971 to 1986, the year in which TCI acquired a majority
interest in UACI. After the acquisition, Mr. Naify resigned, but by the terms
of his 1983 employment agreement with UACI, he continued to be entitled to
consulting payments of a fixed amount and certain fringe benefits from UACI and
its successors through August of 1993. Following the death of Mr. O'Brien in
1994, Mr. Gallivan, a director of the Company, was appointed to fill the
vacancy.
III-10
<PAGE> 78
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) Security ownership of certain beneficial owners. The following
table sets forth information with respect to the ownership of shares of the
Company's Class A and Class B common stock, as of February 1, 1994, by each
person known to the Company to own beneficially more than 5% of either class
based on 402,504,309 shares of Class A common stock and 47,258,787 shares of
Class B common stock outstanding on that date. Shares issuable upon exercise or
conversion of convertible securities are deemed to be outstanding for the
purpose of computing the percentage of ownership and overall voting power of
persons beneficially owning such convertible securities, but have not been
deemed to be outstanding for the purpose of computing the percentage ownership
or overall voting power of any other person. So far as is known to the Company,
the persons indicated below have sole voting and investment power with respect
to the shares indicated as owned by them except as otherwise stated in the
notes to the table. The Class A common stock has one vote per share and the
Class B common stock has ten votes per share.
<TABLE>
<CAPTION>
Amount and
Title Nature of
of Name and Address Beneficial Percent Voting
Class of Beneficial Owner Ownership of Class Power
- ----- ------------------- ---------- -------- ------
<S> <C> <C> <C> <C>
Associated Communications
Corporation
Class A 200 Gateway Towers 12,479,976 3.10%
Class B Pittsburgh, Pennsylvania 3,827,208 8.10% 5.80%
Bob Magness, Chairman of
the Board and a Director
Class A 5619 DTC Parkway 4,626,938(1)(2)(3) 1.15%
Class B Englewood, Colorado 27,382,076(1)(3) 57.94% 31.78%
Kearns-Tribune Corporation
Class A 400 Tribune Building 6,157,206(3) 1.53%
Class B Salt Lake City, Utah 6,480,000(3) 13.71% 8.11%
Robert A. Naify, a Director
Class A 172 Golden Gate Avenue 23,638,860(4) 5.56%
Class B San Francisco, California -- -- 2.63 %
The Equitable Life Assurance
Society of the United States
Class A 787 Seventh Avenue 23,924,443(5) 5.94%
Class B New York, New York -- -- 2.73%
The Capital Group, Inc.
Class A 333 South Hope Street 30,472,024(6) 7.57%
Class B Los Angeles, California -- -- 3.48%
Liberty Media Corporation
Class A 8101 E. Prentice, Suite 500 2,988,009(7) *
Class B Englewood, Colorado 3,537,712(7) 7.49% 4.38%
</TABLE>
- --------------------
* Less than one percent.
(continued)
III-11
<PAGE> 79
(1) Bob Magness, as executor of the Estate of Betsy Magness, is the
beneficial owner of all shares of TCI Class A and Class B common stock held of
record by the Estate of Betsy Magness. The number of shares in the table
includes 2,105,332 shares of Class A and 6,346,212 shares of Class B common
stock of which Bob Magness is beneficial owner as executor. The number of Class
A and Class B shares shown as owned by Bob Magness in the table do not include
the numbers of such shares owned by Liberty which are set forth separately. Mr.
Magness, together with Dr. Malone, (each a director and executive officer of
TCI) represent two out of the six members of Liberty's Board of Directors, and
accordingly, each of them may be deemed to share voting and investment power
over, and to be the beneficial owner of, the shares of the Company's Class A
and Class B common stock owned by Liberty. See the table in Section (b)
(Beneficial Ownership by Directors and Executive Officers) below and note 11
thereto. If all of the shares owned by Liberty were included in the numbers of
shares owned by Mr. Magness, his percentage ownership of the Company's Class A
common stock, Class B common stock and overall voting power would be 1.89%,
65.43% and 36.16%, respectively.
(2) Assumes the exercise in full of stock options granted in tandem with
stock appreciation rights in November of 1992 to acquire 1,000,000 shares of
TCI Class A common stock. Options to acquire 200,000 shares of TCI Class A
common stock are currently exercisable. See note 6 to the table in Item 11(a)
for additional information.
(3) Bob Magness and Kearns-Tribune Corporation ("Kearns") are parties to a
buy-sell agreement, entered into in October of 1968, as amended, under which
neither party may dispose of their shares without notification of the proposed
sale to the other, who may then buy such shares at the offered price, sell all
of their shares to the other at the offered price or exchange one of their
Class A shares for each Class B share held by the other and purchase any
remaining Class B shares at the offered price. There are certain exceptions,
including transfers to specified persons or entities, certain public sales of
Class A shares and exchanges of Class A shares for Class B shares.
(4) Mr. Robert Naify received notes, which are currently convertible into
22,446,926 shares of TCI Class A common stock, as partial consideration for the
sale to TCI of the stock owned by him in United Artists Communications, Inc.
("UACI"). Mr. Naify is also a co-trustee, along with Mr. Naify's brother,
Marshall, and their sister, of a trust for the benefit of Marshall which holds
additional notes convertible into 341,606 shares of TCI Class A common stock.
The number of shares in the table assumes the conversion of these notes.
(5) The number of shares in the table is based upon a Schedule 13G, dated
February 9, 1994, filed by The Equitable Life Assurance Society of the United
States which Schedule 13G reflects that said corporation has sole voting power
over 15,277,835 shares and shared voting power over 772,431 shares of Class A
common stock of the Company. No information is given in respect to voting power
over the remaining shares.
(6) The number of shares in the table is based upon a Schedule 13G, dated
February 11, 1994, filed by The Capital Group, Inc. Certain operating
subsidiaries of The Capital Group, Inc. exercised investment discretion over
various institutional accounts which held as of December 31, 1993, 30,472,024
shares of TCI Class A common stock. Capital Guardian Trust Company, a bank, and
one of such operating companies, exercised investment discretion over 3,892,102
of said shares. Capital Research and Management Company and Capital
International, Ltd., registered investment advisors, and Capital International,
S.A., another operating subsidiary, had investment discretion with respect to
26,246,100, 150,675 and 183,147 shares, respectively, of the above shares.
(continued)
III-12
<PAGE> 80
(7) Certain of the shares in the table are held pursuant to an escrow agreement
which provides, among other things, for delivery of the deposited shares to
TCI upon the exercise by TCI of certain exchange rights with respect to one
of the classes of Liberty's preferred stock.
(b) Security ownership of management. The following table sets forth
information with respect to the ownership of shares of the Company's Class A
and Class B common stock (other than directors' qualifying shares) as of
February 1, 1994 by all directors and each of the named executive officers of
the Company, other than those listed in the table in Item 12(a), and by all
executive officers and directors of the Company as a group based on 402,504,309
shares of Class A common stock and 47,258,787 shares of Class B common stock
outstanding on that date. Shares issuable upon exercise or conversion of
convertible securities are deemed to be outstanding for the purpose of
computing the percentage ownership and overall voting power of persons
beneficially owning such convertible securities, but have not been deemed to be
outstanding for the purpose of computing the percentage ownership or overall
voting power of any other person. The number of Class A and Class B shares in
the table include interests of the named directors or executive officers or of
members of the group of directors and executive officers in shares held by the
trustee of TCI's ESPP and shares held by the trustee of UAE's Employee Stock
Ownership Plan for their respective accounts. So far as is known to the
Company, the persons indicated below have sole voting and investment power with
respect to the shares indicated as owned by them except as otherwise stated in
the notes to the table and except for the shares held by the trustee of TCI's
ESPP for the benefit of such person, which shares are voted at the discretion
of the trustee.
<TABLE>
<CAPTION>
Name of Amount and Nature Percent Voting
Title of Class Beneficial Owner of Beneficial Ownership of Class Power
-------------- ---------------- ----------------------- -------- ------
<S> <C> <C> <C> <C>
Class A John C. Malone 1,165,065 (2)(10) *
Class B 904,800 (3)(10) 1.91% 1.17%
Class A Donne F. Fisher 190,659 *
Class B 134,880 * *
Class A John W. Gallivan 600 (9) *
Class B -- -- *
Class A Kim Magness -- --
Class B 518,000 1.10% *
Class A Jerome H. Kern 2,000,000 (6) *
Class B -- -- *
Class A Fred A. Vierra 517,180 (5) *
Class B -- -- *
Class A J.C. Sparkman 235,564 (4) *
Class B -- -- *
Class A Brendan R. Clouston 1,007,682 (7) *
Class B 230 * *
Class A All directors and 37,980,979 (1)(2)(4)(5)(6) 8.79%
executive officers (7)(8)(9)(10)
Class B as a group 32,532,762 (1)(2)(3)(9)(10) 68.84% 40.17%
(16 persons)
- -------------------------
</TABLE>
* Less than one percent.
(continued)
III-13
<PAGE> 81
(1) See notes 1 through 4 to the table in Item 12(a).
(2) Assumes the exercise in full of stock options granted in tandem with
stock appreciation rights in November of 1992 to acquire 1,000,000 shares of
TCI Class A common stock. Options to acquire 200,000 shares of TCI Class A
common stock are currently exercisable. See note 6 to the table in Item 11(a)
for additional information.
(3) The number of Class B shares in the table includes 634,800 shares held
by Dr. Malone's wife, Mrs. Leslie Malone, but Dr. Malone has disclaimed any
beneficial ownership of such shares. Pursuant to a letter agreement, dated June
17, 1988, Mr. Magness and Kearns each agreed with Dr. Malone that prior to
making a disposition of a significant portion of their respective holdings of
TCI Class B common stock, he or it would first offer Dr. Malone the opportunity
to purchase such shares. See note 3 to the table in Item 12(a).
(4) Assumes the exercise in full of stock options granted in tandem with
stock appreciation rights in November of 1992 to acquire 100,000 shares of TCI
Class A common stock. Options to acquire 20,000 shares of TCI Class A common
stock are currently exercisable. See note 6 to the table in Item 11(a) for
additional information.
(5) Assumes the exercise in full of stock options, granted in August of
1990, to purchase an aggregate of 9,714 shares of TCI Class A common stock at
an adjusted price of $10.30 per share. All such options are fully exercisable.
Also assumes the exercise in full of stock options granted in tandem with stock
appreciation rights in November of 1992 to acquire 100,000 shares of TCI Class
A common stock. Options to acquire 20,000 shares of TCI Class A common stock
are currently exercisable. See note 6 to the table in Item 11(a) for additional
information. Also assumes the exercise in full of stock options granted in
tandem with stock appreciation rights in November of 1993 to acquire 100,000
shares of TCI Class A common stock. None of these options are exercisable until
October 12, 1994. See note 1 to the table in Item 11(b) for additional
information.
(6) Assumes the exercise in full of stock options granted in tandem with
stock appreciation rights to acquire 2,000,000 shares of TCI Class A common
stock. Options to acquire 400,000 shares are currently exercisable. See Item
13(a) for additional discussion.
(7) Assumes the exercise in full of stock options granted in tandem with
stock appreciation rights in November of 1992 to acquire 500,000 shares of TCI
Class A common stock. Options to acquire 100,000 shares of TCI Class A common
stock are currently exercisable. See note 6 to the table in Item 11(a) for
additional information. Additionally, assumes the exercise in full of stock
options granted in tandem with stock appreciation rights in November of 1993 to
acquire 500,000 shares of TCI Class A common stock. None of the options are
exercisable until October 12, 1994. See note 1 to the table in Item 11(b) for
additional information.
(continued)
III-14
<PAGE> 82
(8) Certain executive officers of the Company (5 persons) hold options,
which were granted in November of 1989, to purchase an aggregate of 43,000
shares of TCI Class A common stock at a purchase price of $17.25 per share.
Certain executive officers and directors (11 persons including Messrs. Magness,
Malone, Sparkman, Vierra and Clouston) hold stock options which were granted in
tandem with stock appreciation rights in November of 1992, to acquire 3,325,000
shares of TCI Class A common stock at a purchase price of $16.75 per share.
Options to acquire 665,000 of such shares are currently exercisable. Additional
certain executive officers (8 persons including Messrs. Vierra and Clouston)
hold stock options which were granted in tandem with stock appreciation rights
in October and November of 1993 and become exercisable (as to 25% of the shares
covered thereby) in October of 1994, to acquire 1,225,000 shares of TCI Class A
common stock at a purchase price of $16.75 per share. Additionally, Mr. Vierra
holds an option to acquire 9,714 shares of Class A common stock as described in
note 5 above and Mr. Kern holds an option to acquire 2,000,000 shares of Class
A common stock as described in note 6 above. The number of TCI Class A shares
in the table assumes the exercise of these options.
(9) The number of shares in the table does not include any shares held by
Kearns, of which Mr. Gallivan is an officer.
(10) The number of Class A and Class B shares shown in the table as owned
by the directors and executive officers of the Company as a group include the
numbers of such shares owned by Liberty, of which Messrs. Magness and Malone,
each a director and an executive officer of the Company, are also directors and
of which Dr. Malone is an officer. See the table in Item 12(a) and note 1
thereto. The numbers of Class A and Class B shares shown in the above table as
owned by John Malone do not include the shares owned by Liberty although he may
be deemed to share voting and investment power over, and to be the beneficial
owner of, such shares. If all of the shares of the Company's Class A and Class
B common stock owned by Liberty were included in the numbers of shares owned by
Dr. Malone, the percentage ownership of the Company's Class A common stock,
Class B common stock and voting power of Dr. Malone would 1.03%, 9.40% and
5.54%, respectively.
No equity securities in any subsidiary of the Company, other than
directors' qualifying shares, are owned by any of the Company's executive
officers or directors, except that Mr. Bob Magness, a director and an executive
officer of the Company, owns 944 shares of WestMarc Series B cumulative
compounding redeemable preferred stock, including 40 shares owned by KGBB, Inc.
over which Bob Magness is deemed to have shared voting and investment power;
Mr. Kim Magness, a director of the Company, owns 29 shares of WestMarc Series B
cumulative compounding redeemable preferred stock (excluding his indirect
interest in such shares owned by KGBB, Inc.); Dr. Malone, a director and an
executive officer of the Company, owns, as trustee for his children, 68 shares
of WestMarc Series B cumulative compounding redeemable preferred stock; Mr.
Larry Romrell, an officer of the Company, owns 103 shares of WestMarc Series B
cumulative compounding redeemable preferred stock and Mr. Jerome Kern, a
director of the Company, owns 116 shares of WestMarc Series B cumulative
compounding redeemable preferred stock, including 58 shares owned by his wife,
Diane D. Kern, over which Mr. Kern is deemed to have beneficial ownership. Mr.
Kern has disclaimed any beneficial ownership of such shares owned by Diane D.
Kern. Mr. Donne Fisher, a director and executive officer of the Company,
pursuant to a Restricted Stock Award Agreement dated December 10, 1992, was
transferred the right, title and interest in and to 124.03 shares (having a
liquidation value of $4 million) of WestMarc Series B cumulative compounding
redeemable preferred stock owned by the Company. Such preferred stock held by
Mr. Fisher is subject to forfeiture in the event of certain circumstances from
the date of grant through February 1, 2002, decreasing by 10% on February 1 of
each year.
(continued)
III-15
<PAGE> 83
(c) Change of control. The Company knows of no arrangements,
including any pledge by any person of securities of the Company, the operation
of which may at a subsequent date result in a change in control of the Company
except that on January 27, 1994 the Company and Liberty entered into a
definitive agreement to combine the two companies as further described in Item
13 below.
Item 13. Certain Relationships and Related Transactions.
(a) Transactions with management and others.
As of January 27, 1994, TCI and Liberty entered into a definitive
agreement to combine the two companies. The transaction will be structured as a
tax free exchange of Class A and Class B shares of both companies and preferred
stock of Liberty for like shares of a newly formed holding company, TCI/Liberty
Holding Company ("TCI/Liberty"). TCI shareholders will receive one share of
TCI/Liberty for each of their shares. Liberty common shareholders will receive
0.975 of a share of TCI/Liberty for each of their common shares. The
transaction is subject to the approval of both sets of shareholders as well as
various regulatory approvals and other customary conditions. Subject to timely
receipt of such approvals, which cannot be assured, it is anticipated the
closing of such transaction will take place during 1994.
During 1992, the Company and Liberty formed Community Cable Television
("CCT"), a general partnership created for the purpose of acquiring and
operating cable television systems with Tele-Communications of Colorado, Inc.
("TCIC"), an indirect wholly-owned subsidiary of TCI, owning a 49.999% interest
and Liberty Cable Partner, Inc. ("LCP"), an indirect wholly-owned subsidiary of
Liberty, owning a 50.001% interest. Pursuant to a cable management agreement, a
subsidiary of TCI provides management services for cable systems owned by CCT.
The subsidiary receives a fee equal to 3% of the gross cable television revenue
of CCT. In 1993, CCT paid $1,562,000 under the agreement.
Pursuant to an amendment to the CCT General Partnership Agreement (the
"Amendment"), certain noncash contributions previously made to CCT were
rescinded, TCIC contributed to CCT a $10,590,000 promissory note of TCI
Development Corporation ("TCID") as of the date of the originally contributed
assets, LCP agreed to contribute its equity and debt interests in Daniels &
Associates Partners Limited ("DAPL"), a general partner of Mile Hi Cablevision
Associates, Ltd. ("Mile Hi"), to CCT immediately prior to the closing of the
acquisition of Mile Hi described below which closed on March 15, 1993, and TCIC
agreed to contribute, at the time of the contribution by LCP of its DAPL
interests, a TCID promissory note in the amount of $66,900,000.
On March 12, 1993, the CCT General Partnership Agreement was further
amended (the "Second Amendment"). Under the Second Amendment, LCP agreed to
contribute its Mile Hi partnership interest but not a loan receivable from Mile
Hi in the amount of $50 million (including accrued interest) (the "Mile Hi
Note") (both of which it received upon the liquidation of DAPL on March 12,
1993 as described below) to CCT in exchange for 50.001% of a newly created
Class B partnership interest in CCT. TCIC agreed to contribute a $21,795,000
promissory note from TCID in exchange for 49.999% of the Class B partnership
interests in place of the $66,900,000 note which was to be contributed under
the Amendment. On March 15, 1993, each party made its respective contribution
required by the Second Amendment.
(continued)
III-16
<PAGE> 84
On March 26, 1993, TCI Liberty, Inc. ("TCIL"), a wholly-owned
subsidiary of TCI, TCIC and Liberty entered into a recapitalization agreement
(the "Recapitalization Agreement"). Pursuant to the Recapitalization Agreement,
on June 3, 1993, Liberty repurchased 927,900 shares of Liberty's Class A common
stock owned by TCIL (sufficient to reduce TCIL's percentage ownership of
Liberty's outstanding common stock by at least 20%), and repurchased all of the
outstanding shares of Liberty's Class C Redeemable Exchangeable Preferred Stock
(the "Class C Preferred Stock") from TCIL. The purchase price per share for
the shares of Liberty's Class A common stock of $19.98 was equal to the average
of the daily closing prices for the 10 trading days prior to signing of the
Recapitalization Agreement and the daily closing prices for the 10 trading days
prior to closing. The aggregate purchase price for the Class C Preferred Stock
was $175,057,000 plus $337,500 ($22,500 per day from May 19, 1993 to the date
of closing of the repurchase). The total purchase price for the shares of Class
A common stock and Class C Preferred Stock was to be paid through the delivery
of promissory notes of Liberty in the aggregate principal amount of
$76,952,000, consisting of a $66,900,000 note and a $10,052,000 note
(collectively, the "Liberty Notes"), and the balance in cash. The Liberty
Notes, which were issued at the closing, bear interest at the rate of 11.6% per
annum, are due on February 1, 1997 and are secured by a pledge of stock of LCP
and certain other assets of LCP. However, on June 3, 1993, TCIL, TCIC and
Liberty agreed that the balance of the purchase price which was to have been
paid in cash would instead be payable by delivery of two promissory notes in
the principal amount of $86,105,000 and $18,539,442, which bear interest at the
rate of 6% per annum, and were to be due on December 31, 1993 (the "6% Notes").
In consideration for this amendment, Liberty agreed to transfer to TCIC its
interest in "TV Guide On Screen." On November 30, 1993, the parties agreed to
extend the maturity of the 6% Notes to the earlier of June 30, 1994 or ten days
following the termination of the aforementioned proposed business combination
of TCI and Liberty. TCIL acquired the shares of Liberty's Class A common stock
upon the conversion on January 15, 1993 of all of the outstanding shares
(10,794 shares) of Liberty's Class A Redeemable Convertible Preferred Stock
into 4,405,678 shares of Liberty's Class A common stock and 55,070 shares of
Class E, 6% Cumulative Redeemable Exchangeable Junior Preferred Stock. Pursuant
to the Recapitalization Agreement, TCIL, as the holder of Liberty's Class D
Redeemable Voting Preferred Stock, gave its consent to an amendment to
Liberty's Restated Certification of Incorporation that would reduce the number
of Liberty's directors that the holders of such stock have the exclusive right
to elect.
In connection with the Recapitalization Agreement, TCIC and LCP
entered into an Option-Put Agreement (the "Option-Put Agreement"), which was
amended on November 30, 1993. Under the amended Option-Put Agreement, between
June 30, 1994 and September 28, 1994, and between January 1, 1996 and January
31, 1996, TCIC will have the option to purchase all of LCP's interest in CCT
and the Mile Hi Note for an amount equal to $77.0 million plus interest
accruing at the rate of 11.6% per annum on such amount from June 3, 1993.
Between April 1, 1995 and June 29, 1995, and between January 1, 1997 and
January 31, 1997, LCP will have the right to require TCIC to purchase LCP's
interest in CCT and the Mile Hi Note for an amount equal to $77.0 million plus
interest on such amount accruing at the rate of 11.6% per annum from June 3,
1993.
Under a separate agreement, on June 3, 1993, TCI Holdings, Inc.
("TCIH"), a wholly-owned subsidiary of TCI, purchased a 16% limited partnership
interest in Intermedia Partners from LCP and all of LCP's interest in a special
allocation of income and gain of $7 million under the partnership agreement of
Intermedia Partners, for a purchase price of approximately $9 million. TCIH
also received an option to purchase LCP's remaining 6.37% limited partnership
interest in Intermedia Partners prior to December 31, 1995 for a price equal to
approximately $4 million plus interest at 8% per annum from June 3, 1993.
(continued)
III-17
<PAGE> 85
On March 15, 1993, Mile Hi Cable Partners, L.P. ("New Mile Hi")
acquired (the "Acquisition") all of the general and limited partnership
interests in Mile Hi, the owner of the cable television system serving Denver,
Colorado. New Mile Hi is a limited partnership formed among CCT (78% limited
partnership interest), Daniels Communications, Inc. ("DCI") (1% limited
partnership interest) and P & B Johnson Corp. ("PBJC") (21% general partnership
interest), a corporation controlled by Robert L. Johnson, a member of Liberty's
board of directors.
Prior to the Acquisition, Liberty, through LCP, indirectly owned a
32.175% interest in Mile Hi through its ownership of a limited partnership
interest in DAPL, one of Mile Hi's general partners. The other partners in Mile
Hi were Time-Warner Entertainment Company, L.P., various individual investors
and Mile Hi Cablevision, Inc., a corporation in which all the other partners in
Mile Hi were the shareholders.
DAPL was liquidated on March 12, 1993, at which time LCP received a
liquidating distribution consisting of its proportionate interest in DAPL's
partnership interest in Mile Hi, representing the 32.175% interest in Mile Hi.
LCP also received the Mile Hi Note in the approximate amount of $50 million
(including accrued interest) in novation of a loan receivable from DAPL in an
equivalent amount.
The total value of the Acquisition was approximately $180 million. Of
that amount, approximately $70 million was in the form of Mile Hi debt paid at
the closing. Another $50 million was in the form of the Mile Hi Note, which
debt was assumed by New Mile Hi and then by CCT. In connection with the
foregoing assumption, the Mile Hi Note was restated on March 15, 1993 to
reflect its principal amount as approximately $50 million which amount includes
the interest that had accrued on the Mile Hi Note to such date. The Mile Hi
Note, as restated, bears interest from March 15, 1993 at the rate of 8% per
annum and principal and interest thereon is payable on January 1, 2000. Of the
remaining $60 million, approximately $40 million was paid in cash to partners
in Mile Hi in exchange for their partnership interests. The remaining $20
million of interest in Mile Hi was acquired by New Mile Hi through the
contribution by Liberty's subsidiary to CCT and by CCT to New Mile Hi of the
32.175% interest in Mile Hi received in the DAPL liquidation and by DCI's
contribution to New Mile Hi of a 0.4% interest in Mile Hi.
Of the estimated $110 million in cash required by New Mile Hi to
complete the transaction, $105 million was loaned to New Mile Hi by CCT and $5
million was provided by PBJC as a capital contribution to New Mile Hi. Of the
$5 million contributed by PBJC, approximately $4 million was provided by CCT
through loans to Mr. Johnson and trusts for the benefit of his children. CCT
funded its loans to New Mile Hi and the Johnson interests by drawing down $93
million under its revolving credit facility and by borrowing $16 million from
TCI in the form of a subordinated note which bears interest at the rate of 8%
per annum and is payable in full on January 1, 2000.
At June 3, 1993, Liberty and TCI each had approximately $7,800,000 in
outstanding loans to CCT. The loans are evidenced by promissory notes, bear
interest at the rate of 12% per annum through December 31, 1992 and 8% per
annum thereafter, and are due in full on January 1, 2000. On June 3, 1993, CCT
prepaid approximately $3,000,000 to Liberty. The remaining indebtedness between
CCT and each of Liberty and TCI will remain outstanding and will be repaid in
the ordinary course out of cash flow or partnership borrowings, as permitted by
the CCT revolving credit facility. Repayments of this indebtedness will be
made in equal amounts between TCI and Liberty and prior to repayment of any
advances made by TCI in connection with or subsequent to the closing of the
Mile Hi Transaction. In the event that Liberty is no longer a partner, any
remaining indebtedness outstanding to Liberty at such time will be repaid by
CCT.
(continued)
III-18
<PAGE> 86
Satellite Services, Inc. ("SSI"), a wholly-owned subsidiary of TCI,
purchases sports and other programming from certain subsidiaries and affiliates
of Liberty. Charges to SSI (which are based upon customary rates charged to
others) for such programming were $44,074,000 for 1993. Certain subsidiaries
and affiliates of Liberty purchase, at TCI's cost plus in some cases an
administrative fee of up to 10% of the rates actually charged, certain pay
television and other programming through SSI. In addition, a consolidated
subsidiary of Liberty pays a commission to TCI for merchandise sales to
customers who are subscribers of TCI's cable systems. Aggregate commissions and
charges for such programming were $10,650,000 for 1993.
TCI and Liberty are parties to a services agreement pursuant to which
TCI agreed to provide certain financial reporting, tax and other administrative
services to Liberty. A subsidiary of Liberty also leases office space and
satellite transponder facilities from TCI. Charges by TCI for such services and
leases amounted to $1,407,000 for the year ended December 31, 1993.
In September, 1993, Encore QE Programming Corp. ("QEPC"), a
wholly-owned subsidiary of Encore Media Corporation ("EMC"), a 90% owned
subsidiary of Liberty, entered into a limited partnership agreement with TCI
Starz, Inc. ("TCIS"), a wholly-owned subsidiary of TCI, for the purpose of
developing, operating and distributing STARZ!, a first-run movie premium
programming service launched in 1994. QEPC is the general partner and TCIS is
the limited partner. Losses are allocated 1% to QEPC and 99% to TCIS. Profits
are allocated 1% to QEPC and 99% to TCIS until certain defined criteria are
met. Subsequently, profits are allocated 20% to QEPC and 80% to TCIS. TCIS has
the option, exercisable at any time and without payment of additional
consideration, to convert its limited partner interest to an 80% general
partner interest with QEPC's partnership interest simultaneously converting to
a 20% limited partnership interest. In addition, during specific periods
commencing April 1999 and April 2001, respectively, QEPC may require TCIS to
purchase, or TCIS may require QEPC to sell, the partnership interest of QEPC in
the partnership for a formula- based price. EMC is paid a management fee equal
to 20% of "managed costs" as defined, in order to manage the service. During
1993, EMC earned approximately $200,000 in management fees. EMC has agreed to
provide the limited partnership with certain programming under a programming
agreement whereby the partnership will pay its pro rata share of the total
costs incurred by EMC for such programming. In December of 1993, this same
limited partnership announced its intention to enter into a joint venture (the
"BET Venture") with Black Entertainment Television Films, Inc. and Live
Ventures, Inc. which would develop, produce and distribute motion pictures
targeted primarily to minority audiences. Though no definitive agreement has
been reached with respect to the BET Venture, under the proposed structure,
each of the parties would own a one-third interest and agree to contribute up
to $5 million as a capital contribution.
During 1993, Peachtree Cable TV, Inc. ("Peachtree"), a Nevada
corporation wholly owned by certain employees of TCI, including Messrs.
Thomson, Schotters, Marshall and Bracken (executive officers of TCI), paid
$73,553 in management fees to TCI for the operation and management of
Peachtree's cable television systems.
During 1993, Mr. Vierra, an executive officer of the Company, was a
partner in United International Holdings, a Colorado general partnership
("UIH"). An affiliate of the Company and United International Holdings, Inc.
("UIHI"), formerly a subsidiary of UIH, each own a 50% partnership interest in
United International investments ("UII"). On December 31, 1993, UIH was
liquidated and all of the shares of UIHI owned by UIH were distributed to UIH's
partners. After giving effect to the liquidation of UIH, Mr. Vierra's equity
interest in UIHI is less than 5%. UII holds, among other assets, an interest in
cable television systems in Israel. The Company, through an affiliate, has
provided or has agreed to provide certain guarantees for the benefit of the
cable systems in Israel, which guarantee obligations total $4,894,000.
(continued)
III-19
<PAGE> 87
The Company loaned to UIHI the sum of $1 million on June 18, 1992, in
connection with UII's acquisition of an interest in a MMDS system being
developed in Ireland. Such loan is secured by the MMDS system in Ireland and is
due June 30, 1999. Subsequent to the closing, the Company also loaned to UII
the sum of $975,000 on an unsecured basis. This note, which it was anticipated
would be repaid out of the proceeds of the Malta refinancing (described below)
matured on December 31, 1992 and has not yet been repaid in full. UIHI has
claimed that, due to exchange losses, the note should be restated at a lesser
principal amount. The Company has disputed that position, and the issue is
currently under negotiation.
On March 5, 1993, UII acquired an interest in a cable television
system in Malta (the "Malta System") from UIHI and its affiliates. In
connection with that acquisition, the Company contributed capital of
approximately $2 million to UII for the system in Malta and provided certain
guarantees to lenders to the Malta System not to exceed (on a joint and several
basis with UIHI) U.S. $5 million. The closing of the UII acquisition and
related financing permitted UIHI to repay a bridge loan of $1.5 million which
the Company had made to UIHI in 1992. The Company has released its security
with respect to that bridge loan. Currently, the Company and UIHI are
negotiating with lenders the terms of an additional guarantee requested by them
for the Malta System, and the terms of inter-guarantor and inter-shareholder
arrangements for reimbursement of any payments under such guarantee.
Affiliates of the Company and UIHI have also formed a partnership for
the joint management of the interests in Israel and Malta.
The Company is a partner in a partnership with a subsidiary of U S
WEST, Inc. ("U S WEST"), which partnership is in turn a partner in a
partnership, United Communications International ("UCI"), with UIHI. UIHI
acquired its partnership interest in UCI from UIH in 1993. UCI's assets consist
of cable television systems in Norway, Sweden and Hungary. The systems in
Sweden and Norway were originally acquired by UIH or its affiliates from the
Company in 1989 and 1990, respectively. The Company and U S WEST contributed
funds, through the partnership formed by them in January of 1992, to UCI which
in turn advanced funds to NorKabel A/S ("NorKabel"), a Norwegian joint stock
company and the holding company for the Norwegian cable interests, to enable
NorKabel to repay a Keep Well loan previously made by the Company to NorKabel.
UIHI and the Company are continuing to negotiate the amount of post-closing
adjustments owed to the Company from the sale of the Swedish interests to UIHI
in 1989.
On November 12, 1993, the Company granted stock options in tandem with
stock appreciation rights to purchase 2,000,000 shares of TCI Class A common
stock at a purchase price of $16.75 per share to Jerome H. Kern who,
thereafter, became a director of the Company. Twenty percent of such options
vested and became exercisable immediately and the remainder become exercisable
evenly over 4 years. The options expire October 12, 1998.
The Company believes that the foregoing business dealings with
management during 1993 were based upon terms no less advantageous to the
Company than those which would be available in dealing with unaffiliated
persons.
(b) Certain business relationships
Mr. Jerome H. Kern, a director of TCI, is a partner with the law firm
of Baker & Botts, L.L.P., the principal outside counsel for TCI.
See also Item 13(a) above.
(continued)
III-20
<PAGE> 88
(c) Indebtedness of management
On February 3, 1994, Dr. Malone, an executive officer and director of
the Company, borrowed $310,000 from the Company. Such indebtedness bore
interest at the Bank of New York prime rate. Dr. Malone repaid such
indebtedness, including accrued interest amounting to $1,733, on March 10,
1994.
See also Item 13(a) above regarding indebtedness of UIH and Liberty
and their respective subsidiaries to the Company.
III-21
<PAGE> 89
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) Financial Statements
Included in Part II of this Report: Page No.
--------
Independent Auditors' Report II-13
Consolidated Balance Sheets,
December 31, 1993 and 1992 II-14 to II-15
Consolidated Statements of Operations,
Years ended December 31, 1993, 1992 and 1991 II-16
Consolidated Statements of Stockholders' Equity,
Years ended December 31, 1993, 1992 and 1991 II-17
Consolidated Statements of Cash Flows,
Years ended December 31, 1993, 1992 and 1991 II-18 to II-19
Notes to Consolidated Financial Statements,
December 31, 1993, 1992 and 1991 II-20 to II-47
IV-1
<PAGE> 90
(a) (2) Financial Statement Schedules
Included in Part IV of this Report:
(i) Financial Statement Schedules required to be filed: Page No.
--------
Independent Auditors' Report IV-8
Schedule II - Amounts Receivable from Related Parties
and Employees Other Than Related Parties,
Years ended December 31, 1993, 1992 and 1991 IV-9
Schedule III - Condensed Information as to the
Financial Position of the Registrant, December 31, 1993
and 1992; Condensed Information as to the Operations
and Cash Flows of the Registrant,
Years ended December 31, 1993, 1992 and 1991 IV-10 to IV-12
Schedule V - Property and Equipment,
Years ended December 31, 1993, 1992 and 1991 IV-13
Schedule VI - Accumulated Depreciation
of Property and Equipment,
Years ended December 31, 1993, 1992 and 1991 IV-14
Schedule VII - Guarantees of Securities of Other Issuers,
December 31, 1993 IV-15
Schedule VIII - Valuation and Qualifying Accounts,
Years ended December 31, 1993, 1992 and 1991 IV-16
Schedule IX - Short-Term Borrowings,
Years ended December 31, 1993, 1992 and 1991 IV-17
Schedule X - Supplementary Statement
of Operations Information,
Years ended December 31, 1993, 1992 and 1991 IV-18
All other schedules have been omitted because they are not required or
are not applicable, or the required information is set forth in the
applicable financial statements or notes thereto.
IV-2
<PAGE> 91
(a) (3) Exhibits
Listed below are the exhibits which are filed as a part of this Report
(according to the number assigned to them in Item 601 of Regulation S-K):
3 - Articles of Incorporation and Bylaws:
The Restated Certificate of Incorporation, dated July 19, 1979, as
amended on June 12, 1980, June 18, 1981, June 9, 1983, May 20, 1986,
June 12, 1987, January 14, 1988, November 4, 1991, December 2, 1991,
December 2, 1991, December 27, 1991, April 3, 1992, February 8, 1993,
March 19, 1993 and July 23, 1993.
The Bylaws as Amended and Restated July 19, 1979, with amendments
April 8, 1980 and October 29, 1987.
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1987, as amended
by Form 8 amendment dated June 16, 1988. (Commission File No.
0-5550)
10 - Material Contracts:
Tele-Communications, Inc. 1992 Stock Incentive Option Plan.*
Incorporated herein by reference to the Company's definitive Proxy
Statement, dated May 21, 1992. (Commission File No. 0-5550)
Restated and Amended Employment Agreement, dated as of November 1,
1992, between the Company and Bob Magness.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31, 1992.
Restated and Amended Employment Agreement, dated as of November 1,
1992, between the Company and John C. Malone.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31,
1992.
Employment Agreement, dated as of November 1, 1992, between Tele-
Communications, Inc. and J. C. Sparkman.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31,
1992.
Employment Agreement, dated as of January 1, 1992, between Tele-
Communications, Inc. and Donne F. Fisher.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31,
1992.
Restricted Stock Award Agreement, made as of December 10, 1992, among
Tele-Communications, Inc., Donne F. Fisher and WestMarc
Communications, Inc.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31,
1992.
(continued)
IV-3
<PAGE> 92
Deferred Compensation Plan for Non-Employee Directors, effective on
November 1, 1992.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31,
1992.
Employment Agreement, dated as of November 1, 1992 between Tele-
Communications, Inc. and Fred A. Vierra.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31,
1992.
Employment Agreement, dated as of September 1, 1983, by and between
United Artists Communications, Inc. and Robert A. Naify.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1991, as amended
by Form 8 amendments dated April 7, 1992, April 14, 1992,
October 26, 1992, October 27, 1992 and March 2, 1993.
Form of 1992 Non-Qualifed Stock Option and Stock Appreciation Rights
Agreement.*
Form of 1993 Non-Qualified Stock Option and Stock Appreciation Rights
Agreement.*
Non-Qualifed Stock Option and Stock Appreciation Rights Agreement,
dated as of November 12, 1993, by and between Tele-Communications,
Inc. and Jerome H. Kern.*
Form of Indemnification Agreement.*
Qualified Employee Stock Purchase Plan of Tele-Communications, Inc.,
as amended.*
Incorporated herein by reference to the Tele-Communications, Inc.
Registration Statement on Form S-8. (Commission File
No. 33-59058)
Letter Agreement dated September 16, 1992, among Tele-Communications,
Inc., Time Warner Entertainment Company, L.P., Daniels
Communications, Inc., Cablevision Equities III and Liberty of
Denver, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated September 24, 1992.
(Commission File No. 0-19036)
Letter of Intent, dated September 16, 1992, among Robert L. Johnson,
Tele-Communications, Inc., Liberty of Denver, Inc. and Daniels
Communications, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated September 24, 1992.
(Commission File No. 0-19036)
Community Cable Television General Partnership Agreement, dated as of
January 30, 1992, by and between Tele-Communications of Colorado,
Inc. and Liberty Cable Partner, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated January 12, 1993. (Commission
File No. 0-19036)
(continued)
IV-4
<PAGE> 93
10- Material Contracts, continued:
Amendment to Community Cable Television General Partnership Agreement,
dated as of December 29, 1992, by and between Tele-Communications of
Colorado, Inc. and Liberty Cable Partner, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated January 12, 1993. (Commission
File No. 0-19036)
Second Amendment to Community Cable Television General Partnership
Agreement, dated March 12, 1993, between Tele-Communications of
Colorado, Inc. and Liberty Cable Partner, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
(Commission File No. 0-19036)
Agreement to Purchase and Sell Partnership Interests, dated as of
January 29, 1993, among Mile Hi Cable Partners, L.P., Mile Hi
Cablevision, Inc., Time Warner Entertainment Company, L.P., Daniels &
Associates Partners Limited, Daniels Communications, Inc.,
Cablevision Associates, Ltd., and John Yelenick and Maria
Garcia-Berry, as agents for the limited partners.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated March 24, 1993. (Commission
File No. 0-19036)
Loan and Security Agreement, dated January 28, 1993, among Community
Cable Television and Robert L. Johnson, the Paige Johnson Trust and
the Brett Johnson Trust.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated March 24, 1993. (Commission
File No. 0-19036)
Agreement of Limited Partnership, dated as of January 28, 1993 among
P & B Johnson Corp., Community Cable Television and Daniels
Communications, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated March 24, 1993. (Commission
File No. 0-19036)
Assignment and Assumption Agreement, dated December 29, 1992, among
Liberty Cable Partner, Inc., Community Cable Television and
Intermedia Partners.
Incorporated herein by reference to Liberty Media Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
(Commission File No. 0-19036)
Assignment and Assumption Agreement, dated December 29, 1992, among
Liberty Cable Partner, Inc. Community Cable Television and Robin
Cable Systems of Tucson.
Incorporated herein by reference to Liberty Media Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
(Commission File No. 0-19036)
Recapitalization Agreement, dated March 26, 1993, among Liberty Media
Corporation, TCI Liberty, Inc. and Tele-Communications of Colorado,
Inc.
Incorporated herein by reference to Liberty Media Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
(Commission File No. 0-19036)
(continued)
IV-5
<PAGE> 94
10- Material Contracts, continued:
Amendment to Recapitalization Agreement, dated June 3, 1993, between
Liberty Media Corporation, TCI Liberty and Tele-Communications of
Colorado, Inc.
$18,539,442 Promissory Note, dated June 3, 1993, from Liberty Media
Corporation to Tele-Communications of Colorado, Inc.
$66,900,000 Promissory Note, dated June 3, 1993, from Liberty Media
Corporation to Tele-Communications of Colorado, Inc.
$10,052,000 Promissory Note, dated June 3, 1993, from Liberty Media
Corporation to Tele-Communications of Colorado, Inc.
$86,105,000 Promissory Note, dated June 3, 1993, from Liberty Media
Corporation to Tele-Communications of Colorado, Inc.
Pledge and Security Agreement, dated June 3, 1993, between Liberty
Cable Partner, Inc. and Tele-Communications of Colorado, Inc.
Stock Pledge and Security Agreement, dated June 3, 1993, between
Liberty Capital Corp. and Liberty Cable, Inc., and
Tele-Communications of Colorado, Inc.
Option-Put Agreement, dated June 3, 1993, between Tele-Communications
of Colorado, Inc. and Liberty Cable Partner, Inc.
Assignment and Assumption Agreement, dated June 3, 1993, between
Liberty Cable Partner, Inc. and TCI Holdings, Inc.
Option Agreement dated June 3, 1993, between TCI Holdings, Inc. and
Liberty Cable Partner, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated June 24, 1993 (Commission File
No. 0-19036).
Modification of Promissory Note, dated November 30, 1993, between
Liberty Media Corporation and Tele-Communications of Colorado, Inc.
Modification of Promissory Note, dated November 30, 1993, between
Liberty Media Corporation and TCI Liberty, Inc. Amendment to
Option-Put Agreement, dated November 30, 1993, between
Tele-Communications of Colorado, Inc. and Liberty Cable Partner, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Annual Report on Form 10-K for the year ended December 31, 1993
(Commission File No. 0-19036).
Agreement Regarding Purchase and Sales of Partnership Interest, dated
as of March 26, 1993, between Liberty Cable Partners, Inc. and TCI
Holdings, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
(Commission File No. 0-19036)
Stock Purchase Agreement, dated as of February 18, 1992, among
Tele-Communications, Inc., United Artists Entertainment Company,
United Artists Holdings, Inc., United Artists Theatre Holding
Company, United Artists Cable Holdings, Inc., Oscar I Corporation
and Oscar II Corporation.
Incorporated herein by reference to the Tele-Communications, Inc.
Current Report on Form 8-K, dated February 28, 1992.
(continued)
IV-6
<PAGE> 95
Amendment Agreement and Supplement, dated as of May 12, 1992, by and
among Tele-Communications, Inc., United Artists Entertainment
Company, United Artists Holdings, Inc., United Artists Cable
Holdings, Inc., United Artists Theatre Holding Company, Oscar I
Corporation and Oscar II Corporation.
Incorporated herein by reference to the Tele-Communications, Inc.
Current Report on Form 8-K, dated May 19, 1992.
Distribution Agreement, dated as of December 2, 1992, among Comcast
Corporation, Comcast Storer, Inc., SCI Holdings, Inc., Storer
Communications, Inc., certain subsidiaries of Storer,
Tele-Communications, Inc., TCI Storer, Inc., TKR Storer Limited
Partnership, TKR Cable I, Inc., TKR Cable II, Inc. and TKR Cable
III, Inc.
Incorporated herein by reference to the Tele-Communications, Inc.
Current Report on Form 8-K, dated December 7, 1992.
Standstill, Indemnification and Contribution Agreement, made as of
November 30, 1992, by and among Tele-Communications, Inc., TCI
Storer, Inc., TKR Storer Limited Partnership, Knight-Ridder
Cablevision, Inc., Country Cable Co., and SCI Cable Partners.
Incorporated herein by reference to the Tele-Communications, Inc.
Current Report on Form 8-K, dated December 7, 1992.
Tax Sharing Agreement, dated as of December 2, 1992, by and among
Storer Communications, Inc., TKR Cable I, Inc., TKR Cable II, Inc.,
TKR Cable III, Inc., Tele-Communications, Inc., Comcast Corporation
and certain subsidiaries of Storer.
Incorporated herein by reference to the Tele-Communications, Inc.
Current Report on Form 8-K, dated December 7, 1992.
Agreement and Plan of Merger, dated as of January 27, 1994, by and
among Tele-Communications, Inc., Liberty Media Corporation,
TCI/Liberty Holding Company, TCI Mergeco, Inc. and Liberty Mergeco,
Inc.
Incorporated herein by reference to the Company's Current Report
on Form 8-K dated February 15, 1994.
21- Subsidiaries of the Registrant.
23- Consent of KPMG Peat Marwick.
*Constitutes management contract or compensatory arrangement.
(b) Reports on Form 8-K filed during the quarter ended December 31, 1993:
Item
Date of Report Reported Financial Statements Filed
-------------- -------- --------------------------
October 26, 1993 Item 5 Liberty Media Corporation:
Years ended December 31, 1992, nine
months ended December 31, 1991,
three months ended March 31, 1991
and year ended December 31, 1991
Six months ended June 30, 1993 and
1992 (unaudited)
IV-7
<PAGE> 96
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Tele-Communications, Inc.:
Under date of March 21, 1994, we reported on the consolidated balance sheets of
Tele-Communications, Inc. and subsidiaries as of December 31, 1993 and 1992,
and the related consolidated statements of operations, stockholders' equity,
and cash flows for each of the years in the three-year period ended December
31, 1993, as contained in the annual report on Form 10-K for the year 1993. In
connection with our audits of the aforementioned consolidated financial
statements, we have also audited the related financial statement schedules as
listed in the accompanying index. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statement schedules based on our audits.
In our opinion, the related financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
As discussed in notes 1 and 10 to the consolidated financial statements, the
Company changed its method of accounting for income taxes.
/s/ KPMG PEAT MARWICK
KPMG Peat Marwick
Denver, Colorado
March 21, 1994
IV-8
<PAGE> 97
Schedule II
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Amounts Receivable from Related Parties
and Employees Other Than Related Parties
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
Balance at Balance
beginning at end
Name of debtor of year Additions Deductions of year
- -------------- ---------- --------- ---------- -------
amounts in millions
<S> <C> <C> <C> <C>
Year ended
December 31, 1993:
Russ Skinner $0.2 -- -- 0.2 (1)
==== ==== ==== ====
Year ended
December 31, 1992:
Russ Skinner $0.2 -- -- 0.2
==== ==== ===== ====
Year ended
December 31, 1991:
Russ Skinner $0.2 -- -- 0.2
Arthur Lee -- 0.2 (0.2) --
Ron Rierson 0.1 -- (0.1) --
---- ---- ---- ----
$0.3 0.2 (0.3) 0.2
==== ==== ==== ====
</TABLE>
(1) This note receivable is due in 2003 or upon sale of certain property
and has no stated interest rate. Interest will be based upon
appreciation of the underlying property.
Note - Amounts include accrued interest on note receivable balances.
IV-9
<PAGE> 98
Schedule III
Page 1 of 3
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Condensed Information as to the
Financial Position of the Registrant
December 31, 1993 and 1992
<TABLE>
<CAPTION>
Assets 1993 1992*
- ------ ---- ----
amounts in millions
<S> <C> <C>
Cash $ 4 79
Investments in and advances to consolidated
subsidiaries - eliminated upon consolidation 7,560 4,795
Property and equipment, at cost 40 27
Less accumulated depreciation 16 12
------ -----
24 15
------ -----
Other assets, at cost, net of amortization 44 32
------ -----
$7,632 4,921
====== =====
Liabilities and Stockholders' Equity
- ------------------------------------
Accrued liabilities $ 324 188
Debt 5,178 2,897
------ -----
Total liabilities 5,502 3,085
Redeemable preferred stocks 18 110
Stockholders' equity (see detail on page II-15) 2,112 1,726
------ -----
$7,632 4,921
====== =====
Guarantee (see Schedule VII) $ 44
======
</TABLE>
*Restated - see notes 1, 3 and 10 to consolidated financial statements.
IV-10
<PAGE> 99
Schedule III
Page 2 of 3
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Condensed Information as to the
Operations of the Registrant
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992* 1991*
---- ---- ----
amounts in millions
<S> <C> <C> <C>
Management costs reimbursed by subsidiaries $ 98 106 54
----- ----- -----
Operating expenses (income):
Selling, general and administrative 134 99 50
Interest expense 369 226 164
Interest income, principally from
consolidated subsidiaries (370) (232) (165)
Depreciation and amortization 8 5 3
Gain on disposition of assets (43) (2) --
Loss on early extinguishment of debt -- 10 2
----- ----- -----
98 106 54
----- ----- -----
Earnings from operations before
share of losses of
consolidated subsidiaries -- -- --
Share of losses of
consolidated subsidiaries, including
loss from discontinued operations (7) (8) (97)
----- ----- -----
Net loss $ (7) (8) (97)
===== ===== =====
</TABLE>
*Restated - see notes 1, 3 and 10 to consolidated financial statements.
IV-11
<PAGE> 100
Schedule III
Page 3 of 3
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Condensed Information as to Cash Flows
of the Registrant
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
amounts in millions
<S> <C> <C> <C>
Cash flows from operating activities:
Earnings before share of losses of
consolidated subsidiaries, including
loss from discontinued operations $ -- -- --
Adjustments to reconcile loss to net
cash provided by operating activities:
Depreciation and amortization 8 5 3
Loss on early extinguishment of debt -- 10 2
Gain on disposition of assets (43) (2) --
Amortization of debt discount 27 26 15
Change in accrued liabilities 136 90 40
------ ----- -----
Net cash provided by
operating activities 128 129 60
------ ----- -----
Cash flows from investing activities:
Reduction in or additional
investments in and advances to
consolidated subsidiaries, net (2,723) (1,036) (508)
Proceeds on disposition of assets 111 12 --
Capital expended for property and
equipment and other assets, net (38) (25) (19)
------ ----- -----
Net cash used by
investing activities (2,650) (1,049) (527)
------ ----- -----
Cash flows from financing activities:
Borrowings of debt 3,274 2,327 1,996
Repayment of debt (735) (1,332) (1,512)
Preferred stock dividends (2) (15) --
Repurchase of preferred stock (92) (5) --
Issuances of common stock 6 7 2
Repurchases of common stock (4) (19) (9)
------ ----- -----
Net cash provided by
financing activities 2,447 963 477
------ ----- -----
Increase (decrease) in cash (75) 43 10
Cash at beginning of year 79 36 26
------ ----- -----
Cash at end of year $ 4 79 36
====== ===== =====
Supplemental disclosure of cash flow information -
Cash paid during the year for interest $ 257 177 142
====== ===== =====
</TABLE>
See also note 2 to the consolidated financial statements.
IV-12
<PAGE> 101
Schedule V
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Property and Equipment
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
Balance at Retire- Balance
beginning Additions ments at end
Classification of year* at cost* or sales* Other of year*
- -------------- ------- ------- -------- ----- -------
amounts in millions
<S> <C> <C> <C> <C> <C>
Year ended
December 31, 1993:
Land $ 71 1 (1) 2 73
Distribution systems 6,075 899 (323) (22) 6,629
Support equipment
and buildings 712 120 (29) 15 818
------ ------ ------ ---- ------
$6,858 1,020 (353) (5) 7,520
====== ====== ====== ==== ======
Year ended:
December 31, 1992:
Land $ 59 10 (2) 4 71
Distribution systems 5,191 1,075 (151) (40) 6,075
Support equipment
and buildings 598 123 (33) 24 712
------ ------ ------ ---- ------
$5,848 1,208 (186) (12) 6,858
====== ====== ====== ==== ======
Year ended
December 31, 1991:
Land $ 66 1 (8) -- 59
Distribution systems 4,976 551 (336) -- 5,191
Support equipment
and buildings 528 118 (48) -- 598
------ ------ ------ ---- ------
$5,570 670 (392) -- 5,848
====== ====== ====== ==== ======
</TABLE>
*Restated and Reclassified - see notes 1 and 10 to consolidated financial
statements.
Note - Columns which would have been answered "none" have been omitted.
IV-13
<PAGE> 102
Schedule VI
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Accumulated Depreciation of
Property and Equipment
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
Additions
Balance at charged Balance
beginning to profit Retire- at end
Description of year* and loss* ments* Other* of year*
- ----------- ---------- --------- ------- ------ --------
amounts in millions
<S> <C> <C> <C> <C> <C>
Year ended
December 31, 1993:
Distribution systems $1,993 544 (315) -- 2,222
Support equipment
and buildings 303 78 (18) -- 363
------ ------ ------ ----- ------
$2,296 622 (333) -- 2,585
====== ====== ====== ===== ======
Year ended
December 31, 1992:
Distribution systems $1,536 445 (142) 154 1,993
Support equipment
and buildings 231 67 (22) 27 303
------ ------ ------ ----- ------
$1,767 512 (164) 181** 2,296
====== ====== ====== ===== ======
Year ended
December 31, 1991:
Distribution systems $1,230 467 (155) (6) 1,536
Support equipment
and buildings 184 62 (19) 4 231
------ ------ ------ ----- ------
$1,414 529 (174) (2) 1,767
====== ====== ====== ===== ======
</TABLE>
*Restated and Reclassified - see notes 1 and 10 to consolidated financial
statements.
**Amount represents the historical accumulated depreciation of the Storer
assets received by the Holding Companies in the Split-Off (see note 4 to
the consolidated financial statements).
IV-14
<PAGE> 103
Schedule VII
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Guarantees of Securities of Other Issuers
December 31, 1993
<TABLE>
<CAPTION>
Title of issue
Name of issuer of securities of each class Total amount Nature
guaranteed by person for of securities guaranteed and of
which statement is filed guaranteed outstanding guarantee
- ---------------------------- -------------- -------------- ---------
amounts in millions
<S> <C> <C> <C>
Parent company guarantee:
ARP Partnership General $ 1 Letter of
liabilities credit
TCG Partners General 9 Letter of
liabilities credit
Reiss Media Enterprises, Inc. Bank loan 3 Funding
commitment
London South Cable Bank loan Principal and
Partnership and Avon interest
Cable Limited Partnership 31
----
$ 44
====
Subsidiaries' guarantees:
Tempo Satellite, Inc. Construction $125 Payment of
liability obligations
Robin Media Group, Inc. Bank loan 30 Principal and
interest
Interactive Network, Inc. Bank loan 2 Principal and
interest
UA-Israel, Inc. Bank loan 5 Principal and
and general interest
liabilities and payment
obligations
UA-Malta, Inc. Bank loan 5 Principal and
and general interest
liabilities and payment
obligations
Tevel Israel International General Letter of
Communications, Ltd. liabilities 1 credit
E! Entertainment Building Lease
Television, Inc. lease 1 guarantee
United Artists Properties I Bank loan 12 Principal and
interest
United Artists Properties II Bank loan 12 Principal and
---- interest
$193
====
</TABLE>
Note - Columns which would have been answered "none" have been omitted.
IV-15
<PAGE> 104
Schedule VIII
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
Additions Deductions
--------- ----------
Balance at Charged to Write-offs Balance
beginning profit net of at end
Description of year* and loss* recoveries* of year*
- ----------- ---------- ---------- ---------- -------
amounts in millions
<S> <C> <C> <C> <C>
Year ended
December 31, 1993:
Allowance for doubtful
receivables - trade $15 58 (54) 19
=== === === ===
Year ended
December 31, 1992:
Allowance for doubtful
receivables - trade $16 45 (46) 15
=== === === ===
Year ended
December 31, 1991:
Allowance for doubtful
receivables - trade $11 46 (41) 16
=== === === ===
</TABLE>
*Reclassified - see note 1 to consolidated financial statements.
IV-16
<PAGE> 105
Schedule IX
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Short-Term Borrowings
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
End of Year During the year
---------------------- ------------------------------------
Category of Weighted Weighted
aggregate average Maximum Average average
short-term Amount interest amount amount interest
borrowing Outstanding rate outstanding outstanding rate
- ---------- ----------- -------- ----------- ----------- --------
amounts in millions,
except percentage amounts
<S> <C> <C> <C> <C> <C>
Year ended
December 31, 1993 -
Commercial paper $ 44 3.94% $ 306 $128 3.75%
==== ==== ====== ==== ====
Year ended
December 31, 1992 -
Commercial paper $ 62 3.70% $ 266 $171 4.55%
==== ==== ====== ==== ====
Year ended
December 31, 1991 -
Commercial paper $ 47 5.70% $ 188 110 6.31%
==== ==== ====== ==== ====
</TABLE>
IV-17
<PAGE> 106
Schedule X
TELE-COMMUNICATIONS, INC.
AND SUBSIDIARIES
Supplementary Statement of Operations Information
Years ended December 31, 1993, 1992 and 1991
<TABLE>
<CAPTION>
Charged to expense
----------------------
1993 1992* 1991*
---- ---- ----
amounts in millions
<S> <C> <C> <C>
Maintenance and repairs $ 45 43 37
==== ==== ====
Amortization:
Franchise costs $258 230 207
Other 31 22 20
---- ---- ----
$289 252 227
==== ==== ====
Taxes, other than
payroll and income $203 170 97
==== ==== ====
Royalties -
Copyright fees $ 43 40 28
==== ==== ====
Advertising costs $ 20 21 36
==== ==== ====
</TABLE>
*Restated and Reclassified - see notes 1 and 10 to consolidated financial
statements.
IV-18
<PAGE> 107
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
TELE-COMMUNICATIONS, INC.
By /s/ JOHN C. MALONE
-------------------------------
John C. Malone
President and
Chief Executive Officer
Dated: March 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ BOB MAGNESS Chairman of the Board March 25, 1994
- --------------------------- and Director
Bob Magness
/s/ JOHN C. MALONE President, Chief Executive March 25, 1994
- --------------------------- Officer and Director
John C. Malone
/s/ KIM MAGNESS Director March 25, 1994
- ---------------------------
Kim Magness
/s/ D. F. FISHER Executive Vice President March 25, 1994
- --------------------------- and Director
D. F. Fisher (Principal Financial Officer)
/s/ GARY K. BRACKEN Senior Vice President March 25, 1994
- --------------------------- and Controller
Gary K. Bracken (Principal Accounting Officer)
</TABLE>
IV-19
<PAGE> 108
EXHIBIT INDEX
Listed below are the exhibits which are filed as a part of this Report
(according to the number assigned to them in Item 601 of Regulation S-K):
3 - Articles of Incorporation and Bylaws:
The Restated Certificate of Incorporation, dated July 19, 1979, as
amended on June 12, 1980, June 18, 1981, June 9, 1983, May 20, 1986,
June 12, 1987, January 14, 1988, November 4, 1991, December 2, 1991,
December 2, 1991, December 27, 1991, April 3, 1992, February 8,
1993, March 19, 1993 and July 23, 1993.
The Bylaws as Amended and Restated July 19, 1979, with amendments
April 8, 1980 and October 29, 1987.
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1987, as amended
by Form 8 amendment dated June 16, 1988. (Commission File
No. 0-5550)
10 - Material Contracts:
Tele-Communications, Inc. 1992 Stock Incentive Option Plan.*
Incorporated herein by reference to the Company's definitive
Proxy Statement, dated May 21, 1992. (Commission File No. 0-5550)
Restated and Amended Employment Agreement, dated as of November 1,
1992, between the Company and Bob Magness.*
Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992, as amended by
Form 10-K/A (amendment #1) for the year ended December 31, 1992.
Restated and Amended Employment Agreement, dated as of November 1,
1992, between the Company and John C. Malone.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31,
1992.
Employment Agreement, dated as of November 1, 1992, between
Tele-Communications, Inc. and J. C. Sparkman.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31,
1992.
Employment Agreement, dated as of January 1, 1992, between
Tele-Communications, Inc. and Donne F. Fisher.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31,
1992.
Restricted Stock Award Agreement, made as of December 10, 1992, among
Tele-Communications, Inc., Donne F. Fisher and WestMarc
Communications, Inc.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31,
1992.
<PAGE> 109
Deferred Compensation Plan for Non-Employee Directors, effective on
November 1, 1992.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31,
1992.
Employment Agreement, dated as of November 1, 1992 between
Tele-Communications, Inc. and Fred A. Vierra.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1992, as amended
by Form 10-K/A (amendment #1) for the year ended December 31,
1992.
Employment Agreement, dated as of September 1, 1983, by and between
United Artists Communications, Inc. and Robert A. Naify.*
Incorporated herein by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1991, as amended
by Form 8 amendments dated April 7, 1992, April 14, 1992,
October 26, 1992, October 27, 1992 and March 2, 1993.
Form of 1992 Non-Qualifed Stock Option and Stock Appreciation Rights
Agreement.*
Form of 1993 Non-Qualified Stock Option and Stock Appreciation Rights
Agreement.*
Non-Qualifed Stock Option and Stock Appreciation Rights Agreement,
dated as of November 12, 1993, by and between Tele-Communications,
Inc. and Jerome H. Kern.*
Form of Indemnification Agreement.*
Qualified Employee Stock Purchase Plan of Tele-Communications, Inc.,
as amended.*
Incorporated herein by reference to the Tele-Communications, Inc.
Registration Statement on Form S-8. (Commission File
No. 33-59058)
Letter Agreement dated September 16, 1992, among Tele-Communications,
Inc., Time Warner Entertainment Company, L.P., Daniels
Communications, Inc., Cablevision Equities III and Liberty of
Denver, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated September 24, 1992.
(Commission File No. 0-19036)
Letter of Intent, dated September 16, 1992, among Robert L. Johnson,
Tele-Communications, Inc., Liberty of Denver, Inc. and Daniels
Communications, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated September 24, 1992.
(Commission File No. 0-19036)
Community Cable Television General Partnership Agreement, dated as of
January 30, 1992, by and between Tele-Communications of Colorado,
Inc. and Liberty Cable Partner, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated January 12, 1993.
(Commission File No. 0-19036)
<PAGE> 110
10- Material Contracts, continued:
Amendment to Community Cable Television General Partnership Agreement,
dated as of December 29, 1992, by and between Tele-Communications
of Colorado, Inc. and Liberty Cable Partner, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated January 12, 1993.
(Commission File No. 0-19036)
Second Amendment to Community Cable Television General Partnership
Agreement, dated March 12, 1993, between Tele-Communications of
Colorado, Inc. and Liberty Cable Partner, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
(Commission File No. 0-19036)
Agreement to Purchase and Sell Partnership Interests, dated as of
January 29, 1993, among Mile Hi Cable Partners, L.P., Mile Hi
Cablevision, Inc., Time Warner Entertainment Company, L.P., Daniels
& Associates Partners Limited, Daniels Communications, Inc.,
Cablevision Associates, Ltd., and John Yelenick and Maria
Garcia-Berry, as agents for the limited partners.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated March 24, 1993.
(Commission File No. 0-19036)
Loan and Security Agreement, dated January 28, 1993, among Community
Cable Television and Robert L. Johnson, the Paige Johnson Trust and
the Brett Johnson Trust.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated March 24, 1993.
(Commission File No. 0-19036)
Agreement of Limited Partnership, dated as of January 28, 1993 among
P & B Johnson Corp., Community Cable Television and Daniels
Communications, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated March 24, 1993.
(Commission File No. 0-19036)
Assignment and Assumption Agreement, dated December 29, 1992, among
Liberty Cable Partner, Inc., Community Cable Television and
Intermedia Partners.
Incorporated herein by reference to Liberty Media Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
(Commission File No. 0-19036)
Assignment and Assumption Agreement, dated December 29, 1992, among
Liberty Cable Partner, Inc. Community Cable Television and Robin
Cable Systems of Tucson.
Incorporated herein by reference to Liberty Media Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
(Commission File No. 0-19036)
Recapitalization Agreement, dated March 26, 1993, among Liberty Media
Corporation, TCI Liberty, Inc. and Tele-Communications of Colorado,
Inc.
Incorporated herein by reference to Liberty Media Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
(Commission File No. 0-19036)
<PAGE> 111
10- Material Contracts, continued:
Amendment to Recapitalization Agreement, dated June 3, 1993, between
Liberty Media Corporation, TCI Liberty and Tele-Communications of
Colorado, Inc.
$18,539,442 Promissory Note, dated June 3, 1993, from Liberty Media
Corporation to Tele-Communications of Colorado, Inc.
$66,900,000 Promissory Note, dated June 3, 1993, from Liberty Media
Corporation to Tele-Communications of Colorado, Inc.
$10,052,000 Promissory Note, dated June 3, 1993, from Liberty Media
Corporation to Tele-Communications of Colorado, Inc.
$86,105,000 Promissory Note, dated June 3, 1993, from Liberty Media
Corporation to Tele-Communications of Colorado, Inc.
Pledge and Security Agreement, dated June 3, 1993, between Liberty
Cable Partner, Inc. and Tele-Communications of Colorado, Inc.
Stock Pledge and Security Agreement, dated June 3, 1993, between
Liberty Capital Corp. and Liberty Cable, Inc., and
Tele-Communications of Colorado, Inc.
Option-Put Agreement, dated June 3, 1993, between Tele-Communications
of Colorado, Inc. and Liberty Cable Partner, Inc.
Assignment and Assumption Agreement, dated June 3, 1993, between
Liberty Cable Partner, Inc. and TCI Holdings, Inc.
Option Agreement dated June 3, 1993, between TCI Holdings, Inc. and
Liberty Cable Partner, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Current Report on Form 8-K, dated June 24, 1993 (Commission
File No. 0-19036).
Modification of Promissory Note, dated November 30, 1993, between
Liberty Media Corporation and Tele-Communications of Colorado, Inc.
Modification of Promissory Note, dated November 30, 1993, between
Liberty Media Corporation and TCI Liberty, Inc.
Amendment to Option-Put Agreement, dated November 30, 1993, between
Tele-Communications of Colorado, Inc. and Liberty Cable Partner, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Annual Report on Form 10-K for the year ended December 31, 1993
(Commission File No. 0-19036).
Agreement Regarding Purchase and Sales of Partnership Interest, dated
as of March 26, 1993, between Liberty Cable Partners, Inc. and
TCI Holdings, Inc.
Incorporated herein by reference to Liberty Media Corporation's
Annual Report on Form 10-K for the year ended December 31, 1992.
(Commission File No. 0-19036)
Stock Purchase Agreement, dated as of February 18, 1992, among
Tele-Communications, Inc., United Artists Entertainment Company,
United Artists Holdings, Inc., United Artists Theatre Holding
Company, United Artists Cable Holdings, Inc., Oscar I Corporation
and Oscar II Corporation.
Incorporated herein by reference to the Tele-Communications, Inc.
Current Report on Form 8-K, dated February 28, 1992.
<PAGE> 112
Amendment Agreement and Supplement, dated as of May 12, 1992, by and
among Tele-Communications, Inc., United Artists Entertainment
Company, United Artists Holdings, Inc., United Artists Cable
Holdings, Inc., United Artists Theatre Holding Company, Oscar I
Corporation and Oscar II Corporation.
Incorporated herein by reference to the Tele-Communications, Inc.
Current Report on Form 8-K, dated May 19, 1992.
Distribution Agreement, dated as of December 2, 1992, among Comcast
Corporation, Comcast Storer, Inc., SCI Holdings, Inc., Storer
Communications, Inc., certain subsidiaries of Storer,
Tele-Communications, Inc., TCI Storer, Inc., TKR Storer
Limited Partnership, TKR Cable I, Inc., TKR Cable II, Inc. and TKR
Cable III, Inc.
Incorporated herein by reference to the Tele-Communications, Inc.
Current Report on Form 8-K, dated December 7, 1992.
Standstill, Indemnification and Contribution Agreement, made as of
November 30, 1992, by and among Tele-Communications, Inc., TCI
Storer, Inc., TKR Storer Limited Partnership, Knight-Ridder
Cablevision, Inc., Country Cable Co., and SCI Cable Partners.
Incorporated herein by reference to the Tele-Communications, Inc.
Current Report on Form 8-K, dated December 7, 1992.
Tax Sharing Agreement, dated as of December 2, 1992, by and among
Storer Communications, Inc., TKR Cable I, Inc., TKR Cable II,
Inc., TKR Cable III, Inc., Tele-Communications, Inc., Comcast
Corporation and certain subsidiaries of Storer.
Incorporated herein by reference to the Tele-Communications, Inc.
Current Report on Form 8-K, dated December 7, 1992.
Agreement and Plan of Merger, dated as of January 27, 1994, by and
among Tele-Communications, Inc., Liberty Media Corporation,
TCI/Liberty Holding Company, TCI Mergeco, Inc. and Liberty Mergeco,
Inc.
Incorporated herein by reference to the Company's Current Report
on Form 8-K dated February 15, 1994.
21- Subsidiaries of the Registrant.
23- Consent of KPMG Peat Marwick.
*Constitutes management contract or compensatory arrangement.
<PAGE> 1
EXHIBIT 3
{LOGO}
STATE
OF
DELAWARE
Office of SECRETARY OF STATE
I, Glenn C. Kenton Secretary of State of the State of Delaware, do
hereby certify that the above and foregoing is a true and correct copy of
Restated Certificate of Incorporation of the "TELE-COMMUNICATIONS, INC.", as
received and filed in this office the nineteenth day of July A.D. 1979, at 1
o'clock P.M.
In Testimony Whereof, I have hereunto set my
hand and official seal at Dover this nineteenth
day of July in the year of our Lord one
thousand nine hundred and seventy-nine.
{SEAL}
RECEIVED FOR RECORD
JUL 19 1979
LEO J. DUGAN, Jr., Recorder
/s/ GLENN C. KENTON
Glenn C. Kenton, Secretary of State
<PAGE> 2
RESTATED CERTIFICATE OF INCORPORATION
OF
TELE-COMMUNICATIONS, INC.
TELE-COMMUNICATIONS, INC., a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is TELECOMMUNICATIONS, INC.,
and was incorporated under the name American Tele-Communications, Inc. The date
of filing its original Certificate of Incorporation with the Secretary of State
was August 20, 1968.
2. This Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation of this
corporation.
3. The text of the Certificate of Incorporation as amended or
supplemented heretofore is further amended hereby to read as herein set forth in
full:
ARTICLE I.
The name of the corporation shall be TELE-COMMUNICATIONS, INC.
ARTICLE II.
The location of the registered office of the corporation in
the State of Delaware is the office of The Corporation Trust Company, 100 W.
10th Street, Wilmington, County of New Castle, Delaware 19899, and the name of
the registered agent at such address is The Corporation Trust Company.
<PAGE> 3
ARTICLE III.
The nature of the business and purposes to be conducted or
promoted are:
FIRST: To own and operate a radio common carrier service and
to transmit by radio signals, television signals and other intelligence; to own
and hold licenses issued by the Federal Communications Commission and all other
government agencies appropriate to the conducting of such common carrier radio
service; and to engage in the business of transmission of intelligence by wire,
cable, microwave facilities, and by such other means as may be practicable in
accordance with the nature of the art.
SECOND: To own, operate, and deal in community antenna
systems, cable television systems, and all devices, master antenna, cable and
distribution systems whereby radio signals, television signals, and other
intelligence are transmitted, communicated or relayed from one point to another
by means of cable, satellites, microwave facilities, and by such other means as
may be practicable in accordance with the nature of the art.
THIRD: To own, lease, operate, acquire, and deal generally in
television stations, radio stations, theatres, electrical and mechanical
equipment or mechanisms or devices used for the conveying or disseminating or
broadcasting of radio or television signals, and to own and operate microwave
and transmitting equipment and devices, and cable and wire facilities for the
transmitting of television and radio signals.
FOURTH: To acquire, own, hold, and operate under licenses,
privileges and franchises from the government of any
2
<PAGE> 4
state, municipality or nation or any agency or instrumentality thereof.
FIFTH: To engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
ARTICLE IV.
FIRST: The total number of shares of stock which the
corporation shall have authority to issue is twenty-one million (21,000,000)
shares divided into the following classes:
(a) Ten million (10,000,000) shares of Class A Common
Stock with a par value of One Dollar ($1.00) per share (said
shares constituting the Common Stock of the corporation
heretofore authorized and being hereby designated as Class A
Common Stock);
(b) Ten million (10,000,000) shares of Class B Common
Stock with a par value of One Dollar ($1.00) per share; and
(c) One million (1,000,000) shares of Preferred Stock
having a par value of One Dollar ($1.00) per share.
SECOND: Each share of Class A Common Stock shall be identical
in all respects with the Class B Common Stock, except that each holder of Class
A Common Stock shall be entitled to one (1) vote for each share of such stock
held and each holder of Class B Common Stock shall be entitled to ten (10) votes
for each share of such stock held.
THIRD: The Board of Directors is authorized, sub-
3
<PAGE> 5
ject to limitations prescribed by law and to the provisions of this Article, to
provide for the issuance of Preferred Stock from time to time in one or more
series with such distinctive serial designations, rights, preferences and
limitations of the shares of each such series as the Board of Directors shall
establish, by filing a statement pursuant to the Delaware Corporation Law. The
authority of the Board of Directors with respect to each series shall, to the
extent allowed by such Law, include the authority to establish and fix the
following:
(a) The number of shares initially constituting the
series and the distinctive designation of that series;
(b) The extent, if any, to which the series shall
have voting rights, whether none, full, fractional or
otherwise limited, subject, however, to the limitation that at
the time of the creation of any particular series of Preferred
Stock, the voting rights, if any, of that particular series of
Preferred Stock, plus the total voting rights then authorized
for all other Preferred Stock, shall not exceed five percent
(5%) of the voting rights of all Common Stock issued and
outstanding at that time;
(c) Whether entitled to receive dividends (which may
be cumulative or noncumulative) at such rate or rates, on such
conditions, and at such times and payable in preference to, or
in such relation to, the dividends payable
4
<PAGE> 6
on any other class or classes or any other series of the same
or any other class or classes of stock of the corporation;
(d) The rights of the shares of that series in the
event of voluntary or involuntary liquidation, dissolution or
winding up of the corporation, or upon any distribution of its
assets;
(e) Whether the shares shall have conversion
privileges and, if so, the terms and conditions of such
conversion privileges, including provision, if any, for
adjustment of the conversion rate and for payment of
additional amounts by holders of Preferred Stock of that
series upon exercise of such conversion privileges;
(f) Whether or not the shares of that series shall be
redeemable, and, if so, the price at and the terms and
conditions upon which such shares shall be redeemable, and
whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so,
the terms and amount of such sinking fund; and
(g) Such other preferences and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof.
Notwithstanding the fixing of the number of shares
constituting a particular series upon the issuance thereof,
5
<PAGE> 7
the Board of Directors may at any time thereafter authorize the issuance of
additional shares of the same series or may reduce the number of shares
constituting such series.
The Board of Directors is expressly authorized to vary the
provisions relating to the foregoing matters between the various series of
Preferred Stock, but in all other respects the shares of each series shall be
of equal rank with each other, regardless of series. All Preferred Stock of
any one series shall be identical in all respects, except as to the dates from
which dividends shall be cumulative, if such dividends are provided.
FOURTH: Except as may be determined by the Board of Directors
of the corporation pursuant to paragraph THIRD of this Article IV with respect
to the Preferred Stock, and except as otherwise may be required by law, the
holders of the Class A Common Stock and the holders of the Class B Common Stock
shall vote with the holders of voting shares of the Preferred Stock, if any, as
one class for the election of directors and for all other purposes.
At all elections of members of the Board of Directors of the
corporation, each holder of stock certified to vote shall be entitled to as
many votes as shall equal the number of votes which (except for the within
provision as to cumulative voting) he would be entitled to cast for the
election of directors with respect to the votes represented by his shares of
stock multiplied by the number of directors to be elected by him, and he may
cast all of such votes for a single director or may distribute them among the
number to be voted for, or for any two or more of them as he may see fit.
FIFTH: Any and all right, title, interest, and
6
<PAGE> 8
claim in or to any dividends declared by the corporation, whether in cash,
stock or otherwise, which are unclaimed by the stockholder entitled thereto for
a period of six years after the close of business on the payment date, shall be
and be deemed to be extinguished and abandoned; and such unclaimed dividends in
the possession of the corporation, its transfer agents or other agents or
depositories, shall at such time become the absolute property of the
corporation, free and clear of any and all claims of any persons whatsoever.
ARTICLE V.
FIRST: The governing body of this corporation shall be a Board
of Directors. The number of directors shall be not less than six (6) nor more
than twelve (12) and shall be fixed by the By-laws, and each director shall be
of legal age. The Board of Directors shall have full power, direction,
management, and control over the affairs of the corporation, subject, however,
to the limitations provided in these Articles and the law of the State of
Delaware.
SECOND: The Board of Directors of the corporation shall be
divided into three classes: Class I, Class II, and Class III. Each Class shall
consist, as nearly as possible, of one-third of the whole number of the Board
of Directors. Class I directors elected at the 1979 annual meeting of
stockholders shall initially serve until the next annual meeting following
their election; Class II directors elected at the 1979 annual meeting of
stockholders shall initially serve until the second annual meeting following
their election; Class III directors elected at the 1979 meeting of stockholders
shall be elected to serve until the third annual
7
<PAGE> 9
meeting following their election; and, in the case of each Class, the directors
shall serve until their respective successors are duly elected and shall
qualify. At each annual meeting of stockholders after the initial election of
directors according to Classes, the directors chosen to succeed those whose
terms shall have expired shall be elected to hold office for a term to expire
at the third succeeding annual meeting of stockholders after their election,
and until their respective successors are elected and qualified. If the number
of directors is changed, any increase or decrease shall be apportioned among
the Classes so as to maintain all Classes as equal in number as possible, and
any additional director elected to any Class shall hold office for a term which
shall coincide with the terms of the other directors in such Class. Any vacancy
occurring in the Board of Directors caused by death, resignation, removal or
otherwise, and any newly created directorship resulting from an increase in
the number of directors, may be filled by the directors then in office,
although such directors are less than a quorum, or by the sole remaining
director. Each director chosen to fill a vacancy or a newly created
directorship shall hold office until the next election of the Class for which
such director shall have been chosen, and until his successor shall be duly
elected and shall qualify.
THIRD: The Board of Directors shall have the power to
establish an executive committee to manage and operate the affairs of the
corporation, if in the judgment of the Board the appointment of such committee
is necessary or desirable to achieve the corporate purposes. Any such committee
shall report to the Board of Directors not less often than quarterly on its
activities and shall be responsible to the Board for
8
<PAGE> 10
the conduct of the enterprises and affairs entrusted to it.
FOURTH: This corporation shall indemnify to the full extent
permitted by, and in the manner permissible under, the laws of the State of
Delaware, any person made or threatened to be made a party to an action or
proceeding, whether criminal, civil, administrative or investigative,
by reason of the fact that he is or was a director or officer of this
corporation or served any other enterprise as a director or officer at the
request of this corporation and such right of indemnification shall also be
applicable to the executors, administrators and other similar legal
representative of any such director or officer. The foregoing provisions of
this paragraph FOURTH shall be deemed to be a contract between this corporation
and each director and officer who serves in such capacity at any time while
this paragraph FOURTH is in effect, and any repeal or modification thereof
shall not affect any rights or obligations then existing with respect to any
state of facts then or theretofore existing or any action, suit or proceeding
theretofore or thereafter brought based in whole or in part upon any such state
of facts. The foregoing rights of indemnification shall not be deemed exclusive
of any other rights to which any director or officer or his legal
representative may be entitled apart from the provisions this paragraph FOURTH.
FIFTH: In furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized and empowered to adopt, amend or repeal any provision of
the By-laws of this corporation, provided, however, that no such action shall be
taken without the affirmative vote of at least three-quarters (75%) of the
members of the Board of Directors.
9
<PAGE> 11
ARTICLE VI.
The term of existence of this corporation shall be perpetual.
ARTICLE VII.
The capital stock of this corporation shall not be assessable.
It shall be issued as fully paid, and the private property of the stockholders
shall not be liable for the debts, obligations or liabilities of this
corporation. The Certificate of Incorporation shall not be subject to amendment
in this respect.
ARTICLE VIII.
The affirmative vote of at least two-thirds (66-2/3%) of the
votes represented by the outstanding shares of this corporation's Class A
Common Stock, Class B Common Stock and (except as may be determined by the
Board of Directors pursuant to paragraph THIRD of Article IV and as limited
therein) Preferred Stock, entitled to vote at elections of directors and voting
as one class, shall be required in order for the corporation to take any
action, at a meeting specifically called for the purpose of taking of such
action, to authorize:
(a) The amendment, alteration or repeal of any
provision of this Restated Certificate of Incorporation or the
addition or insertion or other provisions therein;
(b) The adoption, amendment or repeal of any
provision of the By-laws of the corporation;
<PAGE> 12
(c) The merger or consolidation of this corporation
with or into any other corporation, provided, however, that
this clause (c) shall not apply to any merger or consolidation
(i) as to which the laws of Delaware, as then in effect, do
not require the consent of this corporation's shareholders, or
(ii) which three-quarters (75%) of the Board of Directors have
approved;
(d) The sale, lease or exchange of all, or
substantially all, of the property and assets of the
corporation;
(e) The dissolution of the corporation; or
(f) The removal of a director of the corporation.
All rights at any time conferred upon the stockholders of the
corporation pursuant to this Certificate of Incorporation are granted subject
to the provisions of this Article VIII.
4. This Restated Certificate of Incorporation was duly
adopted by vote of the stockholders in accordance with Sections 242 and 245 of
the General Corporation law of the State of Delaware.
5. The capital of TELE-COMMUNICATIONS, INC. will not be
reduced under or by reason of this Restated Certificate of Incorporation.
IN WITNESS WHEREOF, said TELE-COMMUNICATIONS, INC.
<PAGE> 13
has caused this certificate to be signed by John C. Malone, its President, and
attested by Paul J. O'Brien, its Secretary, this 19th day of July, 1979.
TELE-COMMUNICATIONS, INC.
{SEAL} By: /s/ JOHN C. MALONE
John C. Malone, President
ATTEST:
By: /s/ PAUL J. O'BRIEN
Paul J. O'Brien, Secretary
STATE OF COLORADO )
)ss
County of Arapahoe )
BE IT REMEMBERED that on this 19th day of July, 1979,
personally came before me, a Notary Public in and for the County and State
aforesaid, John C. Malone, President of Tele-Communications, Inc., a
corporation of the State of Delaware, and he duly executed said Certificate
before me and acknowledged the said Certificate to be his act and deed and the
act and deed of said Corporation and the facts stated therein are true; and
that the seal affixed to said Certificate and attested by the Secretary. of
said Corporation is the common or corporate seal of said Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and seal of
office the day and year aforesaid.
{SEAL} /s/ MARTHA FOUSE
NOTARY PUBLIC
My Commission Expires June 6, 1983
<PAGE> 14
{LOGO}
STATE
OF
DELAWARE
Office of SECRETARY OF STATE
I, Glenn C. Kenton Secretary of State of the State of Delaware, do hereby
certify that the above and foregoing is a true and correct copy of Certificate
of Amendment of the "TELE-COMMUNICATIONS, INC.", as received and filed in this
office the twelfth day of June, A.D. 1980, at 12:45 o'clock P.M.
In Testimony Whereof, I have hereunto set my
hand and official seal at Dover this twelfth
day of June in the year of our Lord one
thousand nine hundred and eighty.
{SEAL}
RECEIVED FOR RECORD
JUN 12 1980
LEO J. DUGAN, Jr., Recorder
/s/ GLENN C. KENTON
Glenn C. Kenton, Secretary of State
<PAGE> 15
CERTIFICATE OF AMENDMENT
of
CERTIFICATE OF INCORPORATION
of
TELE-COMMUNICATIONS, INC.
TELE-COMMUNICATIONS, INC., a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as follows:
1. At a meeting of the Board of Directors of
TELE-COMMUNICATIONS, INC. lawfully convened, a resolution was unanimously
adopted setting forth a proposed amendment to the Certificate of Incorporation
of said Corporation, declaring said amendment to be advisable and directing
that the amendment proposed be considered at the next Annual Meeting of
Stockholders. The resolution is as follows:
RESOLVED, that the First paragraph of Article IV of the restated
Certificate of Incorporation of the Corporation is amended by changing
said paragraph in its entirety so as to read as follows:
"FIRST: The total number of shares of stock which the
corporation shall have authority to issue is thirty-one
million (31,000,000) shares divided into the following
classes:
"(a). Twenty million (20,000,000) shares of
Class A Common Stock with a par value of One Dollar ($I.00)
per share; and .
"(b). Ten million (10,000,000) shares of
Class B Common Stock with a par value of One Dollar ($l.00)
per share; and
"(c). One million (1,000,000) shares of
Preferred Stock having a par value of One Dollar ($1.00) per
share."
2. Thereafter, pursuant to resolution of its Board of
Directors, the Annual Meeting of Stockholders of said Corporation was, on
proper notice in accordance with Section 222 of the General Corporation Law of
the State of Delaware, duly called and held on June 12, 1980, at which Meeting
the necessary number of Stockholders required by the Certificate of
Incorporation of the Corporation and as required by statute cast their votes,
to wit, the affirmative vote of the holders of at least two-thirds (66-2/3%) of
the outstanding shares of the Corporation's Class A Common Stock and Class B
Common Stock voting as one class, in favor of the foregoing amendment.
<PAGE> 16
3. Said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of Delaware as
amended.
4. The capital of said Corporation will not be reduced under
or by reason of said amendment.
WITNESS WHEREOF, said TELE-COMMUNICATIONS, INC. has caused its
corporate seal to be hereunto affixed and this certificate to be signed by John
C. Malone, its President, and attested by John M. Draper, its Assistant
Secretary, on this 12th day of June, 1980.
TELE-COMMUNICATIONS, INC.
By: /s/ JOHN C. MALONE
John C. Malone
President
{SEAL}
ATTEST:
By: /s/ JOHN M. DRAPER
John M. Draper
Assistant Secretary
<PAGE> 17
{LOGO}
STATE
OF
DELAWARE
Office of SECRETARY OF STATE
I, GLENN C. Kenton Secretary of State of the State of Delaware, do hereby
certify that the above and foregoing is a true and correct copy of Certificate
of Amendment of the "TELE-COMMUNICATIONS, INC.", as received and filed in this
office the eighteenth day of June, A.D. 1981 at 9 o'clock A.M.
In Testimony Whereof, I have hereunto set my
hand and official seal at Dover this eighteenth
day of June in the year of our Lord one
thousand nine hundred and eighty-one.
{SEAL}
RECEIVED FOR RECORD
JUL 17 1981
LEO J. DUGAN, Jr., Recorder
/s/ GLENN C. KENTON
Glenn C. Kenton, Secretary of State
<PAGE> 18
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
TELE-COMMUNICATIONS, INC.
Tele-Communications, Inc., a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as follows:
1. At a meeting of the Board of Directors of
Tele-Communications, Inc. lawfully convened, a resolution was unanimously
adopted setting forth a proposed amendment to the Certificate of Incorporation
of said Corporation, declaring the advisability of said amendment and directing
that the amendment be considered at the next Annual Meeting of Stockholders.
The resolution is as follows:
RESOLVED, that the First paragraph of Article IV of the restated
Certificate of Incorporation of the Corporation, as amended, is
further amended by changing said paragraph in its entirety so as to
read as follows:
FIRST: The total number of shares of stock which the
corporation shall have authority to issue is fifty-one million
(51,000,000) shares divided into the following classes:
(a). Forty million (40,000,000) shares of
Class A Common Stock with a par value of One Dollar ($1.00)
per share; and
(b). Ten million (10,000,000) shares of Class
B Common Stock with a par value of One Dollar ($1.00) per
share; and
(c). One million (1,000,000) shares of
Preferred Stock having a par value of One Dollar ($1.00) per
share.
2. The Annual Meeting of Stockholders of said Corporation was,
on proper notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware duly called and held on June 11, 1981, at which
Meeting the necessary number of Stockholders required by the Certificate of
Incorporation of the Corporation and as required by statute cast their votes in
favor of the foregoing amendment, to wit, the affirmative vote of the holders
of at least two-thirds (66 2/3%) of the outstanding shares of the Corporation's
Class A Common Stock and Class B Common Stock voting as one class.
<PAGE> 19
3. Said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of Delaware as
amended.
4. The capital of said Corporation will not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, said Tele-Communications, Inc. has caused
its corporate seal to be hereunto affixed and this certificate to be signed by
John C. Malone, its President, and attested by John M. Draper, its Assistant
Secretary, this 12th day of June, 1981.
TELE-COMMUNICATIONS, INC.
By: /s/ JOHN C. MALONE
John C. Malone
President
{SEAL}
ATTEST:
By: /s/ JOHN M. DRAPER
John M. Draper
Assistant Secretary
<PAGE> 20
{LOGO}
STATE
OF
DELAWARE
OFFICE OF SECRETARY OF STATE
I, Glenn C. Kenton, Secretary of State of the State of Delaware, do hereby
certify that the attached is a true and correct copy Certificate of Amendment
filed in this office on June 9, 1983.
{SEAL} /s/ GLENN C. KENTON
Glenn C. Kenton, Secretary of State
BY: /s/ J. WARD
DATE: June 9, 1983
<PAGE> 21
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
TELE-COMMUNICATIONS, INC.
Tele-Communications, Inc., a corporation organized and existlng under
the laws of the State of Delaware, hereby certifies as follows:
1. At a meeting of the Board of Directors of
Tele-Communications, Inc. lawfully convened, a resolution was unanimously
adopted setting forth a proposed amendment to the Certificate of Incorporation
of said Corporation, declaring the advisability of said amendment and directing
that the amendment be considered at the next Annual Meeting of Stockholders.
The resolution is as follows:
RESOLVED, that the First paragraph of Article IV of the
restated Certificate of Incorporation of the Corporation, as amended,
is further amended by changing said paragraph in its entirety so as to
read as follows:
FIRST: The total number of shares of stock which the
corporation shall have authority to issue is seventy-six
million (76,000,000) shares divided into the following
classes:
(a). Sixty million (60,000,000) shares of Class A
Common Stock with a par value of One Dollar ($1.00)
per share: and
(b). Fifteen million (15,000,000) shares of Class B
Common Stock with a par value of One Dollar ($1.00)
per share; and
(c). One million (1,000,000) shares of Preferred
Stock having a par value of One Dollar ($1.00) per
share.
<PAGE> 22
2. The Annual Meeting of Stockholders of said Corporation was,
on proper notice in accordance with Section 222 of the General Corporation Law
of the State of Delaware duly called and held on June 9, 1983, at which Meeting
the necessary number of Stockholders required by the Certificate of
Incorporation of the Corporation and as required by statute cast their votes in
favor of the foregoing amendment, to wit the affirmative vote of the holders of
at least two-thirds (66 2/3%) of the outstanding shares of the Corporation's
Class A Common Stock and Class B Common Stock voting as one class.
3. Said amendment was duly adopted In accordance with the
provisions of Section 242 of the General Corporation Law of Delaware as
amended.
4. The capital of said Corporation will not be reduced
under or by reason of said amendment.
IN WITNESS WHEREOF, said Tele-Communications, Inc., has caused
its corporate seal to be hereunto affixed and this certificate to.be signed by
John C. Malone, its President, and attested by John M. Draper, its Assistant
Secretary, this 9th day of June, 1983.
TELE-COMMUNICATiONS, INC.
By: /s/ JOHN C. MALONE
John C. Malone
{SEAL} President
ATTEST:
By: /s/ JOHN M. DRAPER
John M. Draper
Assistant Secretary
RECEIVED FOR RECORD
JUN 9 1983
LEO J. DUGAN, Jr., Recorder
<PAGE> 23
PAGE 1
STATE OF DELAWARE
{LOGO}
OFFICE OF SECRETARY OF STATE
-------------------
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF TELE-COHMUNICATIONS, INC. FILED IN THIS OFFICE ON THE TWENTIETH
DAY OF MAY, A.D. 1986, AT 12:30 O'CLOCK P.M.
{SEAL} /s/ MICHAEL HARKINS
736140049 Michael Harkins, Secretary of State
AUTHENTICATION: 0824960
DATE: 05/20/1986
<PAGE> 24
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
TELE-COMMUNICATIONS, INC.
Tele-Communications, Inc., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. At a meeting of the Board of Directors of
Tele-Communications, Inc. lawfully convened, resolutions were
unanimously adopted setting forth proposed amendments to the
Certificate of Incorporation of said Corporation, declaring the
advisability of said amendments and directing that the amendmenta be
considered at the next Annual Meeting of Stockholders. The resolutions
are as follows:
RESOLVED, that the First paragraph of Article IV of the
restated Certificate of Incorporation of the Corporation, as
amended, is further amended by changing said paragraph in its
entirety so as to read as follows:
FIRST: The total number of shares of stock which the
corporation shall have authority to issue is two
hundred and fifty-one million (251,000,000) shares
divided into the following classses:
(a) Two hundred million (200,000,000) shares of
Class A Common Stock with a par value of One
Dollar ($1.00) per share; and
(b) Fifty million (50,000,000) shares of Class B
Common Stock with a par value of One Dollar
($1.00) per share; and
(c) One million (1,000,000) shares of Preferred
Stock having a par value of One Dollar
($1.00) per share.
RESOLVED, that Article IV of the restated Certificate of
Incorporation of the Corporation, as amended, is further
amended by adding a paragraph Sixth to such Article IV, such
Sixth paragraph to read as follows:
SIXTH: Each share of Class B Common Stock shall be
convertible, at the option of the holder thereof,
into one (1) share of Class A Common Stock. A holder
wishing to avail itself of such option shall deliver
the certificate or certificates representing the
shares of Class B Common Stock to be converted, duly
endorsed in blank, to the Secretary of the
corporation, and at the same time notify the
Secretary in writing of its desire to so convert.
Upon receipt by the Secretary of the foregoing
certificates and notice, the corporation shall cause
to be issued to the holder of the Class B Common
Stock delivering the same one (1) share of Class A
Common Stock for each share of Class B Common Stock
delivered for conversion, issuing and delivering to
such holder a certificate for such shares. A number
of shares of Class A Common Stock equal to the number
of shares of Class B Common Stock outstanding from
time to time shall be set aside and reserved for
issuance upon conversion of Class B Common Stock.
Shares of Class B Common Stock which have been
converted hereunder shall remain treasury shares to
be disposed of by resolution of the Board of
Directors of the corporation. Class A Common Stock
shall not be convertible into Class B Common Stock.
<PAGE> 25
2. The Annual Meeting of Stockholders of said Corporation was, on
proper notice in accordance with Section 222 of the General Corporation Law of
the State of Delaware duly called and held on May 20, 1986, at which Meeting
the necessary number of Stockholders required by the Certificate of
Incorporation of the Corporaiton and as required by statute cast their votes in
favor of the foregoing amendments, to wit, the affirmative vote of the holders
of at least two-thirds (66 2/3%) of the outstanding shares of the Corporation's
Class A Common Stock and Class B Common Stock voting as one class.
3. Said amendments were duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware as
amended.
4. The capital of said Corporation will not be reduced under or by
reason of said amendments.
IN WITNESS WHEREOF, said Tele-Communications, Inc. has caused its
corporate seal to be hereunto affixed and this certificate to be signed by John
C. Malone, its President, and attested to by John M. Draper, its Assistant
Secretary, this 20th day of May, 1986.
TELE-COMMUNICATIONS, INC.
By: /s/ JOHN C. MALONE
John C. Malone
President
{SEAL}
ATTEST:
By: /s/ JOHN M. DRAPER
John M. Draper
Assistant Secretary
RECEIVED FOR RECORD
MAY 23 1986
LEO J. DUGAN, Jr., Recorder
<PAGE> 26
PAGE 1
STATE OF DELAWARE
{LOGO}
OFFICE OF SECRETARY OF STATE
-------------------
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF TELE-COHMUNICATIONS, INC. FILED IN THIS OFFICE ON THE TWELFTH
DAY OF JUNE, A.D. 1987, AT 12:30 O'CLOCK P.M.
{SEAL} /s/ MICHAEL HARKINS
737163081 Michael Harkins, Secretary of State
AUTHENTICATION: :1278977
DATE: 06/16/1987
<PAGE> 27
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
TELE-COMMUNICATIONS, INC.
Tele-Communications, Inc., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. At a Meeting of the Board of Directors of
Tele-Communications, Inc. lawfully convened, resolutions were
unanimously adopted setting forth a proposed amendment to the
Certificate of Incorporation of said Corporation declaring the
advisability of said amendment and directing that the amendment be
considered at the next Annual Meeting of Stockholders. The resolutions
are as follows:
RESOLVED, that the fourth paragraph of Article V of the restated
Certificate of incorporation of the Corporation, as amended, is
further amended by changing said paragraph in its entirety so as to
read as follows:
FOURTH: (A) To the fullest extent permitted by the Delaware
General Corporation Law as the same exists or may hereafter be
amended, a director of this corporation shall not be liable to
the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director.
(B) This corporation shall, to the full extent
permitted by, and in the manner permissible under, the laws of
the State of Delaware, (i) indemnify, and (ii) advance
litigation expenses prior to the final disposition of an
action, to any person made or threatened to he made a party to
an action or proceeding, whether criminal, civil,
administrative or investigative, by reason of the fact that he
or she is or was a director or officer of this corporation or
served any other enterprise as a director or officer at the
request of this corporation and such rights of indemnification
and to advancement of litigation expenses shall also be
applicable to the heirs, executors, administrators and other
similar legal representatives of any such director or officer.
(C) The foregoing provisions of this paragraph FOURTH
shall be deemed to be a contract between this corpration and
each director and officer who serves in such capacity at any
time while this paragraph FOURTH is in effect, and any repeal
or modification thereof shall not affect any rights or
obligations then or theretofore existing or any action, suit
or proceeding theretofore or thereafter brought based in whole
or in part upon any such state of facts.
(D) The foregoing rights of indemnification and to
advancement of litigation expenses shall not be deemed
exclusive of any other rights to which any director or officer
or his or her legal representatives may be entitled apart from
the provisions of this paragraph FOURTH.
2. The Annual Meeting of Stockholders of said Corporation was,
on proper notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware duly called and held on June
12, 1987, at which Meeting the necessary number of Stockholders
required by the Certificate of Incorporation of the Corporation and as
required by statute cast their votes in favor of the foregoing
amendment, to wit, the affirmative vote of the holders of at least
two-thirds (66-2/3%) of the outstanding shares of the Corporation's
Class A Common Stock and Class B Common Stock voting as one class.
<PAGE> 28
Page 2
3. Said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State
of Delaware as amended.
4. The capital of said Corporation will not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, said Tele-Communications, Inc. has caused its
corporate seal to be hereunto affixed and this certificate to be signed by John
C. Malone, President, and attested to by John M. Draper, its Assistant
Secretary, this 12th day June, 1987.
TELE-COMMUNICATIONS, INC.
By: /s/ JOHN C. MALONE
John C. Malone
President
{SEAL}
ATTEST:
By: /s/ JOHN M. DRAPER
John M. Draper
Assistant Secretary
<PAGE> 29
PAGE 1
STATE OF DELAWARE
{LOGO}
OFFICE OF SECRETARY OF STATE
-------------------
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF TELE-COHMUNICATIONS, INC. FILED IN THIS OFFICE ON THE FOURTEENTH
DAY OF JANUARY, A.D. 1988, AT 12:15 O'CLOCK P.M.
{SEAL} /s/ MICHAEL HARKINS
Michael Harkins, Secretary of State
888814871
AUTHENTICATION: 1545285
DATE: 01/14/1988
<PAGE> 30
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
TELE-COMMUNICATIONS, INC.
Tele-Communications, Inc., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. At a meeting of the Board of Directors of
Tele-Communications, Inc. lawfully convened, a resolution was
unanimously adopted setting forth a proposed amendment to the
Certificate of Incorporation of said Corporation, declaring the
advisability of said amendment and directing that the amendment be
considered at a Special Meeting of Stockholders, the time and place of
which, for said purpose, shall be fixed by the Executive Ccmmittee of
this Board. The resolution is as follows:
RESOLVED, that the First paragraph of Article IV of the
restated Certificate of Incorporation of the Corporation, as
amended, is further amended by changing said paragraph in its
entirety so as to read as follows:
FIRST: The total number of shares of stock which the
corporation shall have authority to issue is Six
Hundred One Million (601,000,000) shares divided into
the following classes:
(a) Five Hundred Million (500,000,000) shares of
Class A Common Stock with a par value of One
Dollar ($1.00) per share; and
(b) One Hundred Million (100,000,000) shares of
Class B Common Stock with a par value of One
Dollar ($1.00) per share; and
(c) One Million (1,000,000) shares of Preferred
Stock having a par value of One Dollar
($1.00) per share.
2. The Special Meeting of Stockholders of said Corporation
was, on proper notice in accordance with Section 222 of the General Corporation
Law of the State of Delaware duly called and held on January 14, 1988, at which
Meeting the necessary number of Stockholders required by the Certificate of
Incorporation of the Corporation and as required by statute cast their votes in
favor of the foregoing amendment, to wit, the affirmative vote of the holders
of at least two-thirds (66-2/3%) of the outstanding shares of the Corporation's
Class A Common Stock and Class B Common Stock voting as one class.
3. Said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware as amended.
Page 2
<PAGE> 31
4. The capital of said Corporation will not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF said Tele-Communications, Inc. has caused its
corporate seal to be hereunto affixed and this certificate to be signed by John
C. Malone, its President, and attested to by John M. Draper, its Assistant
Secretary, this 14th day of January, 1988.
TELE-COMMUNICATIONS, INC.
By: /s/ JOHN C. MALONE
John C. Malone
President
ATTEST:
BY: /s/ JOHN M. DRAPER
John M. Draper
Assistant Secretary
<PAGE> 32
PAGE 1
STATE OF DELAWARE
{LOGO}
OFFICE OF SECRETARY OF STATE
--------------------
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "TELE-COMMUNICATIONS, INC." FILED IN THIS OFFICE ON THE FOURTH DAY
OF NOVEMBER, A.D. 1991, AT 9 O'CLOCK A.M.
* * * * * * * * * *
{SEAL} /s/ MICHAEL RATCHFORD
752030311 SECRETARY OF STATE
AUTHENTICATION: *3328390
DATE: 01/30/1992
<PAGE> 33
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
TELE-COMMUNICATIONS, INC
Tele-Communications, Inc., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. At a meeting of the Board of Directors of
Tele-Communications, Inc. lawfully convened, a resolution was
unanimously adopted setting forth a proposed amendment to the
Certificate of Incorporation of said Corporation, declaring the
advisability of said amendment and directing that the amendment be
considered at a Meeting of Stockholders, the time and place of which,
for said purpose, shall be fixed by the Executive Committee or this
Board. The resolution is as follows:
RESOLVED, that the First paragraph or Article IV of the
Restated Certificate of Incorporation or the Corporation, as
amended, is further amended by changing said paragraph in its
entirety so as to read as follows:
FIRST: The total number of shares of stock which the
corporation shall have authority to issue is One
Billion One Hundred and Ten Million (1,110,000,000)
shares divided into the following classes:
(a) One Billion (1,000,000,000) shares or Class A
Common Stock with a par value of One Dollar
($1.00) per share; and
(b) One Hundred Million (100,000,000) shares of
Class B Common Stock with a par value of One
Dollar ($1.00) per share; and
(c) Ten Million (10,000,000) shares of Preferred
Stock having a par value of One Dollar ($1.00)
per share.
2. The Annual Meeting of Stockholders of said Corporation was,
on proper notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware duly called and held on Oct .
17, 199 1. at which Meeting the necessary number of Stockholders
required by the Certificate of Incorporation of the Corporation and as
required by statute cast their votes in favor of the foregoing
amendment, to wit, the affirmative vote of the holders of at least
two-thirds (66 2/3%) of the outstanding shares of the Corporation's
Class A Common Stock and Class B Common Stock voting is one class.
3. Said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State
of Delaware as amended.
4. The capital of said Corporation will not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, said Tele-Communications, Inc. has caused its
corporate seal to be hereunto affixed and this certificate to be signed by John
C. Malone, its President and attested to by John M. Draper., its Assistant
Secretary, this 17th day of October, 1991.
TELE-COMMUNICATIONS, INC
By: /s/ JOHN C. MALONE
John C. Malone
President
ATTEST:
By: /s/ JOHN M. DRAPER
John M. Draper
Assistant Secretory
<PAGE> 34
PAGE 1
STATE OF DELAWARE
{LOGO}
OFFICE OF SECRETARY OF STATE
--------------------
I, JEFFREY D. LEWIS, ACTING SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF STOCK DESIGNATION OF "TELE-COMMUNICATIONS, INC." FILED IN THIS
OFFICE ON THE SECOND DAY OF DECEMBER, A.D. 1991, AT 8:30 O'CLOCK A.M.
* * * * * * * * * *
{SEAL} /s/ JEFFREY D. LEWIS
ACTING SECRETARY OF STATE
AUTHENTICATION: *3327901
DATE: 01/29/1992
<PAGE> 35
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 08:30 AM 12/02/1991
913365030 - 685208
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATIONS
- --------------------------------------------------------------------------------
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED AS
"12 7/8% CUMULATIVE COMPOUNDING REDEEMABLE
PREFERRED STOCK, SERIES A" ADOPTED BY THE
BOARD OF DIRECTORS OF TELE-COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
- --------------------------------------------------------------------------------
The undersigned, President of Tele-Communications, Inc., a
Delaware corporation (the "Corporation"), hereby certifies that the Board of
Directors, at a meeting duly called and held, adopted the following resolution
creating a series of preferred stock designated as "12 7/8% Cumulative
Compounding Redeemable Preferred Stock, Series A":
"BE IT RESOLVED, that, pursuant to authority expressly granted
by the provisions of the Restated Certificate of Incorporation of this
Corporation, the Board of Directors hereby creates and authorizes the issuance
of a series of preferred stock, par value $1.00 per share, of this Corporation,
to consist OF 5,022,394 shares, and hereby fixes the designations, dividend
rights, voting powers, rights on liquidation or dissolution and other
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, of the shares of such
series (in addition to the designations, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, set forth in the Restated Certificate of
Incorporation that are applicable to this Corporation's preferred stock of all
series) as follows:
<PAGE> 36
1. Designation. The designation of the series of
preferred stock, par value $1.00 per share, of this corporation authorized
hereby is "12 7/8% Cumulative Compounding Redeemable Preferred Stock, Series A"
(the "Compounding Preferred Stock").
2. Certain Definitions. Unless the context otherwise
requires, the terms defined in this Section 2 shall have the meanings herein
specified:
"Board of Directors" shall mean the Board of Directors of this
Corporation and any authorized committee thereof.
"Convertible Preferred Stock, Series A" shall mean the 6,201
authorized shares of the Convertible Preferred Stock, Series A of this
Corporation.
"Common Stock" shall mean the Class A Common Stock, par value
$1.00 per share, and Class B Common Stock, par value $1.00 per share, of this
Corporation and all shares hereafter authorized of any other class of common
stock of this Corporation, which term shall include, where appropriate, in the
case of a reclassification, recapitalization or other changes in such Common
Stock, or in the case of a consolidation or merger of this Corporation with or
into another corporation affecting the Common Stock, such consideration to
which a holder of Common Stock would have been entitled upon the occurrence of
such event.
"Debt Instrument" shall mean any note, bond, debenture,
indenture, guarantee or other instrument or agreement evidencing any
Indebtedness, whether existing at the Issue Date or thereafter created,
incurred, assumed or guaranteed.
"Dividend Payment Date" shall have the meaning set forth in
Section 3(a).
"Dividend Period" shall mean the period from and including the
First Accrual Date to the first Dividend Payment Date and each three-month
period from and including the Dividend Payment Date for the preceding Dividend
Period to the Dividend Payment Date for such Dividend Period..
"First Accrual Date" shall mean October 1, 1991.
"Indebtedness" shall mean (i) any liability, contingent or
otherwise, of this Corporation or any Subsidiary (x) for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
this Corporation or any Subsidiary or only to a portion thereof), (y) evidenced
by
-2-
<PAGE> 37
a note, debenture or similar instrument (including a purchase money obligation)
given other than in connection with the acquisition of inventory or similar
property in the ordinary course of business, or (z) for the payment of money
relating to indebtedness represented by obligations under a lease that is
required to be capitalized for financial accounting purposes in accordance with
generally accepted accounting principles; (ii) any liability of others
described in the preceding clause (i) which this Corporation or any Subsidiary
has guaranteed or which is otherwise its legal liability; (iii) any obligations
secured by any mortgage, pledge, lien, encumbrance, charge or adverse claim
affecting title or resulting in an encumbrance against any real or personal
property, or a security interest of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or
other. agreement to sell and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction) to which the property or assets of this Corporation or any
Subsidiary are subject whether or not the obligations secured thereby shall
have been assumed by or shall otherwise be this Corporation's or any
Subsidiary's legal liability; and (iv) any amendment, renewal, extension or
refunding of any liability of the types referred to in clauses (i), (ii) and
(iii) above.
"Issue Date" shall mean the first date on which any shares of
the Compounding Preferred Stock are first issued or deemed to have been issued.
"Junior Stock" shall mean Common Stock of this Corporation and
any other class or series of stock of this Corporation authorized after the
Issue Date not entitled to receive any dividends unless all dividends required
to have been paid or declared and set apart for payment on the Compounding
Preferred Stock and any Parity Stock shall have been so paid or declared and
set apart for payment and, for purposes of Section 4, shall mean any class or
series of stock of this Corporation authorized after the Issue Date not
entitled to receive any assets upon liquidation, dissolution or winding up of
the affairs of this Corporation until the Compounding Preferred Stock and any
Parity Stock shall have received the entire amount to which such stock is
entitled upon such liquidation, dissolution or winding up.
"Liquidation Price" measured per share of the Compounding
Preferred Stock as of any date shall mean the sum of (i) $19.25, plus (ii) an
amount equal to all dividends accrued on such share to the Dividend Payment
Date on, or immediately preceding, the date on which the Liquidation Price is
being determined, which pursuant to Section 3(b) have been added to and remain
part of the Liquidation Price as of such
-3-
<PAGE> 38
date, plus (iii) (A) for purposes of determining amounts payable pursuant to
Sections 4 and 5, an amount equal to all unpaid dividends accrued to the
Redemption Date or the liquidation date an the sum of the amounts specified in
clauses (i) and (ii) above, and (B) for purposes of determining the amount of
dividends to be paid on a date other than A Dividend Payment Date as
contemplated by Section 3(c), an amount equal to all unpaid dividends accrued
on the amounts specified in clause (ii) above, to the date as of which the
Liquidation Price is being determined.
"Parity Stock" shall mean the Convertible Preferred Stock,
Series A and any other class or series of stock of this Corporation authorized
after the Issue Date entitled to receive payment of dividends on a parity with
the Compounding Preferred Stock or entitled to receive assets upon liquidation,
dissolution or winding up of the affairs of this Corporation on a parity with
the Compounding Preferred Stock.
"Record Date" for the dividends payable on any Dividend
Payment Date means the fifteenth day of the month preceding the month during
which such Dividend Payment Date shall occur.
"Redemption Date" as to any share of Compounding Preferred
Stock shall mean the date fixed for redemption of such share pursuant to
Section 5(a) or 5(b), provided that no such date will be a Redemption Date
unless the applicable Redemption Price is actually paid in full on such date or
the consideration sufficient for the payment thereof, and for no other purpose,
has been set apart, and if the Redemption Price is not so paid in full or the
consideration sufficient therefor so set apart then the Redemption Date will be
the date on which such Redemption Price is fully paid or the consideration
sufficient for the payment thereof, and for no other purpose, has been set
apart.
"Redemption Price" as to any share of Compounding Preferred
Stock that is to be redeemed on any Redemption Date shall mean the Liquidation
Price as in effect on such Redemption Date.
"Senior Stock" shall mean any class or series of stock of this
Corporation authorized after the Issue Date ranking senior to the Compounding
Preferred Stock and any Parity Stock in respect of the right to receive payment
of dividends or to participate in any distribution upon liquidation,
dissolution or winding up of the affairs of this Corporation.
-4-
<PAGE> 39
"Subsidiary" shall mean (i) any corporation of which the
outstanding capital stock having at least a majority in voting power in the
election of directors under ordinary circumstances shall at the time be owned,
directly or indirectly, by this Corporation, by any one or more Subsidiaries of
this Corporation or by this Corporation and one or more of its Subsidiaries or
(ii) any partnership, joint venture, association or other unincorporated
organization in which this Corporation, any one or more Subsidiaries of this
Corporation or this Corporation and one or more of its Subsidiaries, directly
or indirectly, has at least a majority ownership and voting interest.
3. Dividends.
(a) Subject to the prior preferences and other rights of
any Senior Stock, the holders of the Compounding Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of
unrestricted funds legally available therefor, preferential cumulative cash
dividends that shall accrue as provided herein. Dividends on each share of
Compounding Preferred Stock will accrue on a daily basis at the rate of 12 7/8%
per annum of the Liquidation Price of such share from and including the First
Accrual Date to the date on which the Liquidation Price or Redemption Price of
such share is made available pursuant to Section 4 or 5 hereof, respectively,
whether or not such dividends have been declared and whether or not there are
any unrestricted funds of this Corporation legally available for the payment of
dividends. Accrued dividends on the Compounding Preferred Stock shall be
payable quarterly on January 1, April 1, July 1 and October 1 of each year
(each a "Dividend Payment Date"), commencing on January 1, 1992, to the holders
of record of the Compounding Preferred Stock as of the close of business on the
applicable Record Date. For purposes of determining the amount of dividends
"accrued" (i) as of any date that is not a Dividend Payment Date, such amount
shall be calculated on the basis of the foregoing rate per annum for actual
days elapsed from and including the First Accrual Date (in the case of any date
prior to the first Dividend Payment Date) or the last preceding Dividend
Payment Date (in the case of any other date) to the date as of which such
determination is to be made, based on a 360-day year and (ii) as of any
Dividend Payment Date, such amount shall be calculated on the basis of the
foregoing rate per annum, based on a 360-day year of twelve 30-day months.
(b) If on any Dividend Payment Date this Corporation,
pursuant to applicable law or the terms of any Debt Instrument, shall be
prohibited or restricted from paying in cash the full dividends to which
holders of the Compounding Preferred Stock and any Parity Stock shall be
entitled, the
-5-
<PAGE> 40
amount available for such payment pursuant to applicable law and which is not
restricted by the terms of any Debt Instrument shall be distributed among the
holders of the Compounding Preferred Stock and such Parity Stock ratably in
proportion to the full amounts to which they would otherwise be entitled. To
the extent not paid on each Dividend Payment Date, all dividends that have
accrued on each share of Compounding Preferred Stock during the Dividend Period
ending on such Dividend Payment Date will be added cumulatively to the
Liquidation Price of such share and will remain a part thereof until such
dividends are paid, together with all dividends that have accrued to the date
of such payment with respect to that portion of the Liquidation Price which
consists of such accrued unpaid dividends. Such accrued unpaid dividends,
together with all dividends accrued thereon, may be declared and paid at any
time (subject to the concurrent satisfaction of any dividend arrearages then
existing with respect to any Parity Stock), without reference to any regular
Dividend Payment Date, to holders of record as of the close of business on such
date, not more than 50 days nor less than 10 days preceding the payment date
thereof, as may be fixed by the Board of Directors (the "Special Record Date").
(c) Notice of each Special Record Date shall be mailed,
first class, postage prepaid, not more than 50 days nor less than 10 days prior
thereto, to the holders of record of the Compounding Preferred Stock at their
respective addresses as the same appear on the books of this Corporation or
supplied by them in writing to this Corporation for the purpose of such notice.
(d) So long as any shares of Compounding Preferred Stock
shall be outstanding, this Corporation shall not declare or pay on any Junior
Stock any dividend whatsoever, whether in cash, property or otherwise, nor
shall this Corporation make any distribution on any Junior Stock, or set aside
any assets for any such purposes, nor shall any Junior Stock be purchased,
redeemed or otherwise acquired by this Corporation or any of its Subsidiaries,
nor shall any monies be paid, set aside for payment or made available for a
sinking fund for the purchase or redemption of any Junior Stock, unless and
until (i) all dividends to which the holders of the Compounding Preferred Stock
and all Parity Stock shall have been entitled for all current and all previous
Dividend Periods shall have been paid or declared and the consideration
sufficient for the payment thereof set apart so as to be available for the
payment thereof and for no other purpose (whether or not such payment is then
legally permissible) and (ii) this Corporation shall have made, in full, or set
apart the consideration sufficient for the payment thereof, and for no other
purpose, all redemption payments with respect to the Compounding
-6-
<PAGE> 41
Preferred Stock that it is then obligated to make (whether or not such payment
is then legally permissible); provided, however, that nothing contained in this
Section 3(d) shall prevent (i) the payment of dividends solely in Junior Stock,
(ii) the repurchase, redemption or other acquisition of Junior Stock solely in
exchange for (together with a cash adjustment for fractional shares, if any),
or through the application of the proceeds from the sale of, shares of Junior
Stock or (iii) the acquisition of any shares of Junior Stock that are
beneficially owned by Liberty Media Corporation ("Liberty") upon the redemption
of, or in exchange for, shares of Liberty's preferred stock that are
beneficially owned by this Corporation.
4. Distributions Upon Liquidation, Dissolution or Winding Up.
Subject to the prior payment in full of the preferential amounts to which any
Senior Stock is entitled, in the event of any liquidation, dissolution or
winding up of this Corporation, whether voluntary or involuntary, the holders
of shares of the Compounding Preferred Stock shall be entitled to receive from
the assets of this Corporation available for distribution to the stockholders,
before any payment or distribution shall be made to the holders of any Junior
Stock of this Corporation, an amount in cash or property at its fair market
value, as determined by the Board of Directors in good faith, or a combination
thereof, per share, equal to the Liquidation Price, which payment shall be made
pari passu with any such payment made to the holders of any Parity Stock. The
holders of the Compounding Preferred Stock shall be entitled to no other or
further distribution of or participation in any remaining assets of this
Corporation after receiving the Liquidation Price per share. If, upon
distribution of this Corporation's assets in liquidation, dissolution or
winding up, the assets of this Corporation to be distributed among the holders
of the Compounding Preferred Stock and to all holders of any Parity Stock shall
be insufficient to permit payment in full to such holders of the preferential
amounts to which they are entitled, then the entire assets of this Corporation
to be distributed to holders of the Compounding Preferred Stock and such Parity
Stock shall be distributed pro rata to such holders based upon the aggregate of
the full preferential amounts to which the shares of Compounding Preferred
Stock and such Parity Stock would otherwise respectively be entitled. Neither
the consolidation or merger of this Corporation with or into any other
corporation or corporations nor the sale, transfer, or lease of all or
substantially all the assets of this Corporation shall itself be deemed to be a
liquidation, dissolution or winding up of this Corporation within the meaning
of this Section 4. Notice of the liquidation, dissolution or winding up of this
Corporation shall be mailed, first class mail, postage prepaid, not less than
20 days prior to the date on
-7-
<PAGE> 42
which such liquidation, dissolution or winding up is expected to take place or
become effective, to the holders of record of the Compounding Preferred Stock
at their respective addresses as the same appear on the books of this
Corporation or supplied by them in writing to this Corporation for the purpose
of such notice.
5. Redemption.
(a) Optional. Subject to the rights of any Senior Stock and
the provisions of Section 5(g), the shares of Compounding Preferred Stock may
be redeemed, at the option of this Corporation by action of the Board of
Directors, in whole or from time to time in part, at any time on or after
January 1, 1992, at the Redemption Price per share on the applicable Redemption
Date.
If less than all outstanding shares of Compounding Preferred
Stock are to be redeemed, the shares of Compounding Preferred Stock to be
redeemed shall be chosen by lot or pro rata or in such other manner and subject
to such regulations as the Board of Directors may reasonably determine.
(b) Mandatory. Subject to the rights of any Senior Stock,
Parity Stock and the provisions of Section 5(g) and subject to any prohibition
or restriction contained in any Debt Instrument:
(i) This Corporation shall redeem, out of funds
legally available therefor, (x) on January 1, 1999, a number
of shares of Compounding Preferred Stock equal to 50% of the
number of such shares outstanding on such date and (y) on
January 1, 2000, all of the shares of Compounding Preferred
Stock remaining outstanding on such date, at the Redemption
Price per share on the applicable Redemption Date.
(ii) If on a Redemption Date fixed pursuant to clause
(i) of this Section 5(b) this Corporation, pursuant to
applicable law or the terms of any Debt Instrument, shall be
prohibited or restricted from redeeming the total number of
shares required to be redeemed on such date, those funds that
are legally available and not so restricted will be used to
redeem the maximum possible number of such shares of
Compounding Preferred Stock. At any time thereafter when
additional funds of this Corporation are legally available and
not so restricted for such purpose, such funds will
immediately be used in their entirety to redeem the shares of
Compounding
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<PAGE> 43
Preferred stock that this Corporation failed to redeem on such
Redemption Date until the balance of such shares have been
redeemed.
(iii) If less than all outstanding shares of
Compounding Preferred Stock are to be redeemed on any
Redemption Date pursuant to this Section 5(b), the shares of
Compounding Preferred Stock to be redeemed shall be chosen by
lot or pro rata or in such other manner and subject to such
regulations as the Board of Directors shall reasonably
determine (except that if clause (ii) above is applicable to
the redemption of shares of Compounding Preferred Stock
required to be made on January 1, 2000, then the selection of
shares to be redeemed in accordance with clause (ii) shall be
made pro rata).
(c) Method of Redemption. Notice of redemption shall be mailed,
first class, postage prepaid, not less than 15 days nor more than 60 days prior
to the Redemption Date, to the holders of record of the shares of Compounding
Preferred Stock to be redeemed, at their respective addresses as the same
appear upon the books of this Corporation or are supplied by them in writing to
this Corporation for the purpose of such notice; but no defect in such notice
or in the mailing thereof shall affect the validity of the proceedings for the
redemption of any shares of the Compounding Preferred Stock. In addition to any
information required by law or by the applicable rules of any national stock
exchange on which the Compounding Preferred Stock may be listed or admitted to
trading, such notice shall set forth the Redemption Price, the Redemption Date,
the number of shares to be redeemed and the place at which the shares called
for redemption will, upon presentation and surrender of the stock certificates
evidencing such shares, be redeemed, and shall state the name and address of
any Redemption Agent selected by this Corporation in accordance with Section
5(d). In case fewer than the total number of shares of Compounding Preferred
Stock represented by any certificate are redeemed, a new certificate
representing the number of unredeemed shares will be issued to the holder
thereof without cost to such bolder.
(d) Deposit of Redemption Price. If notice of any redemption
by this Corporation pursuant to this Section 5 shall have been mailed as
provided in subsection (c) above, and if on or before the Redemption Date
specified in such notice the consideration necessary for such redemption shall
have been set apart so as to be available therefor and only therefor, then on
and after the close of business on the Redemption Date, the shares of
Compounding Preferred Stock called for redemption, notwithstanding that any
certificate therefor shall not have been surrendered for cancellation,
-9-
<PAGE> 44
shall no longer be deemed outstanding, and all rights with respect to such
shares shall forthwith cease and terminate, except the right of the holders
thereof to receive upon surrender of their certificates the consideration
payable upon redemption thereof. If on or prior to the Redemption Date (but no
earlier than 60 days prior to such Redemption Date) this Corporation shall
deposit, in a trust fund, with any bank or trust company organized under the
laws of the United States of America or any state thereof having capital,
undivided profits and surplus aggregating at least $50,000,000 (the "Redemption
Agent"), the consideration sufficient to redeem on such Redemption Date the
shares of Compounding Preferred Stock to be redeemed, with irrevocable
instructions and authority to the Redemption Agent, on behalf and at the
expense of this Corporation, to mail the notice of redemption as soon as
practicable after receipt of such irrevocable instructions (or to complete such
mailing previously commenced, if it has not already been completed) and to pay,
commencing on the Redemption Date or prior thereto, the Redemption Price of the
shares of Compounding Preferred Stock to be redeemed to their respective
holders upon the surrender of their share certificates, then, from and after
the date of such deposit (although prior to the Redemption Date), the shares of
Compounding Preferred Stock to be redeemed shall be deemed to be redeemed and
dividends on those shares shall cease to accrue after the Redemption Date. The
deposit shall be deemed to constitute full payment for shares of Compounding
Preferred Stock to be redeemed to their holders and from and after the date of
such deposit the shares shall be deemed to be no longer outstanding and the
holders thereof shall cease to be stockholders with respect to such shares and
shall have no rights with respect thereto, except the right to receive payment
of the consideration sufficient to pay the Redemption Price of the shares,
calculated through the Redemption Date, upon surrender of their certificates
therefor.
(e) Unclaimed Funds. Any funds so deposited by this
Corporation and unclaimed for one year from the Redemption Date shall be paid
to this Corporation, after which repayment the holders of such shares of
Compounding Preferred Stock so called for redemption shall look to this
Corporation for the payment thereof, without interest, unless an applicable
abandoned property law designates another person.
(f) Status of Redeemed Shares. All shares of Compounding
Preferred Stock redeemed, retired, purchased or otherwise acquired by this
Corporation shall be retired and shall be restored to the status of authorized
and unissued shares of preferred stock (and may be reissued as part of another
series of the preferred stock of this Corporation, but such shares shall not be
reissued as Compounding Preferred Stock).
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<PAGE> 45
(g) Restrictions on Redemption. If at any time this
Corporation shall have failed to pay, or declare and set apart the
consideration sufficient to pay, all dividends accrued up to the immediately
preceding Dividend Payment Date on the Compounding Preferred Stock and any
Parity Stock, and until all dividends accrued up to the immediately preceding
Dividend Payment Date on the Compounding Preferred Stock and any Parity Stock
shall have been paid or declared and set apart so as to be available for the
payment in full thereof and for no other purpose, this Corporation shall not
redeem, pursuant to a sinking fund or otherwise, any shares of Compounding
Preferred Stock, Parity Stock or Junior Stock, unless all then outstanding
shares of Compounding Preferred Stock and Parity Stock are redeemed, and shall
not purchase or otherwise acquire any shares of Compounding Preferred Stock,
Parity Stock or Junior Stock. If and so long as this Corporation shall fail to
redeem on a Redemption Date pursuant to Section 5(b), all shares of Compounding
Preferred Stock required to be redeemed on such date, this Corporation shall
not redeem, or discharge any sinking fund obligation with respect to, any
Parity Stock or Junior Stock, and shall not purchase or otherwise acquire any
shares of Compounding Preferred Stock, Parity Stock or Junior Stock. Nothing
contained in this Section 5(g) shall prevent the purchase or acquisition (i) of
shares of Compounding Preferred Stock and Parity Stock pursuant to a purchase
or exchange offer or offers made to holders of all outstanding shares of
Compounding Preferred Stock and Parity Stock, provided that (A) as to holders
of all outstanding shares of Compounding Preferred Stock, the terms of the
purchase or exchange offer for all such shares are identical, (B) as to holders
of all outstanding shares of a particular series or class of Parity Stock, the
terms of the purchase or exchange offer for all such shares are identical, and
(C) as among holders of all outstanding shares of Compounding Preferred Stock
and Parity Stock, the terms of each purchase or exchange offer or offers are
substantially identical relative to the liquidation price of the shares of
Compounding Preferred Stock and each series or class of Parity Stock, (ii) of
shares of Compounding Preferred Stock, Parity Stock or Junior Stock in exchange
for (together with a cash adjustment for fractional shares, if any), or through
the application of the proceeds of the sale of, shares of Junior Stock or (iii)
of shares of Junior Stock that are beneficially owned by Liberty upon the
redemption of, or in exchange for, shares of Liberty's preferred stock
beneficially owned by this Corporation. Subject to the foregoing, this
Corporation may purchase shares of Compounding Preferred Stock but shall not
redeem any shares of Compounding Preferred Stock except as expressly authorized
in this Section 5.
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<PAGE> 46
6. No Voting Rights.
The holders of Compounding Preferred Stock shall have no right
to vote for any purpose, except as specifically required by the Delaware
General Corporation Law.
7. Preemptive Rights. The holders of the Compounding Preferred
Stock will not have any preemptive right to subscribe for or purchase any
shares of stock or any other securities which may be issued by this
corporation.
8. Exclusion of Other Rights. Except as may otherwise be
required by law and for the equitable rights and remedies that may otherwise be
available to holders of Compounding Preferred Stock, the shares of Compounding
Preferred Stock shall not have any designations, preferences, limitations or
relative rights, other than those specifically set forth in these resolutions
(as such resolutions may be amended from time to time) and in the Restated
Certificate of Incorporation of this Corporation.
9. Headings. The headings of the various sections and
subsections hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
FURTHER RESOLVED, that the appropriate officers of this
Corporation are here-by authorized to execute and acknowledge a certificate
setting forth these resolutions and to cause such certificate to be filed and
recorded, in accordance with the requirements of Section 151(g) of the General
Corporation Law of the State of Delaware."
/s/ JOHN C. MALONE
ATTEST John C. Malone
President
By: /s/ EDON V. HARTLEY
Edon V. Hartley
Assistant Secretary
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<PAGE> 47
STATE OF DELAWARE PAGE 1
{LOGO}
OFFICE OF SECRETARY OF STATE
I, JEFFREY D. LEWIS, ACTING SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF STOCK DESIGNATION OF "TELE-COMMUNICATIONS, INC." FILED IN THIS
OFFICE ON THE SECOND DAY OF DECEMBER, A.D. 1991 AT 8:31 O'CLOCK A.M.
* * * * * * * * * *
/s/ JEFFERY D. LEWIS
ACTING SECRETARY OF STATE
AUTHENTICATION: *3327903
DATE: 01/29/1992
{SEAL}
920295257
<PAGE> 48
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 08:31 AM 12/02/1991
913365031 - 685208
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATIONS
------------------
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED
AS "CONVERTIBLE PREFERRED STOCK,
SERIES A" ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
------------------
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
------------------
The undersigned, President of Tele-Communications, Inc., a
Delaware corporation (the "Corporation"), hereby certifies that the Board of
Directors, at a meeting duly called and held, adopted the following resolutions
creating a series of preferred stock designated AS "Convertible Preferred
Stock, Series A":
"BE IT RESOLVED, that, pursuant to authority expressly granted by the
provisions of the Restated Certificate of Incorporation of this corporation,
the Board of Directors hereby creates and authorizes the issuance of a series
of preferred stock, par value $1.00 per share, of this Corporation, to consist
of 6,201 shares, and hereby fixes the designations, dividend rights, voting
powers, rights on liquidation and other preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereof of the shares of such series (in addition
to the designations, preferences and relative, participating, optional or other
special rights and the qualifications, limitations or restrictions thereof set
forth in the Restated Certificate of Incorporation that are applicable to
preferred stock of all series) as follows:
<PAGE> 49
1. Designation. The designation of the series of preferred
stock, par value $1.00 per share, of this Corporation authorized hereby is
"Convertible Preferred Stock, Series A" (the "Convertible Preferred Stock").
2. Certain Definitions. Unless the context otherwise requires,
the terms defined in this Section 2 shall have the meanings herein specified:
Affiliate: As defined in Section 7(b).
Board of Directors: The Board of Directors of this Corporation
and any authorized committee thereof.
Capital Stock: Any and all shares, interests, participations
or other equivalents (however designated) of corporate stock of this
Corporation.
Class A Common Stock: The Class A Common Stock, par value
$1.00 per share, of this Corporation as such exists on the date of this
Certificate of Designations, and Capital Stock of any other class into which
such Class A Common Stock may thereafter have been changed.
Class B Common Stock: The Class B Common Stock, par value
$1.00 per share, of this Corporation as such exists on the date of this
Certificate of Designations, and Capital Stock of any other class into which
such Class B Common Stock may thereafter have been changed.
Conversion Rate: As defined in Section 5(b).
Convertible Preferred Holder: As defined in Section 7(a).
Convertible Securities: Securities, other than the Class B
Common Stock, that are convertible into Class A Common Stock.
Debt Instrument: any bond, debenture, note, indenture,
guarantee or other instrument or agreement evidencing any Indebtedness, whether
existing at the Issue Date or thereafter created, incurred, assumed or
guaranteed.
Dividend Payment Date: As defined in Section 3(b).
Dividend Period: The period from but excluding the First
Accrual Date to and including the first Dividend Payment Date and each
three-month period from but excluding the Dividend Payment Date for the
preceding Dividend Period to and including the Dividend Payment Date for such
Dividend Period.
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<PAGE> 50
First Accrual Date: October 1, 1991.
Indebtedness: Any (i) liability, contingent or otherwise, of
this Corporation (x) for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of this Corporation or only to a portion
thereof), (y) evidenced by a note, debenture or similar instrument (including a
purchase money obligation) given other than in connection with the acquisition
of inventory or similar property in the ordinary course of business, or (z) for
the payment of money relating to an obligation under a lease that is required
to be capitalized for financial accounting purposes in accordance with
generally accepted accounting principles; (ii) liability of others described in
the preceding clause (i) which this Corporation has guaranteed or which is
otherwise its legal liability; (iii) obligations secured by a mortgage, pledge,
lien, charge or other encumbrance to which the property or assets of this
Corporation are subject whether or not the obligations secured thereby shall
have been assumed by or shall otherwise be this Corporation's legal liability;
and (iv) any amendment, renewal, extension or refunding of any liability of the
types referred to in clauses (i), (ii) and (iii) above.
Issue Date: The first date on which any shares of the
Convertible Preferred Stock are first issued or deemed to have been issued.
Junior Securities: All shares of Class A Common Stock, Class B
Common Stock, and any other class or series of stock of this Corporation
authorized after the Issue Date not entitled to receive any dividends unless
all dividends required to have been paid or declared and set apart for payment
on the Convertible Preferred Stock and any Parity Securities shall have been so
paid or declared and set apart for payment and, for purposes of Section 4
hereof, any class or series of stock of this Corporation authorized after the
Issue Date not entitled to receive any assets upon liquidation, dissolution or
winding up of the affairs of this Corporation until the Convertible Preferred
Stock and any Parity Securities shall have received the entire amount to which
such stock is entitled upon such liquidation, dissolution or winding up.
Liquidation Value: Measured per Share of the Convertible
Preferred Stock as of any particular date, the sum of (i) $3,000, plus (ii) an
amount equal to all dividends accrued on such Share through the Dividend
Payment Date immediately preceding the date on which the Liquidation Value is
being determined, which pursuant to Section 3(c) have been added to and remain
a part of the Liquidation Value as of
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<PAGE> 51
such date, plus (iii), for purposes of determining amounts payable pursuant to
Sections 4 and 6 hereof, an amount equal to all unpaid dividends accrued on the
sum of the amounts specified in clauses (i) and (ii) above to the date as of
which the Liquidation Value is being determined.
Original Holder: As defined in Section 7 (a).
Parity Securities: The 12 7/8% Preferred Stock and any other
class or series of stock of this Corporation authorized after the Issue Date
entitled to receive payment of dividends on a parity with the Convertible
Preferred Stock or entitled to receive assets upon liquidation, dissolution or
winding up of the affairs of this Corporation on a parity with the Convertible
Preferred Stock.
Permitted Transferee: As defined in Section 7(a).
Record Date: For dividends payable on any Dividend Payment
Date, the fifteenth day of the month preceding the month during which such
Dividend Payment Date shall occur.
Redemption Date: As to any Share, the date fixed for
redemption of such Share as specified in the notice of redemption given in
accordance with Section 6(d), provided that no such date will be a Redemption
Date unless the applicable Redemption Price is actually paid on such date or
the consideration sufficient for the payment thereof, and for no other purpose,
has been set apart, and if the Redemption Price is not so paid in full or the
consideration sufficient therefor so set apart then the Redemption Date will be
the date on which such Redemption Price is fully paid or the consideration
sufficient for the payment thereof, and for no other purpose, has been set
apart.
Redemption Price: As to any Share that is to be redeemed on
any Redemption Date, the Liquidation Value as in effect on such Redemption
Date.
Senior Securities: Any class or series of stock of this
Corporation authorized after the Issue Date ranking senior to the Convertible
Preferred Stock and any Parity securities in respect of the right to receive
payment of dividends or the right to participate in any distribution upon
liquidation, dissolution or winding up of the affairs of this Corporation.
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<PAGE> 52
Share: As defined in Section 3(a).
Special Record Date; As defined in Section 3(c) .
12 7/8% Preferred Stock: The 5,022,394 authorized shares of
the 12 7/8% Cumulative Compounding Redeemable Preferred Stock, Series A, of
this Corporation.
3. Dividends.
(a) Subject to the prior preferences and other rights of any
Senior Securities with respect to dividends, the holders of the Convertible
Preferred Stock shall be entitled to receive, and, subject to any prohibition
or restriction contained in any Debt instrument, this Corporation shall be
obligated to pay, but only out of funds legally available therefor,
preferential cumulative cash dividends which shall accrue as provided herein.
Except as otherwise provided in Sections 3(c) or 3(d) hereof, dividends on each
share of Convertible Preferred Stock (hereinafter referred to as a "Share")
shall accrue on a daily basis at the rate of ten percent (10%) per annum of the
Liquidation Value thereof, from but excluding the First Accrual Date to and
including the date of conversion thereof pursuant to Section 5 or the date on
which the Liquidation Value or Redemption Price of such Share is made available
pursuant to Section 4 or 6 hereof, respectively. Dividends on the convertible
Preferred Stock shall accrue as provided herein, whether or not such dividends
have been declared and whether or not there are profits, surplus or other funds
of the Corporation legally or contractually available for the payment of
dividends.
(b) Accrued dividends on the Convertible Preferred Stock shall
be payable quarterly on the first day of each January, April, July and October,
or the immediately preceding business day if such first day is a Saturday,
Sunday or legal holiday (each such payment date being hereinafter referred to
as a "Dividend Payment Date"), commencing on January 1, 1992, to the holders of
record of the Convertible Preferred Stock as of the close of business on the
applicable Record Date. For purposes of determining the amount of dividends
"accrued" as of any date that is not a Dividend Payment Date, such amount shall
be calculated on the basis of the rate per annum specified in Section 3(a) for
actual days elapsed from but excluding the First Accrual Date (in the case of
any date prior to the first Dividend Payment Date) or the last preceding
Dividend Payment Date (in the case of any other date) to and including the date
as of which such determination is to be made, based on a 365-day year.
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<PAGE> 53
(c) If on any Dividend Payment Date this corporation, pursuant to
applicable law or the terms of any Debt Instrument, shall be prohibited or
restricted from paying in cash the full dividends to which holders of the
Convertible Preferred Stock and any Parity Securities shall be entitled, the
amount available for such payment pursuant to applicable law and which is not
restricted by the terms of any Debt Instrument shall be distributed among the
holders of the Convertible Preferred Stock and such Parity Securities ratably
in proportion to the full amounts to which they would otherwise be entitled.
To the extent not paid on each Dividend Payment Date, all dividends which have
accrued on each Share during the Dividend Period ending on such Dividend
Payment Date will be added cumulatively to the Liquidation Value of such Share
and will remain a part thereof until such dividends are paid. In the event
that dividends are not paid in full on two consecutive Dividend Payment Dates,
dividends on that portion of the Liquidation Value of each Share which consists
of accrued dividends that have theretofore been or thereafter are added to, and
remain a part of, the Liquidation Value in accordance with the preceding
sentence shall accrue cumulatively on a daily basis at the rate of fifteen
percent (15%) per annum, from and after such second consecutive Dividend
Payment Date to and including the date of conversion of such share pursuant to
Section 5 or the date on which the Liquidation Value or Redemption Price of
such Share is made available pursuant to Section 4 or 6 hereof, respectively,
unless such portion of the Liquidation Value that consists of accrued unpaid
dividends shall be earlier paid in full. Such portion of the Liquidation Value
as consists of accrued unpaid dividends, may be declared and paid at any time
(subject to the concurrent satisfaction of any dividend arrearage then existing
with respect to any Parity Securities), without reference to any regular
Dividend Payment Date, to holders of record as of the close of business on such
date, not more than 50 days nor less than 10 days preceding the payment date
thereof, as may be fixed by the Board of Directors of this Corporation (the
"Special Record Date").
(d) In the event that on any date fixed for redemption of
Shares pursuant to Section 6 (other than on any date fixed for a redemption of
Shares pursuant to Section 6(a)), this Corporation shall fail to pay the
Redemption Price due and payable upon presentation and surrender of the stock
certificates evidencing Shares to be redeemed, then dividends on such Shares
shall accrue cumulatively on a daily basis at the rate of fifteen percent (15%)
per annum of the Liquidation Value thereof from and after such Redemption Date
to and including the date of conversion of such Shares pursuant to Section 5 or
the date on which the Liquidation
-6-
<PAGE> 54
Value or Redemption Price of such Shares is made available pursuant to Section
4 or 6 hereof, respectively.
(e) Notice of each Special Record Date shall be mailed, in the
manner provided in Section 6(d), to the holders of record of the Convertible
Preferred Stock not less than 15 days prior thereto.
(f) As long as any Convertible Preferred Stock shall be
outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any other distribution be made, on any Junior Security, nor
shall any shares of any Junior Security be purchased, redeemed, or otherwise
acquired for value by the Corporation, unless the holders of the Convertible
Preferred Stock shall have received all dividends to which they are entitled
pursuant to Section 3(a) hereof for the Dividend Period in which such dividend
on the Junior Securities is to occur and all preceding Dividend Periods, or
such dividends shall have been declared and the consideration sufficient for
the payment thereof set apart so as to be available for the payment in full
thereof and for no other purpose. The provisions of this Section 3(f) shall
not apply (i) to a dividend payable in any Junior Security, (ii) to the
repurchase, redemption or other acquisition of shares of any Junior Security
solely through the issuance of Junior Securities (together with a cash
adjustment for fractional shares, if any) or through the application of the
proceeds from the sale of Junior Securities or (iii) to the acquisition of any
shares of any Junior Security beneficially owned by Liberty Media Corporation
("Liberty") upon the redemption of, or in exchange for, shares of Liberty's
preferred stock that are beneficially owned by this Corporation.
4. Liquidation. Subject to the prior payment in full of the
preferential amounts to which any Senior Securities are entitled, upon any
liquidation, dissolution or winding up of this Corporation, whether voluntary
or involuntary, the holders of Convertible Preferred Stock shall be entitled to
be paid an amount in cash equal to the aggregate Liquidation Value at the date
fixed for liquidation of all Shares outstanding before any distribution or
payment is made upon any Junior Securities, which payment shall be made pari
passu with any such payment made to the holders of any Parity Securities. The
holders of Convertible Preferred Stock shall be entitled to no other or further
distribution of or participation in any remaining assets of this Corporation
after receiving the Liquidation Value per Share. If upon such liquidation,
dissolution or winding up, the assets of this Corporation to be distributed
among the holders of Convertible Preferred Stock and to all holders of Parity
Securities are insufficient to permit payment in full to such
-7-
<PAGE> 55
holders of the aggregate preferential amounts which they are entitled to be
paid, then the entire assets of this Corporation to be distributed to such
holders shall be distributed ratably among them based upon the full
preferential amounts to which the shares of Convertible Preferred Stock and
such Parity Securities would otherwise respectively be entitled. Upon any such
liquidation, dissolution or winding up, after the holders of Convertible
Preferred Stock and Parity Securities have been paid in full the amounts to
which they are entitled, the remaining assets of this Corporation may be
distributed to the holders of Junior Securities. This corporation shall mail
written notice of such liquidation, dissolution or winding up to each record
holder of Convertible Preferred Stock not less than 30 days prior to the
payment date stated in such written notice. Neither the consolidation or
merger of this Corporation into or with any other corporation or corporations,
nor the sale, transfer or lease by this Corporation of all or any part of its
assets, shall be deemed to be a liquidation, dissolution or winding up of this
Corporation within the meaning of this Section 4.
5. Conversion.
(a) Unless previously called for redemption as provided in
Section 6 hereof, the Convertible Preferred Stock may be converted at such
time, in such manner and upon such terms and conditions as hereinafter provided
in this Section 5 into fully paid and non-assessable full shares of Class A
Common Stock. In the case of Shares called for redemption by this Corporation
pursuant to Sections 6(a) or 6(b) hereof, the conversion right provided by this
Section 5 shall terminate at the close of business on the fifteenth day
preceding the date fixed for redemption. In the case of Shares required to be
redeemed pursuant to Section 6(c), the conversion right provided by this
Section 5 shall terminate immediately upon receipt by this Corporation of a
notice given pursuant to said Section. In case cash, securities or property
other than Class A Common Stock shall be payable, deliverable or issuable upon
conversion as provided herein, then all references to Class A Common Stock in
this Section 5 shall be deemed to apply, so far as appropriate and as nearly as
may be, to such cash, property or other securities.
(b) Subject to the provisions for adjustment hereinafter set
forth in this Section 5, the Convertible Preferred Stock may be converted into
Class A Common Stock at the initial conversion rate of two hundred and four
(204) fully paid and non-assessable shares of Class A Common Stock for one
share of the Convertible Preferred Stock. (This conversion rate as from time to
time adjusted cumulatively pursuant to the provisions of this Section is
hereinafter referred to as the "Conversion Rate".)
-8-
<PAGE> 56
(c) In case this Corporation shall (i) pay a dividend or make
a distribution on its outstanding shares of Class A Common Stock in shares of
its Capital Stock, (ii) subdivide the then outstanding shares of Class A Common
Stock into a greater number of shares of Class A Common Stock, (iii) combine
the then outstanding shares of Class A Common Stock into a smaller number of
shares of Class A Common Stock, or (iv) issue by reclassification of its shares
of Class A Common Stock any shares of any other class of Capital Stock of this
Corporation (including any such reclassification in connection with a merger in
which this Corporation is the continuing corporation), then the Conversion Rate
in effect immediately prior to the opening of business on the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted so that the holder of each
share of the Convertible Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number and kind of shares of Capital Stock of
this Corporation that such holder would have owned or been entitled to receive
immediately following such action had such shares of Convertible Preferred
Stock been converted immediately prior to such time. An adjustment made
pursuant to this Section 5(c) for a dividend or distribution shall become
effective immediately after the record date for the dividend or distribution
and an adjustment made pursuant to this Section 5(c) for a subdivision,
combination or reclassification shall become effective immediately after the
effective date of the subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any action listed above shall be
taken.
(d) In case this Corporation shall issue any rights or
warrants to all holders of shares of Class A Common Stock entitling them (for a
period expiring within 45 days after the record date for the determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Class A Common Stock (or Convertible Securities) at a price
per share of Class A common Stock (or having an initial exercise price or
conversion price per share of Class A Common Stock) less than the then current
market price per share of Class A Common Stock (as determined in accordance
with the provisions of Section 5(f) below) on such record date, the number of
shares of Class A Common Stock into which each Share shall thereafter be
convertible shall be determined by multiplying the number of shares of Class A
Common Stock into which such Share was theretofore convertible immediately
prior to such record date by a fraction of which the numerator shall be the
number of shares of Class A Common Stock outstanding on such record date plus
the number of additional shares of Class A Common Stock offered for
subscription or purchase (or into which the
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Convertible Securities so offered are initially convertible) and of which the
denominator shall be the number of shares of Class A Common Stock outstanding
on such record date plus the number of shares of class A Common Stock which the
aggregate offering price of the total number of shares of Class A Common Stock
so offered (or the aggregate initial conversion or exercise price of the
Convertible Securities so offered) would purchase at the then current market
price per share of Class A Common Stock (as determined in accordance with the
provisions of Section 5(f) below) on such record date. Such adjustment shall
be made successively whenever any such rights or warrants are issued and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. In the event that
all of the shares of Class A Common Stock (or all of the Convertible
Securities) subject to such rights or warrants have not been issued when such
rights or warrants expire (or, in the case of rights or warrants to purchase
Convertible Securities which have been exercised, all of the shares of Class A
Common Stock issuable upon conversion of such Convertible Securities have not
been issued prior to the expiration of the conversion right thereof), then the
Conversion Rate shall be readjusted retroactively to be the Conversion Rate
which would then be in effect had the adjustment upon the issuance of such
rights or warrants been made on the basis of the actual number of shares of
Class A Common Stock (or Convertible Securities) issued upon the exercise of
such rights or warrants (or the conversion of such Convertible Securities); but
such subsequent adjustment shall not affect the number of shares of Class A
Common Stock issued upon the conversion of any Share prior to the date such
subsequent adjustment is made.
(e) In case this Corporation shall distribute to all holders of
shares of class A Common Stock (including any such distribution made in
connection with a merger in which this Corporation is the continuing
corporation, other than a merger to which Section 5(g) is applicable) any
evidences of its indebtedness or assets (other than cash dividends or Capital
Stock) or rights or warrants to purchase shares of Class A Common Stock or
Class B Common Stock or securities convertible into shares of Class A Common
Stock or Class B Common Stock (excluding those referred to in Section 5(d)
above), then in each such case the number of shares of Class A Common Stock
into which each Share shall thereafter be convertible shall be determined by
multiplying the number of shares of Class A Common Stock into which such Share
was theretofore convertible immediately prior to record date for the
determination of stockholders entitled to receive the distribution by a
fraction of which the numerator shall be the then current market price per
share of Class A Common Stock (as determined in accordance with the provisions
of
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Section 5(f) below) on such record date and of which the denominator shall be
such current market price per share of Class A Common Stock less the fair
market value on such record date (as determined by the Board of Directors of
this Corporation, whose determination shall be conclusive) of the portion of
the assets or evidences of indebtedness or rights and warrants so to be
distributed applicable to one share of Class A Common Stock. Such adjustment
shall be made successively whenever any such distribution is made and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(f) For the purpose of any computation under Section 5(d), (e)
or (k), the current market price per share of Class A Common Stock at any date
shall be deemed to be the average of the daily closing prices for a share of
Class A Common Stock for the ten (10) consecutive trading days before the day
in question. The closing price for each day shall be the last reported sale
price regular way or, in case no such reported sale takes place an such day,
the average of the reported closing bid and asked prices regular way, in either
case on the composite tape, or if the shares of Class A Common Stock are not
quoted on the composite tape, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on which the shares of Class A Common Stock are listed or
admitted to trading, or if they are not listed or admitted to trading on any
such exchange, the last reported sale price (or the average of the quoted
closing bid and asked prices if there were no reported sales) as reported by
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") or any comparable system, or if the Class A Common Stock is not
quoted on NASDAQ or any comparable system, the average of the closing bid and
asked prices as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by this Corporation for
that purpose or, in the absence of such quotations, such other method of
determining market value as the Board of Directors shall from time to time deem
to be fair.
(g) In case of any reclassification or change in the Class A
Common stock (other than any reclassification or change referred to in Section
5(c) and other than a change in par value) or in case of any consolidation of
this Corporation with any other corporation or any merger of this Corporation
into another corporation or of another corporation into this Corporation (other
than a merger in which this Corporation is the continuing corporation and which
does not result in any reclassification or change (other than a change in par
value or any reclassification or
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change to which Section 5(c) is applicable) in the outstanding Class A Common
Stock) , or in case of any sale or transfer to another corporation or entity
(other than by mortgage or pledge) of all or substantially all of the
properties and assets of this Corporation, this Corporation (or its successor
in such consolidation or merger) or the purchaser of such properties and assets
shall make appropriate provision so that the holder of a Share shall have the
right thereafter to convert such Share into the kind and amount of shares of
stock and other securities and property that such holder would have owned
immediately after such reclassification, change, consolidation, merger, sale or
transfer if such holder had converted such Share into Class A Common Stock
immediately prior to the effective date of such reclassification, change,
consolidation, merger, sale or transfer (assuming for this purpose (to the
extent applicable) that such holder failed to exercise any rights of election
and received per share of Class A Common Stock the kind and amount of shares of
stock and other securities and property received per share by a plurality of
the nonelecting shares), and the holders of the Convertible Preferred Stock
shall have no other conversion rights under these provisions; provided, that
effective provision shall be made, in the Articles or Certificate of
Incorporation of the resulting or surviving corporation or otherwise or in any
contracts of sale or transfer, so that the provisions set forth herein for the
protection of the conversion rights of the Convertible Preferred Stock shall
thereafter be made applicable, as nearly as reasonably may be to any such other
shares of stock and other securities and property deliverable upon conversion
of the Convertible Preferred Stock remaining outstanding or other convertible
preferred stock or other Convertible Securities received by the holders of
Convertible Preferred Stock in place thereof; and provided, further, that any
such resulting or surviving corporation or purchaser shall expressly assume the
obligation to deliver, upon the exercise of the conversion privilege, such
shares, securities or property as the holders of the Convertible Preferred
Stock remaining outstanding, or other convertible preferred stock or other
convertible securities received by the holders in place thereof, shall be
entitled to receive pursuant to the provisions hereof, and to make provisions
for the protection of the conversion rights as above provided.
(h) Whenever the Conversion Rate or the conversion privilege
shall be adjusted as provided in Sections 5(c),(d), (e) or (g), this
Corporation shall promptly cause a notice to be mailed to the holders of record
of The Convertible Preferred Stock describing the nature of the event requiring
such adjustment, the Conversion Rate in effect immediately thereafter and the
kind and amount of stock or other securities or property into which The
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Convertible Preferred Stock shall be convertible after such event. Where
appropriate, such notice may be given in advance and included as a part of a
notice required to be mailed under the provisions of Section 5(j).
(i) This Corporation may, but shall not be required to, make any adjustment
of the Conversion Rate if such adjustment would require an increase or decrease
of less than 1% in such Conversion Rate; provided, however, that any
adjustments which by reason of this Section 5(i) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 5 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. In any case in which this
Section 5(i) shall require that an adjustment shall become effective
immediately after a record date for an event, the Corporation may defer until
the occurrence of such event (x) issuing to the holder of any shares of
Convertible Preferred Stock converted after such record date and before the
occurrence of such event the additional shares of Class A Common Stock or other
Capital Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the shares of Class A Common Stock, or
other Capital Stock issuable upon such conversion before giving effect to such
adjustment and (y) paying to such holder cash in lieu of any fractional
interest to which such holder is entitled pursuant to Section 5(n); provided,
however, that, if requested by such holder, this Corporation shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares of Class A Common Stock or other
Capital Stock, and such cash, upon the occurrence of the event requiring such
adjustment.
(j) In case at any time:
(i) this Corporation shall take any action which would
require an adjustment in the Conversion Rate pursuant to
this Section;
(ii) there shall be any capital reorganization or
reclassification of the Class A Common Stock (other than a
change in par value), or any consolidation or merger to which
the Corporation is a party and for which approval of any
shareholders of this Corporation is required, or any sale,
transfer or lease of all or substantially all of the
properties and assets of the Corporation, or a tender offer
for shares of Class A Common Stock representing, together with
any shares of Class B Common Stock tendered for in such tender
offer, at least a majority of the total
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voting power represented by the outstanding shares of Class A
Common Stock and Class B Common Stock which has been
recommended by the Board of Directors as being in the best
interests of the holders of Class A Common Stock; or
(iii) there shall be a voluntarily or involuntary
dissolution, liquidation or winding up of this Corporation;
then, in any such event, this Corporation shall give written
notice, in the manner provided in Section 6(d) hereof, to the
holders of the Convertible Preferred Stock at their respective
addresses as the same appear upon the books of the
Corporation, at least twenty days (or ten days in the case of
a recommended tender offer as specified in clause (ii) above)
prior to any record date for such action, dividend or
distribution or the date as of which it is expected that
holders of Class A Common Stock of record shall be entitled to
exchange their shares of Class A Common Stock for securities
or other property, if any, deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
transfer, lease, tender offer, dissolution, liquidation or
winding up; provided, however, that any notice required by any
event described in clause (ii) of this Section 5(j) shall be
given in the manner and at the time that such notice is given
to the holders of Class A Common Stock. Without limiting the
obligation of this Corporation to provide notice of corporate
actions hereunder, the failure to give the notice required by
this Section 5(j) or any defect therein shall not affect the
legality or validity of any such corporate action of the
Corporation or the vote upon such action.
(k) Before any holder of Convertible Preferred Stock shall
be entitled to convert the same into Class A Common Stock, such holder shall
surrender the certificate or certificates for such Convertible Preferred Stock
at the office of this Corporation or at the office of the transfer agent for
the Convertible Preferred Stock, which certificate or certificates, if this
Corporation shall so request, shall be duly endorsed to this Corporation or in
blank or accompanied by proper instruments of transfer to this Corporation or
in blank (such endorsements or instruments of transfer to be in form
satisfactory to this Corporation), and shall give written notice to this
Corporation at said office that it elects to convert all or a part of the
Shares represented by said certificate or certificates in accordance with the
terms of this Section 5, and shall state in writing therein the name or names
in which such holder wishes the
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certificates for Class A Common Stock to be issued. Every such notice of
election to convert shall constitute a contract between the holder of such
Convertible Preferred Stock and the Corporation, whereby the holder of such
Convertible Preferred Stock shall be deemed to subscribe for the amount of
Class A Common Stock which such holder shall be entitled to receive upon
conversion of the number of shares of Convertible Preferred Stock to be
converted, and, in satisfaction of such subscription, to deposit the shares of
Convertible Preferred Stock to be converted, and thereby this Corporation shall
be deemed to agree that the surrender of the shares of Convertible Preferred
Stock to be converted shall constitute full payment of such subscription for
Class A Common Stock to be issued upon such conversion. This Corporation will
as soon as practicable after such deposit of a certificate or certificates for
Convertible Preferred Stock, accompanied by the written notice and the
statement above prescribed, issue and deliver at the office of this Corporation
or of said transfer agent to the person for whose account such Convertible
Preferred Stock was so surrendered, or to his nominee(s) or, subject to
compliance with applicable law, transferee(s), a certificate or certificates
for the number of full shares of Class A Common Stock to which such holder
shall be entitled, together with cash in lieu of any fraction of a share as
hereinafter provided. If surrendered certificates for Convertible Preferred
Stock are converted only in part, this Corporation will issue and deliver to
the holder, or to his nominee(s), without charge therefor, a new certificate or
certificates representing the aggregate of the unconverted Shares. Such
conversion shall be deemed to have been made as of the date of such surrender
of the Convertible Preferred Stock to be converted; and the person or persons
entitled to receive the Class A Common Stock issuable upon conversion of such
Convertible Preferred Stock shall be treated for all purposes as the record
holder or holders of such Class A Common Stock on such date.
Upon the conversion of any Share, this Corporation shall pay,
to the holder of record of such Share on the immediately preceding Record Date,
all accrued but unpaid dividends on such Share to the date of the surrender of
such Share for conversion. Such payment shall be made in cash or, at the
election of this Corporation, the issuance of certificates representing such
number of shares of Class A Common Stock as have an aggregate current market
price (as determined in accordance with Section 5(f)) on the date of issuance
equal to the amount of such accrued but unpaid dividends. Upon the making of
such payment to the person entitled thereto as determined pursuant to the first
sentence of this paragraph, no further dividends shall accrue on such Share or
be payable to any other person.
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The issuance of certificates for shares of Class A Common
Stock upon conversion of shares of Convertible Preferred Stock shall be made
without charge for any issue, stamp or other similar tax in respect of such
issuance, provided, however, if any such certificate is to be issued in a name
other than that of the registered holder of the share or shares of Convertible
Preferred Stock converted, the person or persons requesting the issuance
thereof shall pay to this Corporation the amount of any tax which may be
payable in respect of any transfer involved in such issuance or shall establish
to the satisfaction of this Corporation that such tax has been paid.
This Corporation shall not be required to convert any shares
of Convertible Preferred Stock, and no surrender of Convertible Preferred Stock
shall be effective for that purpose, while the stock transfer books of this
Corporation are closed for any purpose; but the surrender of Convertible
Preferred Stock for conversion during any period while such books are so closed
shall become effective for conversion immediately upon the reopening of such
books, as if the conversion had been made on the date such Convertible
Preferred Stock was surrendered.
(l) This Corporation shall at all times reserve and keep
available, solely for the purpose of issuance upon conversion of the
outstanding shares of Convertible Preferred Stock, such number of shares of
Class A Common Stock as shall be issuable upon the conversion of all
outstanding Shares, provided that nothing contained herein shall be construed
to preclude this Corporation from satisfying its obligations in respect of the
conversion of the outstanding shares of Convertible Preferred Stock by delivery
of shares of Class A Common Stock which are held in the treasury of this
Corporation. This Corporation shall take all such corporate and other actions
as from time to time may be necessary to insure that all shares of Class A
Common Stock issuable upon conversion of shares of Convertible Preferred Stock
at the Conversion Rate in effect from time to time will, upon issue, be duly
and validly authorized and issued, fully paid and nonassessable and free of any
preemptive or similar rights.
(m) All shares of Convertible Preferred Stock received by
this Corporation upon conversion thereof into Class A Common Stock shall be
retired and shall be restored to the status of authorized and unissued shares
of preferred stock (and may be reissued as part of another series of the
preferred stock of this Corporation, but such shares shall not be reissued as
Convertible Preferred Stock).
(n) This Corporation shall not be required to issue
fractional shares of Class A Common Stock or scrip upon
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conversion of the Convertible Preferred Stock. As to any final fraction of a
share of Class A Common Stock which a holder of one or more Shares would
otherwise be entitled to receive upon conversion of such Shares in the same
transaction, this Corporation shall pay a cash adjustment in respect of such
final fraction in an amount equal to the same fraction of the market value of a
full share of Class A Common Stock. For purposes of this Section 5(n), the
market value of a share of Class A Common Stock shall be the last reported sale
price regular way on the business day immediately preceding the date of
conversion, or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way on such day,
in either case on the composite tape, or if the shares of Class A Common Stock
are not quoted on the composite tape, on the principal United States securities
exchange registered under the Exchange Act on which the shares of Class A
Common Stock are listed or admitted to trading, or if the shares of Class A
Common Stock are not listed or admitted to trading on any such exchange, the
last reported sale price (or the average of the quoted last reported bid and
asked prices if there were no reported sales) as reported by NASDAQ or any
comparable system, or if the Class A Common Stock is not quoted on NASDAQ or
any comparable system, the average of the closing bid and asked prices as
furnished by any member of the National Association of Securities Dealers, Inc.
selected from time to time by this Corporation for that purpose or, in the
absence of such quotations, such other method of determining market value as
the Board of Directors shall from time to time deem to be fair.
6. Redemption.
(a) Subject to the rights of any Senior Securities and the
provisions of Section 6(g), the shares of Convertible Preferred Stock may be
redeemed out of funds legally available therefor, at the option of this
Corporation by action of the Board of Directors, in whole or from time to time
in part, at any time after the Issue Date, at the Redemption price per share as
of the applicable Redemption Date. If less than all outstanding Shares are to
be redeemed, Shares shall be redeemed ratably among the holders thereof.
(b) Subject to the rights of any Senior Securities, Parity
Securities and the provisions of Section 6(g) and subject to any prohibition or
restriction contained in any Debt Instrument, this Corporation shall redeem,
out of funds legally available therefor, on April 1, 1999 all of the shares of
the Convertible Preferred Stock remaining outstanding at the Redemption Price
per share on the Redemption Date. If the funds of this Corporation available,
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in accordance with the immediately preceding sentence, for redemption of Shares
are insufficient to redeem the total number of Shares, those funds which are
legally available for redemption of Shares and not restricted in accordance
with the first sentence of this Section 6(b) will be used to redeem the maximum
possible number of Shares ratably among the holders thereof. At any time
thereafter when additional funds of this Corporation are legally available and
not so restricted for such purpose, such funds will immediately be used to
redeem the Shares this Corporation failed to redeem on such Redemption Date
until the balance of the Shares have been redeemed.
(c) Subject to the rights of any Senior Securities, parity
Securities and the provisions of Section 6(g) and subject to any prohibition or
restriction contained in any Debt Instrument, at any time on or after the Issue
Date, any holder shall have the right, at such holder's option, to require
redemption by this Corporation at the Redemption price per Share as of the
applicable Redemption Date of all or any portion of his Shares having an
aggregate Liquidation Value in excess of $1,000,000, by written notice to this
Corporation stating the number of Shares to be redeemed. This Corporation
shall redeem, out of funds legally available therefor and not restricted in
accordance with the first sentence of this Section 6(c), the Shares so
requested to be redeemed on such date within 60 days following this
corporation's receipt of such notice as this Corporation shall state in its
notice given pursuant to Section 6(d). If the funds of this Corporation
legally available for redemption of Shares and not restricted in accordance
with the first sentence of this Section 6(c) are insufficient to redeem the
total number of Shares required to be redeemed pursuant to this Section 6(c),
those funds which are legally available for redemption of such Shares and not
so restricted will be used to redeem the maximum possible number of such Shares
ratably among the holders who have required Shares to be redeemed under this
Section 6(c). At any time thereafter when additional funds of this Corporation
are legally available and not so restricted for such purpose, such funds will
immediately be used to redeem the Shares this Corporation failed to redeem on
such Redemption Date until the balance of such Shares are redeemed.
(d) Notice of any redemption pursuant to this Section shall
be mailed, first class, postage prepaid, not less than 30 days nor more than 60
days prior to the Redemption Date, to the holders of record of the shares of
Convertible Preferred Stock to be redeemed, at their respective addresses as
the same appear upon the books of this Corporation or are supplied by them in
writing to this Corporation for the purpose of such notice; but no failure to
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mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the proceedings for the redemption of any shares of the
Convertible Preferred Stock. Such notice shall set forth the Redemption price,
the Redemption Date, the number of Shares to be redeemed and the place at which
the Shares called for redemption will, upon presentation and surrender of the
stock certificates evidencing such Shares, be redeemed. In case fewer than the
total number of shares of Convertible Preferred Stock represented by any
certificate are redeemed, a new certificate representing the number of
unredeemed Shares will be issued to the holder thereof without cost to such
holder.
(e) If notice of any redemption by this Corporation pursuant
to this Section 6 shall have been mailed as provided in Section 6(d) and if on
or before the Redemption Date specified in such notice the consideration
necessary for such redemption shall have been set apart so as to be available
therefor and only therefor, then on and after the close of business on the
Redemption Date, the Shares called for redemption, notwithstanding that any
certificate therefor shall not have been surrendered for cancellation, shall no
longer be deemed outstanding, and all rights with respect to such Shares shall
forthwith cease and terminate, except the right of the holders thereof to
receive upon surrender of their certificates the consideration payable upon
redemption thereof.
(f) All shares of Convertible Preferred Stock redeemed,
retired, purchased or otherwise acquired by this Corporation shall be retired
and shall be restored to the status of authorized and unissued shares of
preferred stock (and may be reissued as part of another series of the preferred
stock of this Corporation, but such shares shall not be reissued as Convertible
Preferred Stock).
(g) If at any time this Corporation shall have failed to
pay, or declare and set apart the consideration sufficient to pay, all
dividends accrued up to and including the immediately preceding Dividend
Payment Date on the Convertible Preferred Stock and any Parity Securities, and
until all dividends accrued up to and including the immediately preceding
Dividend Payment Date on the Convertible Preferred Stock and any Parity
Securities shall have been paid or declared and set apart so as to be available
for the payment in full thereof and for no other purpose, this Corporation
shall not redeem, pursuant to a sinking fund or otherwise, any shares of
Convertible Preferred Stock, Parity Securities or Junior Securities, unless all
then outstanding shares of Convertible Preferred Stock and Parity Securities
are redeemed, and shall not purchase or otherwise acquire any shares of
Convertible
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Preferred Stock, Parity Securities or Junior Securities. If and so long as
this Corporation shall fail to redeem on a Redemption Date pursuant to Section
6(b) or 6(c) all shares of Convertible Preferred Stock required to be redeemed
on such date, this Corporation shall not redeem, or discharge any sinking fund
obligation with respect to, any Parity Securities or Junior Securities, unless
all then outstanding shares of Convertible Preferred Stock and Parity
Securities are redeemed, and shall not purchase or otherwise acquire any shares
of Convertible Preferred Stock, Parity Securities or Junior Securities.
Nothing contained in this Section 6(g) shall prevent the purchase or
acquisition (i) of shares of Convertible Preferred Stock and Parity Securities
pursuant to a purchase or exchange offer or offers made to holders of all
outstanding shares of Convertible Preferred Stock and Parity Securities,
provided that (A) as to holders of all outstanding shares of Convertible
Preferred Stock, the terms of the purchase or exchange offer for all such
shares are identical, (B) as to holders of all outstanding shares of a
particular series or class of Parity Securities, the terms of the purchase or
exchange offer for all such shares are identical, and (C) as among holders of
all outstanding shares of Convertible Preferred Stock and Parity Securities,
the terms of each purchase or exchange offer or offers are substantially
identical relative to the liquidation price of the shares of Convertible
Preferred Stock and each series or class of Parity Securities, (ii) of shares
of Convertible Preferred Stock, Parity Securities or Junior Securities in
exchange for (together with a cash adjustment for fractional shares, if any),
or through the application of the proceeds of the sale of, shares of Junior
Securities or (iii) of shares of Junior Securities that are beneficially owned
by Liberty upon the redemption of, or in exchange for, shares of Liberty's
preferred stock beneficially owned by this Corporation. The provisions of this
Section 6(g) are for the benefit of holders of Convertible Preferred Stock and
Parity Securities and accordingly, at any time when there are no Parity
Securities outstanding, the provisions of this Section 6(g) shall not restrict
any redemption by this Corporation of Shares held by any holder, provided that
all other holders of Shares shall have waived in writing the benefits of this
provision with respect to such redemption.
7. Transfer.
(a) Without the prior written consent of this on holding
shares of Convertible Preferred Stock of record (hereinafter called a
"Convertible Preferred Holder") may transfer, and this Corporation shall not
register the transfer of, such share of Convertible Preferred Stock, whether by
sale, assignment, or otherwise, except to a Permitted Transferee.
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(i) In the case of a Convertible Preferred Holder
acquiring record and beneficial ownership of the shares of
Convertible Preferred Stock in question upon initial issuance
by this Corporation (an "Original Holder"), a "permitted
Transferee" shall mean:
(x) any Affiliate (as defined in Section 7(b)) of
such Original Holder,
(y) any other Original Holder (or any Affiliate
of any such other Original Holder), or
(z) any person or entity to whom Shares are
transferred by an Original Holder which
Original Holder is a natural person pursuant
to a gift or bequest or pursuant to the laws
of intestacy.
(ii) In the case of a Convertible preferred Holder
which is a permitted Transferee of an Original Holder, a
"permitted Transferee" shall mean:
(x) any Original Holder,
(y) any Permitted Transferee of an Original
Holder, except any transferee referred to in
clause (i)(z) above, or
(z) any person or entity to whom Shares are
transferred by a Permitted Transferee which
Permitted Transferee is a natural person
pursuant to a gift or bequest or pursuant to
the laws of intestacy.
(b) For purposes of this Section 7, the term "Affiliate"
shall mean (i) any person or corporation that beneficially and of record at
least a majority of the outstanding securities representing the right, other
than as affected by events of default, to vote for the election of directors
("voting securities") of an Original Holder or (ii) any person or corporation
at least a majority of the voting securities of which are owned beneficially
and of record by an Original Holder, where in the case of both (i) and (ii),
voting securities will be deemed "owned" by a person or corporation if either
owned directly or if owned indirectly through one or more intermediary
corporations at least a majority of the voting securities of which are owned
beneficially and of record by that person or corporation or
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by an intermediary corporation in such a majority or more chain of ownership.
(c) This Corporation may, in connection with preparing a list
of stockholders entitled to vote at any meeting of stockholders, or as a
condition to the transfer or the registration of shares of Convertible
Preferred Stock on this Corporation's books, require the furnishing of such
affidavits or other proof as it deems necessary to establish that any person is
the beneficial owner of shares of Convertible Preferred Stock or is a permitted
Transferee.
(d) Shares of Convertible Preferred Stock shall be
registered in the names of the beneficial owners thereof and not in "street" or
"nominee" name. For this purpose, a "beneficial owner" of any shares of
Convertible Preferred Stock shall mean a person who, or an entity which,
possesses the power, either singly or jointly, to direct the voting or
disposition of such shares. Certificates for shares of Convertible Preferred
Stock shall bear a legend referencing the restrictions on transfer imposed by
this Section 7.
8. No Voting Rights. The holders of Convertible Preferred
Stock shall have no right to vote for any purpose, except as specifically
required by the Delaware General Corporation Law.
9. Amendment. No amendment or modification of the
designation, rights, preferences, and limitations of the Shares set forth
herein shall be binding or effective without the prior consent of the holders of
record of Shares representing 66 2/3% of the Liquidation Value of all Shares
outstanding at the time such action is taken.
10. Preemptive Rights. The holders of the Convertible
Preferred Stock will not have any preemptive right to subscribe for or purchase
any shares of stock or any other securities which may be issued by this
Corporation.
11. Exclusion of Other Rights. Except as may otherwise be
required by law and for the equitable rights and remedies that may otherwise be
available to holders of Convertible Preferred Stock, the shares of Convertible
Preferred Stock shall not have any designations, preferences, limitations or
relative rights, other that those specifically set forth in these resolutions
(as such resolutions may, subject to Section 9, be amended from time to time)
and in the Restated Certificate of Incorporation of this Corporation.
12. Headings. The headings of the various sections and
subsections hereof are for convenience of
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reference only and shall not affect the interpretation of any of the provisions
hereof.
FURTHER RESOLVED, that the appropriate officers of this
Corporation are hereby authorized to execute and acknowledge a certificate
setting forth these resolutions and cause such certificate to be filed and
recorded, in accordance with the requirements of Section 151(g) of the General
Corporation Law of the State of Delaware."
/s/ JOHN C. MALONE
John C. Malone
President
ATTEST
By: /s/ EDON V. HARTLEY
Edon V. Hartley
Assistant Secretary
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<PAGE> 71
PAGE 1
STATE OF DELAWARE
{LOGO}
OFFICE OF SECRETARY OF STATE
_______________________
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF STOCK DESIGNATION OF "TELE-COMMUNICATIONS, INC." FILED IN THIS
OFFICE ON THE TWENTY-SEVENTH DAY OF DECEMBER, A.D. 1991, AT 2 O'CLOCK P.M.
* * * * * * * * * *
/s/ MICHAEL RATCHFORD
SECRETARY OF STATE
AUTHENTICATION: *3328395
DATE: 01/30/1992
{SEAL}
752030312
<PAGE> 72
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATIONS
_______________________
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED
AS "CONVERTIBLE PREFERRED STOCK,
SERIES B" ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
_______________________
Pursuant to Section 151 of the General
Corporation Law of the State of Delaware
_______________________
The undersigned, President of Tele-Communications, Inc., a
Delaware corporation (the "Corporation"), hereby certifies that the Board of
Directors, at a meeting duly called and held, adopted the following resolutions
creating a series of preferred stock designated as "Convertible Preferred
Stock, Series B":
"BE IT RESOLVED, that, pursuant to authority expressly granted
by the provisions of the Restated Certificate of Incorporation of this
Corporation, the Board of Directors hereby creates and authorizes the issuance
of a series of preferred stock, par value $1.00 per share, of this Corporation,
to consist of 6,201 shares, and hereby fixes the designations, dividend rights,
voting powers, rights on liquidation and other preferences and.relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereof of the shares of such series (in addition
to the designations, preferences and relative, participating, optional or other
special rights and the qualifications, limitations or restrictions thereof set
forth in the Restated Certificate of Incorporation that are applicable to
preferred stock of all series) as follows:
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<PAGE> 73
1. Designation. The designation of the series of preferred
stock par value $1.00 per share, of this Corporation authorized hereby is
"Convertible Preferred Stock, Series B" (the "Convertible Preferred Stock").
2. Certain Definitions. Unless the context otherwise
requires, the terms defined in this Section 2 shall have the meanings herein
specified:
Affiliate: As defined in Section 7(b).
Board of Directors: The Board of Directors of this Corporation
and any authorized committee thereof.
Capital Stock: Any and all shares, interests, participations
or other equivalents (however designated) of corporate stock of this
Corporation.
Class A Common Stock: The Class A Common Stock, par value
$1.00 per share, of this Corporation as such exists on the date of this
Certificate of Designations, and Capital Stock of any other class into which
such Class A Common Stock may thereafter have been changed.
Class B Common Stock: The class B Common Stock, par value
$1.00 per share, of this Corporation as such exists on the date of this
Certificate of Designations, and Capital Stock of any other class into which
such Class B Common Stock may thereafter have been changed.
Conversion Rate: As defined in Section 5(b).
Convertible Preferred Holder: As defined in Section 7(b).
Convertible Securities: Securities, other than the Class B
Common Stock, that are convertible into Class A Common Stock.
Debt Instrument: Any bond, debenture, note, indenture,
guarantee or other instrument or agreement evidencing any Indebtedness, whether
existing at the Issue Date or thereafter created, incurred, assumed or
guaranteed.
Dividend Payment Date: As defined in Section 3(b).
Dividend Period: The period from but excluding the First
Accrual Date to and including the first Dividend Payment Date and each
three-month period from but excluding the Dividend Payment Date for the
preceding Dividend Period to and including the Dividend Payment Date for such
Dividend period.
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First Accrual Date: October 1, 1991.
Indebtedness: Any (i) liability, contingent or otherwise, of
this Corporation (x) for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of this Corporation or only to a portion
thereof), (y) evidenced by a note, debenture or similar instrument (including a
purchase money obligation) given other than in connection with the acquisition
of inventory or similar property in the ordinary course of business, or (z) for
the payment of money relating to an obligation under a lease that is required
to be capitalized for financial accounting purposes in accordance with
generally accepted accounting principles; (ii) liability of others described in
the preceding clause (i) which this Corporation has guaranteed which is
otherwise its legal liability; (iii) obligations secured by a mortgage, pledge,
lien, charge or other encumbrance to which the property or assets of this
Corporation are subject whether or not the obligations secured thereby shall
have been assumed by or shall otherwise be this Corporation's legal liability;
and (iv) any amendment, renewal, extension or refunding of any liability of the
types referred to in clauses (i), (ii) and (iii) above.
Issue Date: The first date on which any shares of the
Convertible Preferred Stock are first issued or deemed to have been issued.
Junior Securities: All shares of Class A Common Stock, Class B
Common Stock, and any other class or series of stock of this Corporation
authorized after the Issue Date not entitled to receive any dividends unless
all dividends required to have been paid or declared and set apart for payment
on the Convertible Preferred Stock and any Parity Securities shall have been so
paid or declared and set apart for payment and, for purposes of Section 4
hereof, any class or series of stock of this Corporation authorized after the
Issue Date not entitled to receive any assets upon liquidation, dissolution or
winding up of the affairs of this Corporation until the Convertible Preferred
Stock and any Parity Securities shall have received the entire amount to which
such stock is entitled upon such liquidation, dissolution or winding up.
Liquidation Value: Measured per Share of the Convertible
Preferred Stock as of any particular date, the sum of (i) $3,000, plus (ii) an
amount equal to all dividends accrued on such Share through the Dividend
Payment Date immediately preceding the date on which the Liquidation Value
being determined, which pursuant to Section 3(c) have been added to and remain
a part of the Liquidation Value as of
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<PAGE> 75
such date, plus (iii), for purposes of determining amounts payable pursuant to
Sections 4 and 6 hereof, an amount equal all unpaid dividends accrued on the
sum of the amounts specified in clauses (i) and (ii) above to the date as of
which the Liquidation Value is being determined.
Original Holder: As defined in Section 7(a).
Parity Securities: The 12 7/8% Preferred Stock and any other
Class or series of stock of this Corporation authorized after the Issue Date
entitled to receive payment of dividends on a parity with the Convertible
Preferred Stock or entitled to receive assets upon liquidation, dissolution or
winding up of the affairs of this Corporation on a parity with the Convertible
Preferred Stock.
Permitted Tranferee: As defined in Section 7(a).
Record Date: For dividends payable on any Dividend Payment
Date, the fifteenth day of the month preceding the month during which such
Dividend Payment Date shall occur.
Redemption Date: As to any share, the date fixed for
redemption of such Share as specified in the notice of redemption given in
accordance with Section 6(d), provided that no such date will be a Redemption
Date unless the applicable Redemption Price is actually paid on such date or
the consideration sufficient for the payment thereof, and for no other purpose,
has been set apart, and if the Redemption Price is not so paid in full or the
consideration sufficient therefor so set apart then the Redemption Date will be
the date on which such Redemption Price is fully paid or the consideration
sufficient for the payment thereof, and for no other purpose, has been set
apart.
Redemption Price: As to any Share that is to be redeemed on
any Redemption Date, the Liquidation Value as in effect on such Redemption
Date.
Senior Securities: Any class or series of stock of this
Corporation authorized after the Issue Date ranking senior to the Convertible
Preferred Stock and any Parity Securities in respect of the right to receive
payment of dividends or the right to participate in any distribution upon
liquidation, dissolution or winding up of the affairs of this Corporation.
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<PAGE> 76
Share: As defined in Section 3(a).
Special Record Date: As defined in Section 3(c).
12 7/8% Preferred Stock: The 5,022,394 authorized shares of the
12 7/8% Cumulative Compounding Redeemable Preferred Stock, Series A, of
this Corporation.
3. Dividends.
(a) Subject to the prior preferences and other rights of any
Senior Securities with respect to dividends, the holders of the Convertible
Preferred Stock shall be entitled to receive, and, subject to any prohibition
or restriction contained in any Debt Instrument, this Corporation shall be
obligated to pay, but only out of funds legally available therefor,
preferential cumulative cash dividends which shall accrue as provided herein.
Except as otherwise provided in Sections 3(c) or 3(d) hereof, dividends on each
share of Convertible Preferred Stock (hereinafter referred to as a "Share")
shall accrue on a daily basis at the rate of ten percent (10%) per annum of the
Liquidation Value thereof, from but excluding the First Accrual Date to and
including January 1, 1992, and thereafter at the rate of 6 3/4% per annum of
the Liquidation Value to and including the date of conversion thereof pursuant
to Section 5 or the date on which the Liquidation Value or Redemption Price of
such Share is made available pursuant to Section 4 or 6 hereof, respectively.
Dividends on the Convertible Preferred Stock shall accrue as provided herein,
whether or not such dividends have been declared and whether or not there are
profits, surplus or other funds of the Corporation legally or contractually
available for the payment of dividends.
(b) Accrued dividends on the Convertible Preferred Stock shall be
payable quarterly on the first day of each January, April, July and October, or
the immediately preceding business day if such first day is a Saturday, Sunday
or legal holiday (each such payment date being hereinafter referred to as a
"Dividend Payment Date"), commencing on January 1, 1992, to the holders of
record of the Convertible Preferred Stock as of the close of business on the
applicable Record Date. For purposes of determining the amount of dividends
"accrued" as of any date that is not a Dividend Payment Date, such amount shall
be calculated on the basis of the rate per annum specified in Section 3(a) for
actual days elapsed from but excluding the First Accrual Date (in the case of
any date prior to the first Dividend Payment Date) or the last preceding
Dividend Payment Date (in the case of any other date) to and including the date
as of which such determination is to be made, based on a 365-day year.
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<PAGE> 77
(c) If on any Dividend Payment Date this Corporation, pursuant to
applicable law or the terms of any Debt Instrument, shall be prohibited or
restricted from paying in cash the full dividends to which holders of the
Convertible Preferred Stock and any Parity Securities shall be entitled, the
amount available for such payment pursuant to applicable law and which is not
restricted by the terms of any Debt Instrument shall be distributed among the
holders of the Convertible Preferred Stock and such Parity Securities ratably
in proportion to the full amounts to which they would otherwise be entitled. To
the extent not paid on each Dividend Payment Date, all dividends which have
accrued on each Share during the Dividend Period ending on such Dividend
Payment Date will be added cumulatively to the Liquidation Value of such Share
and will remain a part thereof until such dividends are paid. In the event that
dividends are not paid in full on two consecutive Dividend Payment Dates,
dividends on that portion of the Liquidation Value of each Share which consists
of accrued dividends that have theretofor been or thereafter are added to, and
remain a part of, the Liquidation Value in accordance with the preceding
sentence shall accrue cumulatively on a daily basis at the rate of fifteen
percent (15%) per annum, from and after such second consecutive Dividend
Payment Date to and including the date of conversion of such Share pursuant to
Section 5 or the date on which the Liquidation Value or Redemption Price of
such Share is made available pursuant to Section 4 or 6 hereof, respectively,
unless such portion of the Liquidation Value that consists of accrued unpaid
dividends shall be earlier paid in full. Such portion of the Liquidation Value
as consists of accrued unpaid dividends, may be declared and paid at any time
(subject to the concurrent satisfaction of any dividend arrearages then existing
with respect to any Parity Securities), without reference to any regular
Dividend Payment Date, to holders of record as of the close of business on such
date, not more than 50 days nor less than 10 days preceding the payment date
thereof, as may be fixed by the Board of Directors of this Corporation (the
"Special Record Date").
(d) In the event that on any date fixed for redemption of Shares
pursuant to Section 6 (other than on any date fixed for a redemption of Shares
pursuant to Section 6(a)), this Corporation shall fail to pay the Redemption
Price due and payable upon presentation and surrender of the stock certificates
evidencing Shares to be redeemed, then dividends on such Shares shall accrue
cumulatively on a daily basis at the rate of fifteen percent (15%) per annum of
the Liquidation Value thereof from and after such Redemption Date to and
including the date of conversion of such Shares pursuant to Section 5 or the
date on which the Liquidation
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Value or Redemption Price of such Shares is made available pursuant to Section
4 or 6 hereof, respectively.
(e) Notice of each Special Record Date shall be mailed, in the
manner provided in Section 6(d), to the holders of record of the Convertible
Preferred Stock not less than 15 days prior thereto.
(f) As long as any Convertible Preferred Stock shall be
outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any other distribution be made, on any Junior Security, nor
shall any shares of any Junior Security be purchased, redeemed, or otherwise
acquired for value by the Corporation, unless the holders of the Convertible
Preferred Stock shall have received all dividends to which they are entitled
pursuant to Section 3(a) hereof for the Dividend Period in which such dividend
on the Junior Securities is to occur and all preceding Dividend Periods, or
such dividends shall have been declared and the consideration sufficient for
the payment thereof set apart so as to be available for the payment in full
thereof and for no other purpose. The provisions of this Section 3(f) shall not
apply (i) to a dividend payable in any Junior Security, (ii) to the repurchase,
redemption or other acquisition of shares of any Junior Security solely through
the issuance of Junior Securities (together with a cash adjustment for
fractional shares, if any) or through the application of the proceeds from the
sale of Junior Securities or (iii) to the acquisition of any shares of any
Junior Security beneficially owned by Liberty Media Corporation ("Liberty")
upon the redemption of, or in exchange for, shares of Liberty's preferred
stock that are beneficially owned by this Corporation.
4. Liquidation. Subject to the prior payment in full of the
preferential amounts to which any Senior Securities are entitled, upon any
liquidation, dissolution or winding up of this Corporation, whether voluntary
or involuntary, the holders of Convertible Preferred Stock shall be entitled to
be paid an amount in cash equal to the aggregate Liquidation Value at the date
fixed for liquidation of all Shares outstanding before any distribution or
payment is made upon any Junior Securities, which payment shall be made pari
passu with any such payment made to the holders of any Parity Securities. The
holders of Convertible Preferred Stock shall be entitled to no other or further
distribution of or participation in any remaining assets of this Corporation
after receiving the Liquidation Value per Share. If upon such liquidation,
dissolution or winding up, the assets of this Corporation to be distributed
among the holders of Convertible Preferred Stock and to all holders of Parity
Securities are insufficient to permit payment in full to such
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<PAGE> 79
holders of the aggregate preferential amounts which they are entitled to be
paid, then the entire assets of this Corporation to be distributed to such
holders shall be distributed ratably among them based upon the full
preferential amounts to which the shares of Convertible Preferred Stock and
such Parity Securities would otherwise respectively be entitled. Upon any such
liquidation, dissolution or winding up, after the holders of Convertible
Preferred Stock and Parity Securities have been paid in full the amounts to
which they are entitled, the remaining assets of this Corporation may be
distributed to the holders of Junior Securities. This Corporation shall mail
written notice of such liquidation, dissolution or winding up to each record
holder of Convertible Preferred Stock not less than 30 days prior to the
payment date stated in such written notice. Neither the consolidation or merger
of this Corporation into or with any other corporation or corporations, nor
the sale, transfer or lease by this Corporation of all or any part of its
assets, shall be deemed to be a liquidation, dissolution or winding up of this
Corporation within the meaning of this Section 4.
5. Conversion.
(a) Unless previously called for redemption as provided in Section
6 hereof, the Convertible Preferred Stock may be converted at such time, in
such manner and upon such terms and conditions as hereinafter provided in this
Section 5 into fully paid and non-assessable full shares of Class A Common
Stock. In the case of Shares called for redemption by this Corporation pursuant
to Sections 6(a) or 6(b) hereof, the conversion right provided by this Section
5 shall terminate at the close of business on the fifteenth day preceding the
date fixed for redemption. In the case of Shares required to be redeemed
pursuant to Section 6(c), the conversion right provided by this Section 5 shall
terminate immediately upon receipt by this Corporation of a notice given
pursuant to said Section. In case cash, securities or property other than
Class A Common Stock shall be payable, deliverable or issuable upon conversion
as provided herein, then all references to Class A Common Stock in this Section
5 shall be deemed to apply, so far as appropriate and as nearly as may be, to
such cash, property or other securities.
(b) Subject to the provisions for adjustment hereinafter set forth
in this Section 5, the Convertible Preferred Stock may be converted into Class
A Common Stock at the initial conversion rate of two hundred and four (204)
fully paid and non-assessable shares of Class A Common Stock for one share of
the Convertible Preferred Stock. (This conversion rate as from time to time
adjusted cumulatively pursuant to the provisions of this Section is hereinafter
referred to as the "Conversion Rate".)
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<PAGE> 80
(c) In case this Corporation shall (i) pay a dividend or make a
distribution on its outstanding shares of Class A Common Stock in shares of its
Capital Stock, (ii) subdivide the then outstanding shares of Class A Common
Stock into a greater number of shares of Class A Common stock, (iii) combine
the then outstanding shares of Class A Common Stock into a smaller number of
shares of Class A Common Stock, or (iv) issue by reclassification of its shares
of Class A Common Stock any shares of any other class of Capital Stock of this
Corporation (including any such reclassification in connection with a merger in
which this Corporation is the continuing corporation), then the Conversion Rate
in effect immediately prior to the opening of business on the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted so that the holder of each
share of the Convertible Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number and kind of shares of Capital Stock of
this Corporation that such holder would have owned or been entitled to receive
immediately following such action had such shares of Convertible Preferred
Stock been converted immediately prior to such time. An adjustment made
pursuant to this Section 5(c) for a dividend or distribution shall become
effective immediately after the record date for the dividend or distribution
and an adjustment made pursuant to this Section 5(c) for a subdivision,
combination or reclassification shall become effective immediately after the
effective date of the subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any action listed above shall be
taken.
(d) In case this Corporation shall issue any rights or warrants to
all holders of shares of Class A Common Stock entitling them (for a period
expiring within 45 days after the record date for the determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Class A Common Stock (or Convertible Securities) at a price
per share of Class A Common Stock (or having an initial exercise price or
conversion price per share of Class A Common Stock) less than the then current
market price per share of Class A Common Stock (as determined in accordance
with the provisions of Section 5(f) below) on such record date, the number of
shares of Class A Common Stock into which each Share shall thereafter be
convertible shall be determined by multiplying the number of shares of Class A
Common Stock into which such Share was theretofore convertible immediately
prior to such record date by a fraction of which the numerator shall be the
number of shares of Class A Common Stock outstanding on such record date plus
the number of additional shares of Class A Common Stock offered for
subscription or purchase (or into which the
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Convertible Securities so offered are initially convertible) and of which the
denominator shall be the number of shares of Class A Common Stock outstanding
on such record date plus the number of shares of Class A Common Stock which the
aggregate offering price of the total number of shares of Class A Common Stock
so offered (or the aggregate initial conversion or exercise price of the
Convertible Securities so offered) would purchase at the then current market
price per share of Class A Common Stock (as determined in accordance with the
provisions of Section 5(f) below) on such record date. Such adjustment shall be
made successively whenever any such rights or warrants are issued and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. In the event that all
of the shares of Class A Common Stock (or all of the Convertible Securities)
subject to such rights or warrants have not been issued when such rights or
warrants expire (or, in the case of rights or warrants to purchase Convertible
Securities which have been exercised, all of the shares of Class A Common Stock
issuable upon conversion of such Convertible Securities have not been issued
prior to the expiration of the conversion right thereof), then the Conversion
Rate shall be readjusted retroactively to be the Conversion Rate which would
then be in effect had the adjustment upon the issuance of such rights or
warrants been made on the basis of the actual number of shares of Class A
Common Stock (or Convertible Securities) issued upon the exercise of such
rights or warrants (or the conversion of such Convertible Securities); but such
subsequent adjustment shall not affect the number of shares of Class A Common
Stock issued upon the conversion of any Share prior to the date such subsequent
adjustment is made.
(e) In case this Corporation shall distribute to all holders of
shares of Class A Common Stock (including any such distribution made in
connection with a merger in which this Corporation is the continuing
corporation, other than a merger to which Section 5(g) is applicable) any
evidences of its indebtedness or assets (other than cash dividends or Capital
Stock) or rights or warrants to purchase shares of Class A Common Stock or
Class B Common Stock or securities convertible into shares of Class A Common
Stock or Class B Common Stock (excluding those referred to in Section 5(d)
above), then in each such case the number of shares of Class A Common Stock
into which each Share shall thereafter be convertible shall be determined by
multiplying the number of shares of Class A Common Stock into which such Share
was theretofore convertible immediately prior to record date for the
determination of stockholders entitled to receive the distribution by a
fraction of which the numerator shall be the then current market price per
share of Class A Common Stock (as determined in accordance with the provisions
of
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Section 5(f) below) on such record date and of which the denominator shall be
such current market price per share of Class A Common Stock less the fair
market value on such record date (as determined by the Board of Directors of
this Corporation, whose determination shall be conclusive) of the portion of
the assets or evidences of indebtedness or rights and warrants so to be
distributed applicable to one share of Class A Common Stock. Such adjustment
shall be made successively whenever any such distribution is made and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(f) For the purpose of any computation under Section 5(d), (e) or
(k), the current market price per share of Class A Common Stock at any date
shall be deemed to be the average of the daily closing prices for a share of
Class A Common Stock for the ten (10) consecutive trading days before the day
in question. The closing price for each day shall be the last reported sale
price regular way or, in case no such reported sale takes place on such day,
the average of the reported closing bid and asked prices regular way, in either
case on the composite tape, or if the shares of Class A Common Stock are not
quoted on the composite tape, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on which the shares of Class A Common Stock are listed or
admitted to trading, or if they are not listed or admitted to trading on any
such exchange, the last reported sale price (or the average of the quoted
closing bid and asked prices if there were no reported sales) as reported by
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") or any comparable system, or if the Class A Common Stock is not
quoted on NASDAQ or any comparable system, the average of the closing bid and
asked prices as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by this Corporation for
that purpose or, in the absence of such quotations, such other method of
determining market value as the Board of Directors shall from time to time deem
to be fair.
(g) In case of any reclassification or change in the Class A
Common Stock (other than any reclassification or change referred to in Section
5(c) and other than a change in par value) or in case of any consolidation of
this Corporation with any other corporation or any merger of this Corporation
into another corporation or of another corporation into this Corporation (other
than a merger in which this Corporation is the continuing corporation and which
does not result in any reclassification or change (other than a change in par
value or any reclassification or
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change to which Section 5(c) is applicable) in the outstanding Class A Common
Stock), or in case of any sale or transfer to another corporation or entity
(other than by mortgage or pledge) of all or substantially all of the
properties and assets of this Corporation, this Corporation (or its successor
in such consolidation or merger) or the purchaser of such properties and assets
shall make appropriate provision so that the holder of a Share shall have the
right thereafter to convert such Share into the kind and amount of shares of
stock and other securities and property that such holder would have owned
immediately after such reclassification, change, consolidation, merger, sale or
transfer if such holder had converted such Share into Class A Common Stock
immediately prior to the effective date of such reclassification, change,
consolidation, merger, sale or transfer (assuming for this purpose (to the
extent applicable) that such holder failed to exercise any rights of election
and received per share of Class A Common Stock the kind and amount of shares of
stock and other securities and property received per share by a plurality of
the nonelecting shares), and the holders of the Convertible Preferred Stock
shall have no other conversion rights under these provisions; provided, that
effective provision shall be made, in the Articles or Certificate of
Incorporation of the resulting or surviving corporation or otherwise or in any
contracts of sale or transfer, so that the provisions set forth herein for the
protection of the conversion rights of the Convertible Preferred Stock shall
thereafter be made applicable, as nearly as reasonably may be to any such other
shares of stock and other securities and property deliverable upon conversion
of the Convertible Preferred Stock remaining outstanding or other convertible
preferred stock or other Convertible Securities received by the holders of
Convertible Preferred Stock in place thereof; and provided, further, that any
such resulting or surviving corporation or purchaser shall expressly assume the
obligation to deliver, upon the exercise of the conversion privilege, such
shares, securities or property as the holders of the Convertible Preferred
Stock remaining outstanding, or other convertible preferred stock or other
convertible securities received by the holders in place thereof, shall be
entitled to receive pursuant to the provisions hereof, and to make provisions
for the protection of the conversion rights as above provided.
(h) Whenever the Conversion Rate or the conversion privilege shall
be adjusted as provided in Sections 5(c), (d), (e) or (g), this Corporation
shall promptly cause a notice to be mailed to the holders of record of the
Convertible Preferred Stock describing the nature of the event requiring such
adjustment, the Conversion Rate in effect immediately thereafter and the kind
and amount of stock or other securities or property into which the
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Convertible Preferred Stock shall be convertible after such event. Where
appropriate, such notice may be given in advance and included as a part of a
notice required to be mailed under the provisions of Section 5(J).
(i) This Corporation may, but shall not be required to, make any
adjustment of the Conversion Rate if such adjustment would require an increase
or decrease of less than 1% in such Conversion Rate; provided, however, that
any adjustments which by reason of this Section 5(i) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 5 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. In any case in
which this Section 5(i) shall require that an adjustment shall become effective
immediately after a record date for an event, the Corporation may defer until
the occurrence of such event (x) issuing to the holder of any shares of
Convertible Preferred Stock converted after such record date and before the
occurrence of such event the additional shares of Class A Common Stock or other
Capital Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the shares of Class A Common Stock, or
other Capital Stock issuable upon such conversion before giving effect to such
adjustment and (y) paying to such holder cash in lieu of any fractional
interest to which such holder is entitled pursuant to Section 5(n); provided,
however, that, if requested by such holder, this Corporation shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares of Class A Common Stock or other
Capital Stock, and such cash, upon the occurrence of the event requiring such
adjustment.
(j) In case at any time:
(i) this Corporation shall take any action which would
require an adjustment in the Conversion Rate pursuant to this Section;
(ii) there shall be any capital reorganization or
reclassification of the Class A Common Stock (other than a change in
par value), or any consolidation or merger to which the Corporation is
a party and for which approval of any shareholders of this Corporation
is required, or any sale, transfer or lease of all or substantially
all of the properties and assets of the Corporation, or a tender offer
for shares of Class A Common Stock representing, together with any
shares of Class B Common Stock tendered for in such tender offer, at
least a majority of the total
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<PAGE> 85
voting power represented by the outstanding shares of Class A Common
Stock and Class B Common Stock which has been recommended by the Board
of Directors as being in the best interests of the holders of Class A
Common Stock; or
(iii) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of this Corporation;
then, in any such event, this Corporation shall give written notice, in the
manner provided in Section 6(d) hereof, to the holders of the Convertible
Preferred Stock at their respective addresses as the same appear upon the books
of the Corporation, at least twenty days (or ten days in the case of a
recommended tender offer as specified in clause (ii) above) prior to any record
date for such action, dividend or distribution or the date as of which it is
expected that holders of Class A Common Stock of record shall be entitled to
exchange their shares of Class A Common Stock for securities or other property,
if any, deliverable upon such reorganization, reclassification, consolidation,
merger, sale, transfer, lease, tender offer, dissolution, liquidation or
winding up; provided, however, that any notice required by any event described
in clause (ii) of this Section 5(j) shall be given in the manner and at the
time that such notice is given to the holders of Class A Common Stock. Without
limiting the obligation of this Corporation to provide notice of corporate
actions hereunder, the failure to give the notice required by this Section 5(j)
or any defect therein shall not affect the legality or validity of any such
corporate action of the Corporation or the vote upon such action.
(k) Before any holder of Convertible Preferred Stock shall be entitled to
convert the same into Class A Common Stock, such holder shall surrender the
certificate or certificates for such Convertible Preferred Stock at the office
of this Corporation or at the office of the transfer agent for the Convertible
Preferred Stock, which certificate or certificates, if this Corporation shall so
request, shall be duly endorsed to this Corporation or in blank or accompanied
by proper instruments of transfer to this Corporation or in blank (such
endorsements or instruments of transfer to be in form satisfactory to this
Corporation), and shall give written notice to this Corporation at said office
that it elects to convert all or a part of the Shares represented by said
certificate or certificates in accordance with the terms of this Section 5, and
shall state in writing therein the name or names in which such holder wishes the
certificates for Class A Common Stock to be issued. Every such notice of
election to convert shall constitute a contract between the holder of such
Convertible Preferred
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<PAGE> 86
Stock and the Corporation, whereby the holder of such Convertible Preferred
Stock shall be deemed to subscribe for the amount of Class A Common Stock which
such holder shall be entitled to receive upon conversion of the number of
shares of Convertible Preferred Stock to be converted, and, in satisfaction of
such subscription, to deposit the shares of Convertible Preferred Stock to be
converted, and thereby this Corporation shall be deemed to agree that the
surrender of the shares of Convertible Preferred Stock to be converted shall
constitute full payment of such subscription for Class A Common Stock to be
issued upon such conversion. This Corporation will as soon as practicable after
such deposit of a certificate or certificates for Convertible Preferred Stock,
accompanied by the written notice and the statement above prescribed, issue and
deliver at the office of this Corporation or of said transfer agent to the
person for whose account such Convertible Preferred Stock was so surrendered,
or to his nominee(s) or, subject to compliance with applicable law,
transferee(s), a certificate or certificates for the number of full shares of
Class A Common Stock to which such holder shall be entitled, together with cash
in lieu of any fraction of a share as hereinafter provided. If surrendered
certificates for Convertible Preferred Stock are converted only in part, this
Corporation will issue and deliver to the holder, or to his nominee(s), without
charge therefor, a new certificate or certificates representing the aggregate
of the unconverted Shares. Such conversion shall be deemed to have been made as
of the date of such surrender of the Convertible Preferred Stock to be
converted; and the person or persons entitled to receive the Class A Common
Stock issuable upon conversion of such Convertible Preferred Stock shall be
treated for all purposes as the record holder or holders of such Class A Common
Stock on such date.
Upon the conversion of any Share, this Corporation shall pay, to the
holder of record of such Share on the immediately preceding Record Date, all
accrued but unpaid dividends on such Share to the date of the surrender of such
Share for conversion. Such payment shall be made in cash or, at the election of
this Corporation, the issuance of certificates representing such number of
shares of Class A Common Stock as have an aggregate current market price (as
determined in accordance with Section 5(f)) on the date of issuance equal to
the amount of such accrued but unpaid dividends. Upon the making of such
payment to the person entitled thereto as determined pursuant to the first
sentence of this paragraph, no further dividends shall accrue on such Share or
be payable to any other person.
The issuance of certificates for shares of Class A Common Stock upon
conversion of shares of Convertible Preferred Stock shall be made without
charge for any issue,
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<PAGE> 87
stamp or other similar tax in respect of such issuance, provided, however, if
any such certificate is to be issued in a name other than that of the
registered holder of the share or shares of Convertible Preferred Stock
converted, the person or persons requesting the issuance thereof shall pay to
this Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of
this Corporation that such tax has been paid.
This Corporation shall not he required to convert any shares of
Convertible Preferred Stock, and no surrender of Convertible Preferred Stock
shall be effective for that purpose, while the stock transfer books of this
Corporation are closed for any purpose; but the surrender of Convertible
Preferred Stock for conversion during any period while such books are so closed
shall become effective for conversion immediately upon the reopening of such
books, as if the conversion had been made on the date such Convertible
Preferred Stock was surrendered.
(l) This Corporation shall at all times reserve and keep
available, solely for the purpose of issuance upon conversion of the
outstanding shares of Convertible Preferred Stock, such number of shares of
Class A Common Stock as shall be issuable upon the conversion of all
outstanding Shares, provided that nothing contained herein shall be construed
to preclude this Corporation from satisfying its obligations in respect of the
conversion of the outstanding shares of Convertible Preferred Stock by delivery
of shares of Class A Common Stock which are held in the treasury of this
Corporation. This Corporation shall take all such corporate and other actions
as from time to time may be necessary to insure that all shares of Class A
Common Stock issuable upon conversion of shares of Convertible Preferred Stock
at the Conversion Rate in effect from time to time will, upon issue, be duly
and validly authorized and issued, fully paid and nonassessable and free of any
preemptive or similar rights.
(m) All shares of Convertible Preferred Stock received by this
Corporation upon conversion thereof into Class A Common Stock shall be retired
and shall be restored to the status of authorized and unissued shares of
preferred stock (and may be reissued as part of another series of the preferred
stock of this Corporation, but such shares shall not be reissued as Convertible
Preferred Stock).
(n) This Corporation shall not be required to issue fractional
shares of Class A Common Stock or scrip upon conversion of the Convertible
Preferred Stock. As to any final fraction of a share of Class A Common Stock
which a holder of one or more Shares would otherwise be entitled to
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<PAGE> 88
receive upon conversion of such Shares in the same transaction, this
Corporation shall pay a cash adjustment in respect of such final fraction in an
amount equal to the same fraction of the market value of a full share of Class
A Common Stock. For purposes of this Section S(n), the market value of a share
of Class A Common Stock shall be the last reported sale price regular way on
the business day immediately preceding the date of conversion, or, in case no
such reported sale takes place on such day, the average of the reported closing
bid and asked prices regular way on such day, in either case on the composite
tape, or if the shares of Class A Common Stock are not quoted on the composite
tape, on the principal United States securities exchange registered under the
Exchange Act on which the shares of Class A Common Stock are listed or admitted
to trading, or if the shares of Class A Common Stock are not listed or admitted
to trading on any such exchange, the last reported sale price (or the average
of the quoted last reported bid and asked prices if there were no reported
sales) as reported by NASDAQ or any comparable system, or if the Class A Common
Stock is not quoted on NASDAQ or any comparable system, the average of the
closing bid and asked prices as furnished by any member of the National
Association of Securities Dealers, Inc. selected from time to time by this
Corporation for that purpose or, in the absence of such quotations, such other
method of determining market value as the Board of Directors shall from time to
time deem to be fair.
6. Redemption.
(a) Subject to the rights of any Senior Securities and the
provisions of Section 6(g), the shares of Convertible Preferred Stock may be
redeemed out of funds legally available therefor, at the option of this
Corporation by action of the Board of Directors, in whole or from time to time
in part, at any time after the Issue Date, at the Redemption Price per share as
of the applicable Redemption Date. If less than all outstanding Shares are to
be redeemed, Shares shall be redeemed ratably among the holders thereof.
(b) Subject to the rights of any Senior Securities, Parity
Securities and the provisions of Section 6(g) and subject to any prohibition or
restriction contained in any Debt Instrument, this Corporation shall redeem,
out of funds legally available therefor, on April 1, 1999 all of the shares of
the Convertible Preferred Stock remaining outstanding at the Redemption Price
per share on the Redemption Date. If the funds of this Corporation available,
in accordance with the immediately preceding sentence, for redemption of Shares
are insufficient to redeem the total number of Shares, those funds which are
legally available for
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<PAGE> 89
redemption of Shares and not restricted in accordance with the first sentence
of this Section 6(b) will be used to redeem the maximum possible number of
Shares ratably among the holders thereof. At any time thereafter when
additional funds of this Corporation are legally available and not so
restricted for such purpose, such funds will immediately be used to redeem the
Shares this Corporation failed to redeem on such Redemption Date until the
balance of the Shares have been redeemed.
(c) Subject to the rights of any Senior Securities, Parity
Securities and the provisions of Section 6(g) and subject to any prohibition or
restriction contained in any Debt Instrument, at any time on or after the Issue
Date, any holder shall have the right, at such holder's option, to require
redemption by this Corporation at the Redemption Price per Share as of the
applicable Redemption Date of all or any portion of his Shares having an
aggregate Liquidation Value in excess of $1,000,000, by written notice to this
Corporation stating the number of Shares to be redeemed. This Corporation shall
redeem, out of funds legally available therefor and not restricted in
accordance with the first sentence of this Section 6(c), the Shares so
requested to be redeemed on such date within 60 days following this
Corporation's receipt of such notice as this Corporation shall state in its
notice given pursuant to Section 6(d). If the funds of this Corporation legally
available for redemption of Shares and not restricted in accordance with the
first sentence of this Section 6(c) are insufficient to redeem the total number
of Shares required to be redeemed pursuant to this Section 6(c), those funds
which are legally available for redemption of such Shares and not so restricted
will be used to redeem the maximum possible number of such Shares ratably among
the holders who have required Shares to be redeemed under this Section 6(c). At
any time thereafter when additional funds of this Corporation are legally
available and not so restricted for such purpose, such funds will immediately
be used to redeem the Shares this Corporation failed to redeem on such
Redemption Date until the balance of such Shares are redeemed.
(d) Notice of any redemption pursuant to this Section shall be
mailed, first class, postage prepaid, not less than 30 days nor more than 60
days prior to the Redemption Date, to the holders of record of the shares of
Convertible Preferred Stock to be redeemed, at their respective addresses as
the same appear upon the books of this Corporation or are supplied by them in
writing to this Corporation for the purpose of such notice; but no failure to
mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the proceedings for the redemption of any shares of the
Convertible Preferred Stock.
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<PAGE> 90
Such notice shall set forth the Redemption Price, the Redemption Date, the
number of Shares to be redeemed and the place at which the Shares called for
redemption will, upon presentation and surrender of the stock certificates
evidencing such Shares, be redeemed. In case fewer than the total number of
shares of Convertible Preferred Stock represented by any certificate are
redeemed, a new certificate representing the number of unredeemed Shares will
be issued to the holder thereof without cost to such holder.
(e) If notice of any redemption by this Corporation pursuant to
this Section 6 shall have been mailed as provided in Section 6(d) and if on or
before the Redemption Date specified in such notice the consideration necessary
for such redemption shall have been set apart so as to be available therefor
and only therefor, then on and after the close of business on the Redemption
Date, the Shares called for redemption, notwithstanding that any certificate
therefor shall not have been surrendered for cancellation, shall no longer be
deemed outstanding, and all rights with respect to such Shares shall forthwith
cease and terminate, except the right of the holders thereof to receive upon
surrender of their certificates the consideration payable upon redemption
thereof.
(f) All shares of Convertible Preferred Stock redeemed, retired,
purchased or otherwise acquired by this Corporation shall be retired and shall
be restored to the status of authorized and unissued shares of preferred stock
(and may be reissued as part of another series of the preferred stock of this
Corporation, but such shares shall not be reissued as Convertible Preferred
Stock).
(g) If at any time this Corporation shall have failed to pay, or
declare and set apart the consideration sufficient to pay, all dividends
accrued up to and including the immediately preceding Dividend Payment Date on
the Convertible Preferred Stock and any Parity Securities, and until all
dividends accrued up to and including the immediately preceding Dividend
Payment Date on the Convertible Preferred Stock and any Parity Securities shall
have been paid or declared and set apart so as to be available for the payment
in full thereof and for no other purpose, this corporation shall not redeem,
pursuant to a sinking fund or otherwise, any shares of Convertible Preferred
Stock, Parity Securities or Junior Securities, unless all then outstanding
shares of Convertible Preferred Stock and Parity Securities are redeemed, and
shall not purchase or otherwise acquire any shares of Convertible Preferred
Stock, Parity Securities or Junior Securities. If and so long as this
Corporation shall fail to redeem on a Redemption Date pursuant to Section 6(b)
or 6(c) all shares
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<PAGE> 91
of Convertible Preferred Stock required to be redeemed on such date, this
Corporation shall not redeem, or discharge any sinking fund obligation with
respect to, any Parity Securities or Junior Securities, unless all then
outstanding shares of Convertible Preferred Stock and Parity Securities are
redeemed, and shall not purchase or otherwise acquire any shares of Convertible
Preferred Stock, Parity Securities or Junior Securities. Nothing contained in
this Section 6(g) shall prevent the purchase or acquisition (i) of shares of
Convertible Preferred Stock and purchase or exchange offer or offers made to
holders of all outstanding shares of Convertible Preferred Stock and Parity
Securities, provided that (A) as to holders of outstanding shares of
Convertible Preferred Stock, the terms of the purchase or exchange offer for
all such shares are identical, (B) as to holders of all outstanding shares of a
particular series or class of Parity Securities, the terms of the purchase or
exchange offer for all such shares are identical, and (C) as among holders of
all outstanding shares of Convertible Preferred Stock and Parity Securities,
the terns of each purchase or exchange offer or offers are substantially
identical relative to the liquidation price of the shares of Convertible
Preferred Stock and each series or class of Parity Securities, (ii) of shares
Of Convertible Preferred Stock, Parity Securities or Junior Securities in
exchange for (together with a cash adjustment for fractional shares, if any),
or through the application of the proceeds of the sale of, shares of Junior
Securities or (iii) of shares of Junior Securities that are beneficially owned
by Liberty upon the redemption of, or in exchange for, shares of Liberty's
preferred stock beneficially owned by this Corporation. The provisions of this
Section 6(g) are for the benefit of holders of Convertible Preferred Stock and
Parity Securities and accordingly, at any time when there are no parity
Securities outstanding, the provisions of this Section 6(g) shall not restrict
any redemption by this Corporation of Shares held by any holder, provided that
all other holders of Shares shall have waived in writing the benefits of this
provision with respect to such redemption.
7. Transfer.
(a) Without the prior written consent of this Corporation, no
person holding shares of Convertible Preferred Stock of record (hereinafter
called a "Convertible Preferred Holder") may transfer, and this Corporation
shall not register the transfer of, such shares of Convertible Preferred
Stock, whether by sale, assignment, or otherwise, except to a Permitted
Transferee.
(i) In the case of a Convertible Preferred Holder
acquiring record and beneficial ownership of
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<PAGE> 92
the shares of Convertible Preferred Stock in question upon
initial issuance by this Corporation (an "Original Holder"), a
"Permitted Transferee" shall mean:
(x) any Affiliate (as defined in Section 7(b)) of
such Original Holder,
(y) any other Original Holder (or any Affiliate
of any such other Original Holder), or
(z) any person or entity to whom Shares are
transferred by an Original Holder which
Original Holder is a natural person pursuant
to a gift or bequest or pursuant to the laws
of intestacy.
(ii) In the case of a Convertible Preferred Holder
which is a Permitted Translates of an Original Holder, a
"Permitted Transferee" shall mean:
(x) any Original Molder,
(y) any Permitted Translates of an Original
Molder, except any translates referred to in
clause (i)(z) above, or
(z) any person or entity to whom Shares are
transferred by a Permitted Translates which
Permitted Translates is a natural person
pursuant to a gift or bequest or pursuant to
the laws of intestacy.
(b) For purposes of this Section 7, the term "Affiliate"
shall mean (i) any person or corporation that owns beneficially and of record
at least a majority of the outstanding securities representing the right, other
than as affected by events of default, to vote for the election of directors
("voting securities") of an Original Holder or (ii) any person or corporation
at least a majority of the voting securities of which are owned beneficially
and of record by an Original Holder, where in the case of both (i) and (ii),
voting securities will be deemed "owned" by a person or corporation if either
owned directly or if owned indirectly through one or more intermediary
corporations at least a majority of the voting securities of which are owned
beneficially and of record by that person or corporation or by an intermediary
corporation in such a majority or more chain of ownership.
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<PAGE> 93
(c) This Corporation may, in connection with preparing a list
of stockholders entitled to vote at any meeting of stockholders, or as a
condition to the transfer or the registration of shares of Convertible
Preferred stock on this Corporation's books, require the furnishing of such
affidavits or other proof as it deems necessary to establish that any person is
the beneficial owner of shares of Convertible Preferred Stock or is a Permitted
Transferee.
(d) Shares of Convertible Preferred Stock shall be registered
in the names of the beneficial owners thereof and not in "street" or "nominee"
name. For this purpose, a "beneficial owner" of any shares of Convertible
Preferred Stock shall mean a person who, or an entity which, possesses the
power, either singly or jointly, to direct the voting or disposition of such
shares. Certificates for shares of Convertible Preferred Stock shall bear a
legend referencing the restrictions on transfer imposed by this Section 7.
8. No Voting Rights. The holders of Convertible Preferred
Stock shall have no right to vote for any purpose, except as specifically
required by the Delaware General Corporation Law.
9. Amendment. No amendment or modification of the
designation, rights, preferences, and limitations of the Shares set forth
herein shall be binding or effective without the prior consent of the holders
of record of Shares representing 66 2/3% of the Liquidation Value of all Shares
outstanding at the time such action is taken.
10. Preemptive Rights. The holders of the Convertible
Preferred Stock will not have any preemptive right to subscribe for or purchase
any shares of stock or any other securities which may be issued by this
Corporation.
11. Exclusion of Other Rights. Except as may otherwise be
required by law and for the equitable rights and remedies that may otherwise be
available to holders of Convertible Preferred Stock, the shares of Convertible
Preferred Stock shall not have any designations, preferences, limitations or
relative rights, other than those specifically set forth in these resolutions
(as such resolutions may, subject to Section 9, be amended from time to time)
and in the Restated Certificate of Incorporation of this Corporation.
12. Headings. The headings of the various sections and
subsections hereof are for convenience of
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<PAGE> 94
reference only and shall not affect the interpretation of any of the provisions
hereof.
FURTHER RESOLVED, that the appropriate officers of this
Corporation are hereby authorized to execute and acknowledge a certificate
setting forth these resolutions and to cause such certificate to be filed and
recorded, in accordance with the requirements of Section 151(g) of the General
Corporation Law of the State of Delaware."
/s/ JOHN C. MALONE
ATTEST
By:
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<PAGE> 95
PAGE 1
STATE OF DELAWARE
{LOGO}
OFFICE OF SECRETARY OF STATE
----------------
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF STOCK DESIGNATION OF "TELE-COMMUNICATIONS, INC." FILED IN THIS
OFFICE ON THE THIRD DAY OF APRIL, A.D. 1992, AT 9 O'CLOCK A.M.
* * * * * * * * * *
/s/ MICHAEL RATCHFORD
SECRETARY OF STATE
AUTHENTICATION: *3407110
DATE: 04/06/1992
{SEAL}
920945212
<PAGE> 96
TELE-COMMUNICATIONS, INC.
AMENDED CERTIFICATE OF DESIGNATIONS
---------------
SETTING FORTH A COPY OF THE RESOLUTIONS ADOPTED BY THE BOARD
OF DIRECTORS OF TELE-COMMUNICATIONS, INC. RELATING TO THE
RETIREMENT OF A SERIES OF PREFERRED STOCK DESIGNATED AS
"CONVERTIBLE PREFERRED STOCK, SERIES A"
---------------
Pursuant to Section 151 of the General Corporation Law of the
State of Delaware
---------------
The undersigned, President of Tele-Communications, Inc., a
Delaware Corporation (the "Corporation"), hereby certifies that the Board of
Directors, by unanimous written consent, adopted the following resolutions
relating to the retirement of an authorized series of preferred stock
designated as "Convertible Preferred Stock, Series A":
"RESOLVED, that in connection with the exchange (the
"Exchange") of all of the outstanding shares of the
Corporation's Convertible Preferred Stock, Series A, $1.00 par
value per share (the "Series A Preferred Stock") for shares of
the Corporation's Convertible Preferred Stock, Series B, $1.00
par value per share (the "Series B preferred Stock"), the
Chairman of the Board, the President, or any Executive Vice
President of the Corporation (each an "Authorized Officer"
and collectively the "Authorized Officers") be, and they
hereby are, and each of them with
<PAGE> 97
full authority to act without the others hereby is, authorized
to execute, file and record in accordance with the
requirements of Section 151(g) of the General Corporation Law
of the State of Delaware an amendment to the Certificate of
Designations with respect to the Series A Preferred Stock
filed with the Secretary of State of the State of Delaware on
December 2, 1991 (the "Certificate of Designations") to
indicate that (i) the shares of Series A Preferred Stock
authorized pursuant to resolutions of the Board of Directors
as set forth in the Certificate of Designations and
subsequently issued no longer remain outstanding by reason of
the Exchange, (ii) no shares of Series A Preferred Stock
authorized pursuant to resolutions of the Board of Directors
as set forth in the Certificate of Designations will hereafter
be issued and all shares of Series A Preferred Stock shall
hereafter have the status of retired shares; and (iii) the
capital of this Corporation shall not be reduced by or in
connection with the retirement of the shares of Series A
Preferred Stock; and
RESOLVED, that the Authorized Officers be, and they
hereby are, and each of them with full authority to act
without the others hereby is, authorized to take or cause to
be taken all such action and to execute, file, record and/or
deliver all such instruments and documents, in the name and on
behalf of the Corporation and under its corporate seal or
otherwise, as in their or his judgment shall be necessary,
proper or advisable in order to carry out fully the intent and
to accomplish the purposes of the foregoing resolution and to
take any other actions necessary to effect the elimination
from the Restated Certificate of Incorporation of this
Corporation of all matters set forth in the Certificate of
Designations, the execution, filing, recordation and/or
delivery thereof by such officers or officer or the doing by
them or him of any act in connection with
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<PAGE> 98
the foregoing matters to conclusively establish their or his
authority therefor from the Corporation and the approval and
ratification by the Corporation of the instruments and
documents so executed, filed, recorded and/or delivered and
the action so taken, and that any Secretary or Assistant
Secretary of the Corporation is authorized to acknowledge any
instrument or document so executed, filed, recorded and/or
delivered including, without limitation, the amendment to the
Certificate of Designations."
/s/ JOHN C. MALONE
John C. Malone
President
Attest
By: /s/ MARY S. WILLIS
Mary S. Willis
Assistant Secretary
-3-
<PAGE> 99
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
---------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF RETIREMENT OF STOCK OF "TELE-COMMUNICATIONS, INC." FILED IN THIS
OFFICE ON THE EIGHTH DAY OF FEBRUARY, A.D. 1993, AT 1:40 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO
KENT COUNTY RECORDER OF DEEDS ON THE EIGHTH DAY OF FEBRUARY, A.D. 1993 FOR
RECORDING.
* * * * * * * * * *
/s/ WILLIAM T. QUILLEN
William T. Quillen, Secretary of State
AUTHENTICATION: *3777508
DATE: 02/08/1993
{SEAL}
930395170
<PAGE> 100
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:40 PM 02/08/1993
930395170 - 685208
CERTIFICATE OF RETIREMENT OF THE 12 7/8% CUMULATIVE
COMPOUNDING REDEEMABLE PREFERRED STOCK, SERIES A
OF TELE-COMMUNICATIONS, INC.
Pursuant to Section 243(b) of the General Corporation Law
of the State of Delaware
TELE-COMMUNICATIONS, INC., a corporation organized and existing under
the laws of the State of Delware (the "Company"), hereby certifies as follows:
1. The Board of Directors of the Company has duly
adopted resolutions providing for the redemption of all outstanding shares of
the series of the preferred stock of the Company, par value $1.00 per share,
designated 12 7/8% Cumulative Compounding Redeemable Preferred Stock, Series A
(the "Compounding Preferred Stock").
2. All outstanding shares of the Compounding Preferred
Stock have been redeemed as aforesaid and retired.
3. The Certificate of Designations with respect to the
Compounding Preferred Stock, filed with the Secretary of State of the State of
Delaware on December 2, 1991 prohibits the reissuance of the aforesaid shares
of Compounding Preferred Stock as shares of said series.
4. Accordingly, pursuant to the provisions of Section
243(b) of the General Corporation Law of the State of Delaware, upon the
effective date of the filing of this Certificate of Retirement, the Restated
Certificate of Incorporation of the Company shall be amended so as to eliminate
therefrom all reference to the Compounding Preferred Stock, but not to reduce
the total authorized number of shares of preferred stock of the Company.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Retirement to be executed and its corporate seal to be affixed hereto this 8th
day of February, 1993.
TELE-COMMUNICATIONS, INC.
By: /s/ JOHN C. MALONE
President
ATTEST
By: /s/ PAUL J. O'BRIEN
Corporate Secretary
<PAGE> 101
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE
CERTIFICATE OF STOCK DESIGNATION OF "TELE-COMMUNICATIONS, INC." FILED IN THIS
OFFICE ON THE NINETEENTH DAY OF MARCH, A.D. 1993, AT 4:30 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO
KENT COUNTY RECORDER OF DEEDS FOR RECORDING.
* * * * * * * * * *
/s/ WILLIAM T. QUILLEN
{SEAL} William T. Quillen, Secretary of State
753078020
AUTHENTICATION: *3829498
DATE: 03/22/1993
<PAGE> 102
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATIONS
---------------
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED
AS "CONVERTIBLE PREFERRED STOCK
SERIES C" ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
---------------
The undersigned, Executive Vice President and Assistant
Secretary, respectively, of Tele-Communications, Inc., a Delaware corporation
(the "Corporation"), hereby certifies that the Board of Directors duly adopted
the following resolutions creating a series of preferred stock designated as
"Convertible Preferred Stock, Series C":
"BE IT RESOLVED, that, pursuant to authority expressly granted
by the provisions of the Restated Certificate of Incorporation of this
Corporation, the Board of Directors hereby creates and authorizes the issuance
of a series of preferred stock, par value $1.00 per share, of this Corporation,
to consist of 6,201 shares, and hereby fixes the designations, dividend rights,
voting powers, rights on liquidation and other preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereof of the shares of such series (In addition
to the designations, preferences and relative, participating, limitations or
restrictions thereof act forth in the Restated Certificate of Incorporation
that are applicable to preferred stock of all series) as follows:
1. Designation. The designation of the series of
preferred stock, par value $1.00 per share, of this Corporation authorized
hereby is "Convertible Preferred Stock, Series C" (the "Convertible Preferred
Stock").
2. Certain Definitions. Unless the context otherwise
requires, the terms defined in this Section 2 shall have the meanings herein
specified:
Affiliate: As defined in Section 7(b).
Board of Directors: The Board of Directors of this
Corporation and any authorized committee thereof.
<PAGE> 103
Capital Stock: Any and all shares, interests, participations,
or other equivalents (however designated) of corporate stock of this
Corporation.
Class A Common Stock: The Class A Common Stock, par value
$1.00 per share, of this Corporation as such exists on the date of this
Certificate of Designations, and Capital Stock of any other class into which
such Class A Common Stock may thereafter have been changed.
Class B Common Stock: The Class B Common Stock, par value
$1.00 per share, of this Corporation as such exists on the date of this
Certificate of Designations, and Capital Stock of any other class into which
such Class B Common Stock may thereafter have been changed.
Conversion Rate: As defined in Section 5(b).
Convertible Preferred Holder: As defined in Section 7(a).
Convertible Securities: Securities, other than the Class B
Common Stock, that are convertible into Class A Common Stock.
Debt Instrument: Any bond, debenture, note, indenture,
guarantee or other instrument or agreement evidencing any Indebtedness, whether
existing at the Issue Date or thereafter created, incurred, assumed or
guaranteed.
Dividend Payment Date: As defined in Section 3(b).
Dividend Period: The period from but excluding the First
Accrual Date to and including the first Dividend Payment Date and each
three-month period from but excluding the Dividend Payment Date from preceding
Dividend Period to and including the Dividend Payment Date for such Dividend
Period.
First Accrual Date: January 1, 1993.
Indebtedness: Any (i) liability, contingent or otherwise, of
this Corporation (x) for borrowed money (whether or not the recourse of the
lender is to whole of the assets of this Corporation or only to a portion
thereof), (y) evidenced by a note, debenture or similar instrument (including a
purchase money obligation) given other than in connection with the acquisition
of inventory or similar property in the ordinary course of business, or (z) for
the payment of money relating to an obligation under a lease that is required
to be capitalized for financial accounting purposes in accordance with
generally accepted accounting principles; (ii) liability of others described in
the preceding clause (i) which this Corporation has guaranteed or which is
otherwise its legal liability; (iii) obligations accrued by a mortgage, pledge,
lien, charge or other encumbrance to which the property or assets of this
Corporation are subject whether or not the obligations secured thereby shall
have been assumed by or shall otherwise be this Corporation's legal liability;
and (iv) any amendment, renewal,
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extension or refunding of any liability of the types referred to in clauses
(i), (ii), and (iii) above.
Issue Date: The first date on which any shares of the
Convertible Preferred Stock are first issued or deemed to have been issued.
Junior Securities: All shares of Class A Common Stock, Class
B Common Stock, and any other class or series of stock of this Corporation
authorized after the Issue Date not entitled to receive any dividends unless
all dividends required to have been paid or declared and set apart for payment
on the Convertible Preferred Stock and any Parity Securities shall have been so
paid or declared and set apart for payment and, for purposes of Section 4
hereof, any class or series of stock of this Corporation authorized after the
Issue Date not entitled to receive any assets upon liquidation, dissolution or
winding up of the affairs of this Corporation until the Convertible Preferred
Stock and any Parity Securities shall have received the entire amount to which
such stock is entitled upon such liquidation, dissolution or winding up.
Liquidation Value: Measured per Share of the Convertible
Preferred Stock as of any particular date, the sum of (i) $3,000, plus (ii) an
amount equal to all dividends accrued on such Share through the Dividend
Payment Date immediately preceding the date on which the Liquidation Value
being determined, which pursuant to Section 3(c) have been added to and remain
a part of the Liquidation Value as of such date, plus (iii), for purposes of
determining amounts payable pursuant to Sections 4 and 6 hereof, an amount
equal all unpaid dividends accrued on the sum of the amounts specified in
clauses (i) and (ii) above to the date as of which the Liquidation Value is
being determined.
Original Holder: As defined in Section 7(a).
Parity Securities.: The 12 7/8% Preferred Stock and any other
Class or series of stock of this Corporation authorized after the Issue Date
entitled to receive payment of dividends on a parity with the Convertible
Preferred Stock or entitled to receive assets upon liquidation, dissolution or
winding up of the affairs of this Corporation on a parity with the Convertible
Preferred Stock.
Permitted Transferee: As defined in Section 7(a).
Record Date: For dividends payable on any Dividend Payment
Date, the fifteenth day of the month preceding the month during which such
Dividend Payment Date shall occur.
Redemption Date: As to any share, the date fixed for
redemption of such Share as specified in the notice of redemption given in
accordance with Section 6(d), provided that no such date will be a Redemption
Date unless the applicable Redemption Price is actually paid on such date or
the consideration sufficient for the payment thereof, and for no other purpose,
has been set apart, and if the Redemption Price is not so paid in full or
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<PAGE> 105
the consideration sufficient therefor so set apart then the Redemption Date
will be the date on which such Redemption Price is fully paid or the
consideration sufficient for the payment thereof, and for no other purpose, has
been set apart.
Redemption Price: As to any Share that is to be redeemed on
any Redemption Date, the Liquidation Value as in effect on such Redemption
Date.
Senior Securities: Any class or series of stock of this
Corporation authorized after the Issue Date ranking senior to the Convertible
Preferred Stock and any Parity Securities in respect of the right to receive
payment of dividends or the right to participate in any distribution upon
liquidation, dissolution or winding up of the affairs of this Corporation.
Share: As defined in Section 3(a).
Special Record Date: As defined in Section 3(C).
12-7/8% Preferred Stock: The 5,022,394 authorized shares of
the 12-7/8% Cumulative Compounding Redeemable Preferred Stock, Series A, of
this Corporation.
3. Dividends.
(a) Subject to the prior preferences and other rights of any
Senior Securities with respect to dividends, the holders of the Convertible
Preferred Stock shall be entitled to receive, and, subject to any prohibition
or restriction contained in any Debt Instrument, this Corporation shall be
obligated to pay, but only out of funds legally available therefor,
preferential cumulative cash dividends which shall accrue as provided herein.
Except as otherwise provided in Sections 3(c) or 3(d) hereof, dividends on each
share of Convertible Preferred Stock (hereinafter referred to as a "Share")
shall accrue on a daily basis at the rate of ten percent (10%) per annum of the
Liquidation Value thereof, from but excluding the First Accrual Date to and
including January 1, 1992, and thereafter at the rate of 6 3/4% per annum of
the Liquidation Value to and including the date of conversion thereof pursuant
to Section 5 or the date on which the Liquidation Value or Redemption Price of
such Share ie made available pursuant to Section 4 or 6 hereof, respectively.
Dividends on the Convertible Preferred Stock shall accrue as provided herein,
whether or not such dividends have been declared and whether or not there are
profits, surplus or other funds of the Corporation legally or contractually
available for the payment of dividends.
(b) Accrued dividends on the Convertible Preferred Stock
shall be payable quarterly on the first day of each January, April, July and
October, or the immediately preceding business day if such first day is a
Saturday, Sunday or legal holiday (each such payment date being hereinafter
referred to as a "Dividend Payment Date"), commencing on January 1, 1992, to
the holders of record of the Convertible Preferred Stock as of the close of
business on the applicable Record Date. For purposes of determining the amount
of dividends "accrued" as of any date that is not a Dividend Payment Date, such
amount shall be calculated on the basis of the rate per annum specified In
Section 3(a) for actual days elapsed from but excluding the First Accrual Date
(in the case of any date prior to the first
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<PAGE> 106
Dividend Payment Date) or the last preceding Dividend Payment Date (in the case
of any other date) to and including the date as of which such determination is
to be made, based on a 365-day year.
(c) If on any Dividend Payment Date this Corporation, pursuant
to applicable law or the terms of any Debt Instrument, shall be prohibited or
restricted from paying in cash the full dividends to which holders of the
Convertible Preferred Stock and any Parity Securities shall be entitled, the
amount available for such payment pursuant to applicable law and which is not
restricted by the terms of any Debt Instrument shall be distributed among the
holders of the Convertible Preferred Stock and such Parity Securities ratably
in proportion to the full amounts to which they would otherwise be entitled. To
the extent not paid on each Dividend Period ending on such Dividend Payment
Date will be added cumulatively to the Liquidation Value of such Share and will
remain a part thereof until such dividends are paid. In the event that
dividends are not paid in full on two consecutive Dividend Payment Dates,
dividends on that portion of the Liquidation Value of each Share which consists
of accrued dividends that have theretofore been or thereafter are added to, and
remain a part of the Liquidation Value in accordance which the preceding
sentence shall accrue cumulatively on a daily basis at the rate of fifteen
percent (15%) per annum, from and after such second consecutive Dividend
Payment Date to and including the date of conversion of such Share pursuant to
Section 5 or the date on which the Liquidation Value or Redemption Price of
such Share is made available pursuant to Section 4 or 6 hereof, respectively,
unless such portion of the Liquidation Value that consists of accrued unpaid
dividends shall be earlier paid in full. Such portion of the Liquidation Value
as consists of accrued unpaid dividends, may be declared and paid at any time
(subject to the concurrent satisfaction of any dividend arrearages then
existing with respect to any Parity Securities), without reference to any
regular Dividend Payment Date, to holders of record as of the close of business
on such date, not more than 50 days nor less than days preceding the payment
date thereof, as may be fixed by the Board of Directors of this Corporation
(the "Special Record Date").
(d) In the event that on any date fixed for redemption of
Share pursuant to Section 6 (other than on any date fixed for a redemption
Price due and payable upon presentation and surrender of the stock certificates
evidencing Shares to be redeemed, then dividends on such Shares shall accrue
cumulatively on a daily basis at the rate of fifteen percent (15%) per annum of
the Liquidation Value thereof from and after such Redemption date to and
including the date of conversion of such Shares pursuant to Section 5 or the
date on which the Liquidation Value or Redemption Price of such Shares is made
available pursuant to Section 4 or 6 hereof, respectively.
(e) Notice of such Special Record Date shall be mailed, in the
manner provided in Section 6(d), to the holders of record of the Convertible
Preferred Stock not less than 15 days prior thereto.
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<PAGE> 107
(f) As long as any Convertible Preferred Stock shall be
outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any other distribution be made, on any Junior Security, nor
shall any shares of any Junior Security be purchased, redeemed, or otherwise
acquired for value by the Corporation, unless the holders of the Convertible
Preferred Stock shall have received all dividends to which they are entitled
pursuant to Section 3(a) hereof for the Dividend Period in which such dividend
on the Junior Securities is to occur and all preceding Dividend Periods, or
such dividends shall have been declared and the consideration sufficient for
the payment thereof set apart so as to be available for the payment in full
thereof and for no other purpose. The provisions of this Section 3(f) shall
not apply (i) to a dividend payable in any Junior Security, (ii) to the
repurchase, redemption or other acquisition of shares of any Junior Security
solely through the issuance of Junior Securities (together with a cash
adjustment for fractional shares, if any) or through the application of the
proceeds from the sale of Junior Securities or (iii) to the acquisition of any
shares of any Junior Security beneficially owned by Liberty Media Corporation
("Liberty") upon the redemption of, or in exchange for, shares of Liberty's
preferred stock that are beneficially owned by this Corporation.
4. Liquidation. Subject to the prior payment in full of the
preferential amounts to which any Senior Securities are entitled, upon any
liquidation, dissolution or winding up of this Corporation, whether voluntary
or involuntary, the holders of Convertible Preferred Stock shall be entitled to
be paid an amount in cash equal to the aggregate Liquidation Value at the date
fixed for liquidation of all Shares outstanding before any distribution or
payment is made upon any Junior Securities, which payment shall be made pari
passu with any such payment made to the holders of any Parity Securities. The
holders of Convertible Preferred Stock shall be entitled to no other or further
distribution of or participation in any remaining assets of this Corporation
after receiving the Liquidation Value per Share. If upon such liquidation,
dissolution or winding up, the assets of this Corporation to be distributed
among the holders of Convertible Preferred Stock and to all holders of Parity
Securities are insufficient to permit payment in full to such holders of the
aggregate preferential amounts which they are entitled to be paid, then the
entire assets of this Corporation to be distributed to such holders shall be
distributed ratably among them based upon the full preferential amounts to
which the shares of Convertible Preferred Stock and such Parity Securities
would otherwise respectively be entitled. Upon any such liquidation,
dissolution or winding up, after the holders of Convertible Preferred Stock and
Parity Securities have been paid in full the amounts to which they are
entitled, the remaining assets of this Corporation may be distributed to the
holders of Junior Securities. This corporation shall mail written notice of
such liquidation, dissolution or winding up to each record holder of
Convertible Preferred Stock not less than 30 days prior to the payment date
stated in such written notice. Neither the consolidation or merger of this
Corporation into or with any other corporation or corporations, nor the sale,
transfer or lease by this Corporation of all or any part of its assets, shall
be deemed to be a liquidation, dissolution or winding up of this Corporation
within the meaning of this Section 4.
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<PAGE> 108
5. Conversion.
(a) Unless previously called for redemption as provided in
Section 6 hereof, the Convertible Preferred Stock may be converted at such
time, in such manner and upon such terms and conditions as hereinafter provided
in this Section 5 into fully paid and non-assessable full shares of Class A
Common Stock. In the case of Shares called for redemption by this Corporation
pursuant to Sections 6(a) or 6(b) hereof, the conversion right provided by this
Section 5 shall terminate at the close of business on the fifteenth day
preceding the date fixed for redemption. In the case of Shares required to be
redeemed pursuant to Section 6(c), the conversion right provided by this
Section 5 shall terminate immediately upon receipt by this Corporation of a
notice given pursuant to said Section. In case cash, securities or property
other than Class A Common Stock shall be payable, deliverable or issuable upon
conversion as provided herein, then all references to Class A Common Stock in
this Section 5 shall be deemed to apply, so far as appropriate and as nearly as
may be, to such cash, property or other securities.
(b) Subject to the provisions for adjustment hereinafter set
forth in this Section 5, the Convertible Preferred Stock may be converted into
Class A Common Stock at the initial conversion rate of two hundred and four
(204) fully paid and non-assessable shares of Class A Common Stock for one
share of the Convertible Preferred Stock. (This conversion rate as from time to
time adjusted cumulatively pursuant to the provisions of this Section is
hereinafter referred to as the "Conversion Rate".)
(c) In case this Corporation shall (i) pay a dividend or make
a distribution on its outstanding shares of Class A Common Stock in shares of
its Capital Stock, (ii) subdivide the then outstanding shares of Class A Common
Stock into a greater number of shares of Class A Common Stock, (iii) combine
the then outstanding shares of Class A Common Stock into a smaller number of
shares of Class A Common Stock, or (iv) issue by reclassification of its shares
of Class A Common Stock any shares of any other class of Capital Stock of this
Corporation (including any such reclassification in connection with a merger in
which this Corporation is the continuing corporation), then the Conversion Rate
in effect immediately prior to the opening of business on the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted so that the holder of each
share of the Convertible Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number and kind of shares of Capital Stock of
this Corporation that such holder would have owned or been entitled to receive
immediately following such action had such shares of Convertible Preferred
Stock been converted immediately prior to such time. An adjustment made
pursuant to this Section 5(c) for a dividend or distribution shall become
effective immediately after the record date for the dividend or distribution
and an adjustment made pursuant to this Section 5(c) for a subdivision,
combination or reclassification shall become effective immediately after the
effective date of the subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any action listed above shall be
taken.
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<PAGE> 109
(d) In case this Corporation shall issue any rights or
warrants to all holders of shares of Class A Common Stock entitling them (for a
period expiring within 45 days after the record date for the determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Class A Common Stock (or Convertible Securities) at a price
per share of Class A common Stock (or having an initial exercise price or
conversion price per share of Class A Common Stock) less than the then current
market price per share of Class A Common Stock (as determined in accordance
with the provisions of Section 5(f) below) on such record date, the number of
shares of Class A Common Stock into which each Share shall thereafter be
convertible shall be determined by multiplying the number of shares of Class A
Common Stock into which such Share was theretofore convertible immediately
prior to such record date by a fraction of which the numerator shall be the
number of shares of Class A Common Stock outstanding on such record date plus
the number of additional shares of Class A Common Stock offered for
subscription or purchase (or into which the Convertible Securities so offered
are initially convertible) and of which the denominator shall be the number of
shares of Class A Common Stock outstanding on such record date plus the number
of shares of class A Common Stock which the aggregate offering price of the
total number of shares of Class A Common Stock so offered (or the aggregate
initial conversion or exercise price of the Convertible Securities so offered)
would purchase at the then current market price per share of Class A Common
Stock (as determined in accordance with the provisions of Section 5(f) below)
on such record date. Such adjustment shall be made successively whenever any
such rights or warrants are issued and shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
rights or warrants. In the event that all of the shares of Class A Common
Stock (or all of the Convertible Securities) subject to such rights or warrants
have not been issued when such rights or warrants expire (or, in the case of
rights or warrants to purchase Convertible Securities which have been
exercised, all of the shares of Class A Common Stock issuable upon conversion
of such Convertible Securities have not been issued prior to the expiration of
the conversion right thereof), then the Conversion Rate shall be readjusted
retroactively to be the Conversion Rate which would then be in effect had the
adjustment upon the issuance of such rights or warrants been made on the basis
of the actual number of shares of Class A Common Stock (or Convertible
Securities) issued upon the exercise of such rights or warrants (or the
conversion of such Convertible Securities); but such subsequent adjustment
shall not affect the number of shares of Class A Common Stock issued upon the
conversion of any Share prior to the date such subsequent adjustment is made.
(e) In case this Corporation shall distribute to all holders
of shares of class A Common Stock (including any such distribution made in
connection with a merger in which this Corporation is the continuing
corporation, other than a merger to which Section 5(g) is applicable) any
evidences of its indebtedness or assets (other than cash dividends or Capital
Stock) or rights or warrants to purchase shares of Class A Common Stock or
Class B Common Stock or securities convertible into shares of Class A Common
Stock or Class B Common Stock (excluding those referred to in Section 5(d)
above), then in each such case the number of shares of Class A Common Stock
into which each Share shall thereafter be convertible shall be determined by
multiplying the number of shares of
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Class A Common Stock into which such Share was theretofore convertible
immediately prior to record date for the determination of stockholders entitled
to receive the distribution by a fraction of which the numerator shall be the
then current market price per share of Class A Common Stock (as determined in
accordance with the provisions of Section 5(f) below) on such record date and
of which the denominator shall be such current market price per share of Class
A Common Stock less the fair market value on such record date (as determined by
the Board of Directors of this Corporation, whose determination shall be
conclusive) of the portion of the assets or evidences of indebtedness or rights
and warrants so to be distributed applicable to one share of Class A Common
Stock. Such adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
distribution.
(f) For the purpose of any computation under Section 5(d), (e)
or (k), the current market price per share of Class A Common Stock at any date
shall be deemed to be the average of the daily closing prices for a share of
Class A Common Stock for the ten (10) consecutive trading days before the day
in question. The closing price for each day shall be the last reported sale
price regular way or, in case no such reported sale takes place an such day,
the average of the reported closing bid and asked prices regular way, in either
case on the composite tape, or if the shares of Class A Common Stock are not
quoted on the composite tape, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on which the shares of Class A Common Stock are listed or
admitted to trading, or if they are not listed or admitted to trading on any
such exchange, the last reported sale price (or the average of the quoted
closing bid and asked prices if there were no reported sales) as reported by
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") or any comparable system, or if the Class A Common Stock is not
quoted on NASDAQ or any comparable system, the average of the closing bid and
asked prices as furnished by any member of the National Association of
Securities Dealers, Inc. selected from time to time by this Corporation for
that purpose or, in the absence of such quotations, such other method of
determining market value as the Board of Directors shall from time to time deem
to be fair.
(g) In case of any reclassification or change in the Class A
Common stock (other than any reclassification or change referred to in Section
5(c) and other than a change in par value) or in case of any consolidation of
this Corporation with any other corporation or any merger of this Corporation
into another corporation or of another corporation into this Corporation (other
than a merger in which this Corporation is the continuing corporation and which
does not result in any reclassification or change (other than a change in par
value or any reclassification or change to which Section 5(c) is applicable) in
the outstanding Class A Common Stock) , or in case of any sale or transfer to
another corporation or entity (other than by mortgage or pledge) of all or
substantially all of the properties and assets of this Corporation, this
Corporation (or its successor in such consolidation or merger) or the purchaser
of such properties and assets shall make appropriate provision so that the
holder of a Share shall have the right thereafter to convert such Share into
the kind and amount
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of shares of stock and other securities and property that such holder
would have owned immediately after such reclassification, change,
consolidation, merger, sale or transfer if such holder had converted such Share
into Class A Common Stock immediately prior to the effective date of such
reclassification, change, consolidation, merger, sale or transfer (assuming for
this purpose (to the extent applicable) that such holder failed to exercise
any rights of election and received per share of Class A Common Stock the kind
and amount of shares of stock and other securities and property received per
share by a plurality of the nonelecting shares), and the holders of the
Convertible Preferred Stock shall have no other conversion rights under these
provisions; provided, that effective provision shall be made, in the Articles
or Certificate of Incorporation of the resulting or surviving corporation or
otherwise or in any contracts of sale or transfer, so that the provisions set
forth herein for the protection of the conversion rights of the Convertible
Preferred Stock shall thereafter be made applicable, as nearly as reasonably
may be to any such other shares of stock and other securities and property
deliverable upon conversion of the Convertible Preferred Stock remaining
outstanding or other convertible preferred stock or other Convertible
Securities received by the holders of Convertible Preferred Stock in place
thereof; and provided, further, that any such resulting or surviving
corporation or purchaser shall expressly assume the obligation to deliver, upon
the exercise of the conversion privilege, such shares, securities or property
as the holders of the Convertible Preferred Stock remaining outstanding, or
other convertible preferred stock or other convertible securities received by
the holders in place thereof, shall be entitled to receive pursuant to the
provisions hereof, and to make provisions for the protection of the conversion
rights as above provided.
(h) Whenever the Conversion Rate or the conversion privilege
shall be adjusted as provided in Sections 5(c),(d), (e) or (g), this
Corporation shall promptly cause a notice to be mailed to the holders of record
of The Convertible Preferred Stock describing the nature of the event requiring
such adjustment, the Conversion Rate in effect immediately thereafter and the
kind and amount of stock or other securities or property into which The
Convertible Preferred Stock shall be convertible after such event. Where
appropriate, such notice may be given in advance and included as a part of a
notice required to be mailed under the provisions of Section 5(j).
(i) This Corporation may, but shall not be required to, make
any adjustment of the Conversion Rate if such adjustment would require
an increase or decrease of less than 1% in such Conversion Rate; provided,
however, that any adjustments which by reason of this Section 5(i) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 5 shall be made to
the nearest cent or the nearest 1/100th of a share, as the case may be. In any
case in which this Section 5(i) shall require that an adjustment shall become
effective immediately after a record date for an event, the Corporation may
defer until the occurrence of such event (x) issuing to the holder of any
shares of Convertible Preferred Stock converted after such record date and
before the occurrence of such event the additional shares of Class A Common
Stock or other Capital Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the shares of Class A Common
Stock, or other Capital Stock issuable upon such conversion before giving
effect to such adjustment and (y) paying to such
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holder cash in lieu of any fractional interest to which such holder is
entitled pursuant to Section 5(n); provided, however, that, if requested by
such holder, this Corporation shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares of Class A Common Stock or other Capital Stock, and such
cash, upon the occurrence of the event requiring such adjustment.
(j) In case at any time:
(i) this Corporation shall take any action which would
require an adjustment in the Conversion Rate pursuant to
this Section;
(ii) there shall be any capital reorganization or
reclassification of the Class A Common Stock (other than a
change in par value), or any consolidation or merger to which
the Corporation is a party and for which approval of any
shareholders of this Corporation is required, or any sale,
transfer or lease of all or substantially all of the
properties and assets of the Corporation, or a tender offer
for shares of Class A Common Stock representing, together with
any shares of Class B Common Stock tendered for in such tender
offer, at least a majority of the total voting power
represented by the outstanding shares of Class A Common Stock
and Class B Common Stock which has been recommended by the
Board of Directors as being in the best interests of the
holders of Class A Common Stock; or
(iii) there shall be a voluntarily or involuntary
dissolution, liquidation or winding up of this Corporation;
then, in any such event, this Corporation shall give written notice, in
the manner provided in Section 6(d) hereof, to the holders of the Convertible
preferred Stock at their respective addresses as the same appear on the books
of the Corporation, at least twenty days (or ten days in the case of a
recommended tender offer as specified in clause (ii) above) prior to any record
date for such action, dividend or distribution or the date as of which it is
expected that holders of Class A Common Stock of record shall be entitled to
exchange their shares of Class A Common Stock for securities or other property,
if any, deliverable upon such reorganization, reclassification, consolidation,
merger, sale, transfer, lease, tender offer, dissolution, liquidation or
winding up; provided, however, that any notice required by any event described
in clause (ii) of this Section 5(j) shall be given in the manner and at the
time that such notice is given to the holders of Class A Common Stock. Without
limiting the obligations of this Corporation to provide notice of corporate
actions hereunder, the failure to give the notice required by this Section
5(j) or any defect therein shall not affect the legality or validity of any
such corporate action of the Corporation or the vote upon such action.
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(k) Before any holder of Convertible Preferred Stock shall
be entitled to convert the same into Class A Common Stock, such holder shall
surrender the certificate or certificates for such Convertible Preferred Stock
at the office of this Corporation or at the office of the transfer agent for
the Convertible Preferred Stock, which certificate or certificates, if this
Corporation shall so request, shall be duly endorsed to this Corporation or in
blank or accompanied by proper instruments of transfer to this Corporation or
in blank (such endorsements or instruments of transfer to be in form
satisfactory to this Corporation), and shall give written notice to this
Corporation at said office that it elects to convert all or a part of the
Shares represented by said certificate or certificates in accordance with the
terms of this Section 5, and shall state in writing therein the name or names
in which such holder wishes the certificates for Class A Common Stock to be
issued. Every such notice of election to convert shall constitute a contract
between the holder of such Convertible Preferred Stock and the Corporation,
whereby the holder of such Convertible Preferred Stock shall be deemed to
subscribe for the amount of Class A Common Stock which such holder shall be
entitled to receive upon conversion of the number of shares of Convertible
Preferred Stock to be converted, and, in satisfaction of such subscription, to
deposit the shares of Convertible Preferred Stock to be converted, and thereby
this Corporation shall be deemed to agree that the surrender of the shares of
Convertible Preferred Stock to be converted shall constitute full payment of
such subscription for Class A Common Stock to be issued upon such conversion.
This Corporation will as soon as practicable after such deposit of a
certificate or certificates for Convertible Preferred Stock, accompanied by the
written notice and the statement above prescribed, issue and deliver at the
office of this Corporation or of said transfer agent to the person for whose
account such Convertible Preferred Stock was so surrendered, or to his
nominee(s) or, subject to compliance with applicable law, transferee(s), a
certificate or certificates for the number of full shares of Class A Common
Stock to which such holder shall be entitled, together with cash in lieu of any
fraction of a share as hereinafter provided. If surrendered certificates for
Convertible Preferred Stock are converted only in part, this Corporation will
issue and deliver to the holder, or to his nominee(s), without charge therefor,
a new certificate or certificates representing the aggregate of the unconverted
Shares. Such conversion shall be deemed to have been made as of the date of
such surrender of the Convertible Preferred Stock to be converted; and the
person or persons entitled to receive the Class A Common Stock issuable upon
conversion of such Convertible Preferred Stock shall be treated for all
purposes as the record holder or holders of such Class A Common Stock on such
date.
Upon the conversion of any Share, this Corporation shall pay,
to the holder of record of such Share on the immediately preceding Record Date,
all accrued but unpaid dividends on such Share to the date of the surrender of
such Share for conversion. Such payment shall be made in cash or, at the
election of this Corporation, the issuance of certificates representing such
number of shares of Class A Common Stock as have an aggregate current market
price (as determined in accordance with Section 5(f)) on the date of issuance
equal to the amount of such accrued but unpaid dividends. Upon the making of
such payment to the person entitled thereto as determined pursuant to the first
sentence of
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this paragraph, no further dividends shall accrue on such Share or be payable
to any other person.
The issuance of certificates for shares of Class A Common
Stock upon conversion of shares of Convertible Preferred Stock shall be made
without charge for any issue, stamp or other similar tax in respect of such
issuance, provided, however, if any such certificate is to be issued in a name
other than that of the registered holder of the share or shares of Convertible
Preferred Stock converted, the person or persons requesting the issuance
thereof shall pay to this Corporation the amount of any tax which may be
payable in respect of any transfer involved in such issuance or shall establish
to the satisfaction of this Corporation that such tax has been paid.
This Corporation shall not be required to convert any shares
of Convertible Preferred Stock, and no surrender of Convertible Preferred Stock
shall be effective for that purpose, while the stock transfer books of this
Corporation are closed for any purpose; but the surrender of Convertible
Preferred Stock for conversion during any period while such books are so closed
shall become effective for conversion immediately upon the reopening of such
books, as if the conversion had been made on the date such Convertible
Preferred Stock was surrendered.
(l) This Corporation shall at all times reserve and keep
available, solely for the purpose of issuance upon conversion of the
outstanding shares of Convertible Preferred Stock, such number of shares of
Class A Common Stock as shall be issuable upon the conversion of all
outstanding Shares, provided that nothing contained herein shall be construed
to preclude this Corporation from satisfying its obligations in respect of the
conversion of the outstanding shares of Convertible Preferred Stock by delivery
of shares of Class A Common Stock which are held in the treasury of this
Corporation. This Corporation shall take all such corporate and other actions
as from time to time may be necessary to insure that all shares of Class A
Common Stock issuable upon conversion of shares of Convertible Preferred Stock
at the Conversion Rate in effect from time to time will, upon issue, be duly
and validly authorized and issued, fully paid and nonassessable and free of any
preemptive or similar rights.
(m) All shares of Convertible Preferred Stock received by
this Corporation upon conversion thereof into Class A Common Stock shall be
retired and shall be restored to the status of authorized and unissued shares
of preferred stock (and may be reissued as part of another series of the
preferred stock of this Corporation, but such shares shall not be reissued as
Convertible Preferred Stock).
(n) This Corporation shall not be required to issue
fractional shares of Class A Common Stock or scrip upon conversion of the
Convertible Preferred Stock. As to any final fraction of a share of Class A
Common Stock which a holder of one or more Shares would otherwise be entitled
to receive upon conversion of such Shares in the same transaction, this
Corporation shall pay a cash adjustment in respect of such final fraction in
an amount equal to the same fraction of the market value of a full share of
Class A
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Common Stock. For purposes of this Section 5(n), the market value of a
share of Class A Common Stock shall be the last reported sale price regular way
on the business day immediately preceding the date of conversion, or, in case
no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way on such day, in either case on the
composite tape, or if the shares of Class A Common Stock are not quoted on the
composite tape, on the principal United States securities exchange registered
under the Exchange Act on which the shares of Class A Common Stock are listed
or admitted to trading, or if the shares of Class A Common Stock are not listed
or admitted to trading on any such exchange, the last reported sale price (or
the average of the quoted last reported bid and asked prices if there were no
reported sales) as reported by NASDAQ or any comparable system, or if the Class
A Common Stock is not quoted on NASDAQ or any comparable system, the average of
the closing bid and asked prices as furnished by any member of the National
Association of Securities Dealers, Inc. selected from time to time by this
Corporation for that purpose or, in the absence of such quotations, such other
method of determining market value as the Board of Directors shall from time to
time deem to be fair.
6. Redemption.
(a) Subject to the rights of any Senior Securities and the
provisions of Section 6(g), the shares of Convertible Preferred Stock may be
redeemed out of funds legally available therefor, at the option of this
Corporation by action of the Board of Directors, in whole or from time to time
in part, at any time after January 10,1994, at the Redemption price per share as
of the applicable Redemption Date. If less than all outstanding Shares are to
be redeemed, Shares shall be redeemed ratably among the holders thereof.
(b) Subject to the rights of any Senior Securities, Parity
Securities and the provisions of Section 6(g) and subject to any prohibition or
restriction contained in any Debt Instrument, this Corporation shall redeem,
out of funds legally available therefor, on April 1, 1999 all of the shares of
the Convertible Preferred Stock remaining outstanding at the Redemption Price
per share on the Redemption Date. If the funds of this Corporation available,
in accordance with the immediately preceding sentence, for redemption of Shares
are insufficient to redeem the total number of Shares, those funds which are
legally available for redemption of Shares and not restricted in accordance
with the first sentence of this Section 6(b) will be used to redeem the maximum
possible number of Shares ratably among the holders thereof. At any time
thereafter when additional funds of this Corporation are legally available and
not so restricted for such purpose, such funds will immediately be used to
redeem the Shares this Corporation failed to redeem on such Redemption Date
until the balance of the Shares have been redeemed.
(c) Subject to the rights of any Senior Securities, Parity
Securities and the provisions of Section 6(g) and subject to any prohibition or
restriction contained in any Debt Instrument, at any time on or after the Issue
Date, any holder shall have the right, at such holder's option, to require
redemption by this Corporation at the Redemption Price per Share as of the
applicable Redemption Date of all or any portion of his Shares having an
aggregate
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<PAGE> 116
Liquidation Value in excess of $1,000,000, by written notice to this
Corporation stating the number of Shares to be redeemed. This Corporation
shall redeem, out of funds legally available therefor and not restricted in
accordance with the first sentence of this Section 6(c), the Shares so
requested to be redeemed on such date within 60 days following this
Corporation's receipt of such notice as this Corporation shall state in its
notice given pursuant to Section 6(d). If the funds of this Corporation
legally available for redemption of Shares and not restricted in accordance
with the first sentence of this Section 6(c) are insufficient to redeem the
total number of Shares required to be redeemed pursuant to this Section 6(c),
those funds which are legally available for redemption of such Shares and not
so restricted will be used to redeem the maximum possible number of such Shares
ratably among the holders who have required Shares to be redeemed under this
Section 6(c). At any time thereafter when additional funds of this Corporation
are legally available and not so restricted for such purpose, such funds will
immediately be used to redeem the Shares this Corporation failed to redeem on
such Redemption Date until the balance of such Shares are redeemed.
(d) Notice of any redemption pursuant to this Section shall
be mailed, first class, postage prepaid, not less than 30 days nor more than 60
days prior to the Redemption Date, to the holders of record of the shares of
Convertible Preferred Stock to be redeemed, at their respective addresses as
the same appear upon the books of this Corporation or are supplied by them in
writing to this Corporation for the purpose of such notice; but no failure to
mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the proceedings for the redemption of any shares of the
Convertible Preferred Stock. Such notice shall set forth the Redemption Price,
the Redemption Date, the number of Shares to be redeemed and the place at which
the Shares called for redemption will, upon presentation and surrender of the
stock certificates evidencing such Shares, be redeemed. In case fewer than the
total number of shares of Convertible Preferred Stock represented by any
certificate are redeemed, a new certificate representing the number of
unredeemed Shares will be issued to the holder thereof without cost to such
holder.
(e) If notice of any redemption by this Corporation pursuant
to this Section 6 shall have been mailed as provided in Section 6(d) and if on
or before the Redemption Date specified in such notice the consideration
necessary for such redemption shall have been set apart so as to be available
therefor and only therefor, then on and after the close of business on the
Redemption Date, the Shares called for redemption, notwithstanding that any
certificate therefor shall not have been surrendered for cancellation, shall no
longer be deemed outstanding, and all rights with respect to such Shares shall
forthwith cease and terminate, except the right of the holders thereof to
receive upon surrender of their certificates the consideration payable upon
redemption thereof.
(f) All shares of Convertible Preferred Stock redeemed,
retired, purchased or otherwise acquired by this Corporation shall be retired
and shall be restored to the status of authorized and unissued shares of
preferred stock (and may be reissued as part of another series of the preferred
stock of this Corporation, but such shares shall not be reissued as Convertible
Preferred Stock).
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(g) If at any time this Corporation shall have failed to pay,
or declare and set apart the consideration sufficient to pay, all dividends
accrued up to and including the immediately preceding Dividend Payment Date on
the Convertible Preferred Stock and any Parity Securities, and until all
dividends accrued up to and including the immediately preceding Dividend
Payment Date on the Convertible Preferred Stock and any Parity Securities shall
have been paid or declared and set apart so as to be available for the payment
in full thereof and for no other purpose, this Corporation shall not redeem,
pursuant to a sinking fund or otherwise, any shares of Convertible Preferred
Stock, Parity Securities or Junior Securities, unless all then outstanding
shares of Convertible Preferred Stock and Parity Securities are redeemed, and
shall not purchase or otherwise acquire any shares of Convertible Preferred
Stock, Parity Securities or Junior Securities. If and so long as this
Corporation shall fail to redeem on a Redemption Date pursuant to Section 6(b)
or 6(c) all shares of Convertible Preferred Stock required to be redeemed on
such date, this Corporation shall not redeem, or discharge any sinking fund
obligation with respect to, any Parity Securities or Junior Securities, unless
all then outstanding shares of Convertible Preferred Stock and Parity
Securities are redeemed, and shall not purchase or otherwise acquire any shares
of Convertible Preferred Stock, Parity Securities or Junior Securities. Nothing
contained in this Section 6(g) shall prevent the purchase or acquisition (i) of
shares of Convertible Preferred Stock and Parity Securities pursuant to a
purchase or exchange offer or offers made to holders of all outstanding shares
of Convertible Preferred Stock and Parity Securities, provided that (A) as to
holders of all outstanding shares of Convertible Preferred Stock, the terms of
the purchase or exchange offer for all such shares are identical, (B) as to
holders of all outstanding shares of a particular series or class of Parity
Securities, the terms of the purchase or exchange offer for all such shares are
identical, and (C) as among holders of all outstanding shares of Convertible
Preferred Stock and Parity Securities, the terms of each purchase or exchange
offer or offers are substantially identical relative to the liquidation price
of the shares of Convertible Preferred Stock and each series or class of Parity
Securities, (ii) of shares of Convertible Preferred Stock, Parity Securities or
Junior Securities in exchange for (together with a cash adjustment for
fractional shares, if any), or through the application of the proceeds of the
sale of, shares of Junior Securities or (iii) of shares of Junior Securities
that are beneficially owned by Liberty upon the redemption of, or in exchange
for, shares of Liberty's preferred stock beneficially owned by this
Corporation. The provisions of this Section 6(g) are for the benefit of
holders of Convertible Preferred Stock and Parity Securities and accordingly,
at any time when there are no Parity Securities outstanding, the provisions of
this Section 6(g) shall not restrict any redemption by this Corporation of
Shares held by any holder, provided that all other holders of Shares shall have
waived in writing the benefits of this provision with respect to such
redemption.
7. Transfer.
(a) Without the prior written consent of this Corporation, no
person holding shares of Convertible Preferred Stock of record (hereinafter
called a "Convertible Preferred Holder") may transfer, and this Corporation
shall not register the transfer of, such shares of
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Convertible Preferred Stock, whether by sale, assignment, or otherwise, except
to a Permitted Transferee.
(i) In the case of a Convertible Preferred Holder
acquiring record and beneficial ownership of the shares of
Convertible Preferred Stock in question upon initial issuance by
this Corporation (an "Original Holder"), a "Permitted Transferee"
shall mean:
(x) any Affiliate (as defined in Section 7(b)) of
such Original Holder,
(y) any other Original Holder (or any Affiliate
of any such other Original Holder), or
(z) any person or entity to whom Shares are
transferred by an Original Holder which
Original Holder is a natural person pursuant
to a gift or bequest or pursuant to the laws
of intestacy.
(ii) In the case of a Convertible Preferred Holder which
is a Permitted Transferee of an Original Holder, a "Permitted
Transferee" shall mean:
(x) any Original Holder,
(y) any Permitted Transferee of an Original
Holder, except any transferee referred to in
clause (i)(z) above, or
(z) any person or entity to whom Shares are
transferred by a Permitted Transferee which
Permitted Transferee is a natural person
pursuant to a gift or bequest or pursuant to
the laws of intestacy.
(b) For purposes of this Section 7, the term "Affiliate"
shall mean (i) any person or corporation that owns beneficially and of record
at least a majority of the outstanding securities representing the right, other
than as affected by events of default, to vote for the election of directors
("voting securities") of an Original Holder or (ii) any person or corporation
at least a majority of the voting securities of which are owned beneficially
and of record by an Original Holder, where in the case of both (i) and (ii),
voting securities will be deemed "owned" by a person or corporation if either
owned directly or if owned indirectly through one or more intermediary
corporations at least a majority of the voting securities of which are owned
beneficially and of record by that person or corporation or by an intermediary
corporation in such a majority or more chain of ownership.
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(c) This Corporation may, in connection with preparing a list
of stockholders entitled to vote at any meeting of stockholders, or as a
condition to the transfer or the registration of shares of Convertible
Preferred Stock on this Corporation's books, require the furnishing of such
affidavits or other proof as it deems necessary to establish that any person is
the beneficial owner of shares of Convertible Preferred Stock or is a Permitted
Transferee.
(d) Shares of Convertible preferred Stock shall be
registered in the names of the beneficial owners thereof and not in "street" or
"nominee" name. For this purpose, a "beneficial owner" of any shares of
Convertible Preferred Stock shall mean a person who, or an entity which,
possesses the power, either singly or jointly, to direct the voting or
disposition of such shares. Certificates for shares of Convertible Preferred
Stock shall bear a legend referencing the restrictions on transfer imposed by
this Section 7.
8. No Voting Rights. The holders of Convertible Preferred
Stock shall have no right to vote for any purpose, except as specifically
required by the Delaware General Corporation Law.
9. Amendment. No amendment or modification of the
designation, rights, preferences, and limitations of the Shares set forth
herein shall be binding or effective without the prior consent of the holders
of record of Shares representing 66 2/3% of the Liquidation Value of all Shares
outstanding at the time such action is taken.
10. Preemptive Rights. The holders of the Convertible
Preferred Stock will not have any preemptive right to subscribe for or purchase
any shares of stock or any other securities which may be issued by this
Corporation.
11. Exclusion of Other Rights. Except as may otherwise be
required by law and for the equitable rights and remedies that may otherwise be
available to holders of Convertible Preferred Stock, the shares of Convertible
Preferred Stock shall not have any designations, preferences, limitations or
relative rights, other that those specifically set forth in these resolutions
(as such resolutions may, subject to Section 9, be amended from time to time)
and in the Restated Certificate of Incorporation of this Corporation.
12. Headings. The headings of the various sections and
subsections hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
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FURTHER RESOLVED, that the appropriate officers of this
Corporation are hereby authorized to execute and acknowledge a certificate
setting forth these resolutions and to cause such certificate to be filed and
recorded, in accordance with the requirements of Section 151(g) of the General
Corporation Law of the State of Delaware."
/s/ D. F. FISHER
D. F. Fisher
Executive Vice President
ATTEST
By: /s/ MARY S. WILLIS
Mary Willis
Assistant Secretary
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<PAGE> 121
TELE-COMMUNICATIONS, INC.
CERTIFICATE
PURSUANT TO SECTIONS 151(g)
OF THE DELAWARE GENERAL
CORPORATION LAW
WHEREAS, Tele-Communications, Inc. (the "Corporation") having
previously issued all 6,201 authorized shares of its Convertible Preferred
Stock, Series B ("Series B Preferred Stock"), and having retired all the Series
B Preferred Stock in a share-for-share exchange for shares of this
Corporation's Convertible Preferred Stock, Series C, certifies as follows:
That all of the authorized shares of Series B Preferred Stock have been
retired, and reissuance of such shares being prohibited, such shares shall be
restored to the status of authorized and unissued shares of preferred stock of
this Corporation and may be reissued as part of another series of preferred
stock of this Corporation, but such shares shall not be reissued as Series B
Preferred Stock; all matters previously set forth in the Certificate of
Designations filed with respect to the Series B Preferred Stock shall be deemed
eliminated from the certificate of incorporation of this Corporation.
Date: July 23, 1993 TELE-COMMUNICATIONS, INC.
By: /s/ STEPHEN M. BRETT
Stephen M. Brett
Senior Vice President
ATTEST:
/s/ MARY S. WILLIS
Mary S. Willis
Assistant Secretary
<PAGE> 1
1992 GRANT
TELE-COMMUNICATIONS, INC.
1992 STOCK INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION
AND STOCK APPRECIATION RIGHTS AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 11th day of
November, 1992 (the "Grant Date"), by and between TELE-COMMUNICATIONS, INC., a
Delaware corporation (the "Company"), and the person signing adjacent to the
caption "Grantee" on the signature page hereof (the "Grantee").
The Company has adopted the Tele-Communications, Inc. 1992
Stock Incentive Plan (the "Plan"), a copy of which is appended to this
Agreement as Exhibit A and by this reference made a part hereof, for the
benefit of eligible employees of the Company and its Subsidiaries. Capitalized
terms used and not otherwise defined herein shall have the meaning ascribed
thereto in the Plan.
Pursuant to the Plan, the Compensation Committee of the Board
(the "Committee"), which has been assigned responsibility for administering the
Plan, has determined that it would be in the interest of the Company and its
stockholders to grant the options and rights provided herein in order to
provide Grantee with additional remuneration for services rendered, to
encourage Grantee to remain in the employ of the Company or its Subsidiaries
and to increase Grantee's personal interest in the continued success and
progress of the Company.
The Company and Grantee therefore agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions
herein, the Company grants to the Grantee, during the period commencing on the
Grant Date and expiring at 5:00 p.m., Denver, Colorado time ("Close of
Business"), on the day which immediately precedes the tenth anniversary of the
Grant Date (the "Option Term"), subject to earlier termination as provided in
paragraphs 8 and 12(b) below, an option to purchase from the Company, at the
price per share set forth on Schedule 1 hereto (the "Option Price"), the number
of shares of Common Stock set forth on said Schedule 1 (the "Option Shares").
The Option Price and Option Shares are subject to adjustment pursuant to
paragraph 12 below. This option is designated as a "Nonqualified Stock Option"
in accordance with the Plan and is hereinafter referred to as the "Option."
2. GRANT OF STOCK APPRECIATION RIGHTS. Subject to the
terms and conditions herein and in tandem with the Option, the Company grants
to Grantee for the Option Term, subject to earlier termination as provided in
paragraphs 8 and 12(b) below, a
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<PAGE> 2
stock appreciation right with respect to each Option Share (individually, a
"Tandem SAR" and collectively, the "Tandem SARs"). Upon exercise of a Tandem
SAR in accordance with this Agreement, the Company shall, subject to paragraph
6 below, make payment as follows:
(i) the amount of payment shall equal the amount by which
the Fair Market Value of the Option Share on the date of exercise if
the Tandem SAR exceeds the Option Price; and
(ii) payment of the amount determined in accordance with
clause (i) shall be made in shares of Common Stock (valued at their
Fair Market Value as of the date of exercise of such Tandem SAR), or,
in the sole discretion of the Committee, in cash, or partly in cash
and partly in shares of Common Stock.
3. REDUCTION UPON EXERCISE. The exercise of any number
of Tandem SARs shall cause a corresponding reduction in the number of Option
Shares which shall apply against the Option Shares then available for purchase.
The exercise of the Option to purchase any number of Option Shares shall cause
a corresponding reduction in the number of Tandem SARs.
4. CONDITIONS OF EXERCISE. The Option and Tandem SARs
are exercisable only in accordance with the conditions stated in this
paragraph.
(a) Except as otherwise provided in paragraph 12(b) below
or in the last sentence of this subparagraph (a), the Option shall not be
exercisable until the first anniversary of the Grant Date, and on such first
anniversary and thereafter the Option may only be exercised to the extent the
Option Shares have become available for purchase in accordance with the
following schedule:
<TABLE>
<CAPTION>
Anniversary of Percentage of Option Shares
Grant Date Available for Purchase
-------------- ---------------------------
<S> <C>
1st 20%
2nd 40%
3rd 60%
4th 80%
5th 100%
</TABLE>
Notwithstanding the foregoing, all Option Shares shall become available for
purchase if Grantee's employment with the Company and its Subsidiaries (i)
shall terminate by reason of (x) termination by the Company without cause (as
defined in Section 10.2(b) of the Plan), (y) termination by Grantee for good
reason (as defined herein) or (z) Disability, (ii) shall terminate pursuant to
provisions of a written employment agreement, if any, between the Grantee and
the Company which expressly permit the Grantee to terminate such employment
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<PAGE> 3
upon the occurrence of specified events (other than the giving of notice and
passage of time), or (iii) if Grantee dies while employed by the Company or a
Subsidiary.
(b) A Tandem SAR with respect to an Option Share shall be
exercisable only if the Option Share is then available for purchase in
accordance with subparagraph (a).
(c) To the extent the Option or Tandem SARs become
exercisable, such Option or Tandem SARs may be exercised in whole or in part
(at any time or from time to time, except as otherwise provided herein) until
expiration of the Option Term or earlier termination thereof.
(d) Grantee acknowledges and agrees that the Committee
may, in its discretion and as contemplated by Section 7.5 of the Plan, adopt
rules and regulations from time to time after the date hereof with respect to
the exercise of SARs and that the exercise by Grantee of the Tandem SARs will
be subject to the further condition that such exercise is made in accordance
with all such rules and regulations as the Committee may determine are
applicable thereto.
5. MANNER OF EXERCISE. The Option or a Tandem SAR shall
be considered exercised (as to the number of Option Shares or Tandem SARs
specified in the notice referred to in subparagraph (a) below) on the latest of
(i) the date of exercise designated in the written notice referred to in
subparagraph (a) below, (ii) if the date so designated is not a business day,
the first business day following such date or (iii) the earliest business day
by which the Company has received all of the following:
(a) Written notice, in such form as the Committee may
require, designating, among other things, the date of exercise, the number of
Option Shares to be purchased and/or the number of Tandem SARs to be exercised;
(b) If the Option is to be exercised, payment of the
Option Price for each Option Share to be purchased in cash or in such other
form, or combination of forms, of payment contemplated by Section 6.6(a) of the
Plan as the Committee may permit; provided, however, that any shares of Common
Stock or Class B Stock delivered in payment of the Option Price, if such form
of payment is so permitted by the Committee, shall be shares that the Grantee
has owned for a period of at least six months prior to the date of exercise,
and provided, further, that, notwithstanding clause (v) of Section 6.6(a) of
the Plan, Option Shares may not be withheld in payment or partial payment of
the Option Price; and
(c) Any other documentation that the Committee may
reasonably require.
Notwithstanding the foregoing, if in order to meet the
exemptive requirements of Rule 16b-3, the Grantee exercises Tandem SARs during
a quarterly window period determined in accordance with paragraph (e)(3) of
such Rule (including by designating in a written notice of exercise delivered
prior thereto that such exercise is to be effective during
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<PAGE> 4
such window period), then the date of exercise of such Tandem SARs shall be
deemed for purposes of this paragraph 5 and for purposes of the Fair Market
Value determinations to be made pursuant to paragraph 2 hereof, to be the day
during such window period on which the highest reported last sale price of a
share of Common Stock as reported on NASDAQ occurred and the Fair Market Value
of such share shall be deemed to be such highest reported last sale price.
6. MANDATORY WITHHOLDING FOR TAXES. Grantee
acknowledges and agrees that the Company shall deduct from the cash and/or
shares of Common Stock otherwise payable or deliverable upon exercise of the
Option or a Tandem SAR an amount of cash and/or number of shares of Common
Stock (valued at their Fair Market Value on the date of exercise) that is equal
to the amount of all federal, state and local taxes required to be withheld by
the Company upon such exercise, as determined by the Committee.
7. DELIVERY BY THE COMPANY. As soon as practicable
after receipt of all items referred to in paragraph 5, and subject to the
withholding referred to in paragraph 6, the Company shall deliver to the
Grantee certificates issued in Grantee's name for the number of Option Shares
purchased by exercise of the Option and for the number of shares of Common
Stock to which the Grantee is entitled by the exercise of Tandem SARs and any
cash payment to which the Grantee is entitled by the exercise of Tandem SARs.
If delivery is by mail, delivery of shares of Common Stock shall be deemed
effected for all purposes when a stock transfer agent of the Company shall have
deposited the certificates in the United States mail, addressed to the Grantee,
and any cash payment shall be deemed effected when a Company check, payable to
Grantee and in an amount equal to the amount of the cash payment, shall have
been deposited in the United States mail, addressed to the Grantee.
8. EARLY TERMINATION OF OPTION AND TANDEM SARS. Unless
otherwise determined by the Committee in its sole discretion, the Option and
Tandem SARs shall terminate, prior to the expiration of the Option Term, at the
time specified below:
(a) If Grantee's employment with the Company and its
Subsidiaries terminates (i) other than (x) by the Company for "cause" (as
defined in Section 10.2(b) of the Plan), (y) by the Grantee with "good reason"
(as defined herein) or (z) by the Company without cause, and (ii) other than
(x) by reason of death or Disability, (y) with the written consent of the
Company or the applicable Subsidiary or (z) without such consent if such
termination is pursuant to provisions of a written employment agreement, if
any, between the Grantee and the Company which expressly permit the Grantee to
terminate such employment upon the occurrence of specified events (other than
the giving of notice and passage of time), then the Option and all Tandem SARs
shall terminate at the Close of Business on the first business day following
the expiration of the 90-day period which began on the date of termination of
Grantee's employment;
(b) If Grantee dies while employed by the Company or a
Subsidiary, or prior to the expiration of a period of time following
termination of Grantee's employment during
-4-
<PAGE> 5
which the Option and Tandem SARs remain exercisable as provided in paragraph
(a), the Option and all Tandem SARs shall terminate at the Close of Business on
the first business day following the expiration of the one-year period which
began on the date of death;
(c) If Grantee's employment with the Company terminates
by reason of Disability, then the Option and all Tandem SARs shall terminate at
the Close of Business on the first business day following the expiration of the
one-year period which began on the date of termination of Grantee's employment;
(d) If Grantee's employment with the Company and its
Subsidiaries is terminated by the Company for "cause" (as defined in Section
10.2(b) of the Plan), then the Option and all Tandem SARs shall terminate
immediately upon such termination of Grantee's employment; or
(e) If Grantee's employment (i) is terminated by Grantee
(x) with "good reason" (as defined herein), (y) with the written consent of the
Company or the applicable Subsidiary or (z) pursuant to provisions of a written
employment agreement, if any, between the Grantee and the Company which
expressly permit the Grantee to terminate such employment upon the occurrence
of specified events (other than the giving of notice and passage of time), or
(ii) by the Company without "cause" (as defined in Section 10.2(b) of the
Plan), then the Option Term shall terminate early only as provided for in
paragraph 8(b) or 12(b) below.
In any event in which the Option and Tandem SARs remain
exercisable for a period of time following the date of termination of Grantee's
employment as provided above, the Option and Tandem SARs may be exercised
during such period of time only to the extent the same were exercisable as
provided in paragraph 4 above on such date of termination of Grantee's
employment. A change of employment is not a termination of employment within
the meaning of this paragraph 8 provided that, after giving effect to such
change, the Grantee continues to be an employee of the Company or any
Subsidiary. Notwithstanding any period of time referenced in this paragraph 8
or any other provision of this paragraph that may be construed to the contrary,
the Option and all Tandem SARs shall in any event terminate upon the expiration
of the Option Term.
"Good reason" for purposes of the Agreement shall be deemed to
have occurred upon the happening of any of the following:
(i) any reduction in Grantee's annual rate of salary;
(ii) either (x) a failure of the Company to continue in
effect any employee benefit plan in which Grantee was participating or
(y) the taking of any action by the Company that would adversely
affect Grantee's participation in, or materially reduce Grantee's
benefits under, any such employee benefit
-5-
<PAGE> 6
plan, unless such failure or such taking of any action, adversely
affects the senior members of the corporate management of the Company
generally;
(iii) the assignment to Grantee of duties and
responsibilities that are materially more oppressive or onerous than
those attendant to Grantee's position immediately after the date
hereof;
(iv) the relocation of the office location as assigned to
Grantee by the Company to a location more than 20 miles from Grantee's
current location without Grantee's consent; or
(v) the failure of the Company to obtain, prior to the
time of any reorganization, merger, consolidation, disposition of all
or substantially all of the assets of the Company or similar
transaction effective after the date hereof, in which the Company is
not the surviving person, the unconditional assumption in writing or
by operation of law of the Company's obligations to Grantee under this
Agreement by each direct successor to the Company in any such
transaction.
9. AUTOMATIC EXERCISE OF TANDEM SARS. Immediately prior
to the termination of the Option, as provided in paragraph 8 above, or the
expiration of the Option Term, all remaining Tandem SARs shall be deemed to
have been exercised by the Grantee.
10. NONTRANSFERABILITY OF OPTION AND TANDEM SARS. During
Grantee's lifetime, the Option and Tandem SARs are not transferable
(voluntarily or involuntarily) other than pursuant to a qualified domestic
relations order and, except as otherwise required pursuant to a qualified
domestic relations order, are exercisable only by the Grantee or Grantee's
court appointed legal representative. The Grantee may designate a beneficiary
or beneficiaries to whom the Option and Tandem SARs shall pass upon Grantee's
death and may change such designation from time to time by filing a written
designation of beneficiary or beneficiaries with the Committee on the form
annexed hereto as Exhibit B or such other form as may be prescribed by the
Committee, provided that no such designation shall be effective unless so filed
prior to the death of Grantee. If no such designation is made or if the
designated beneficiary does not survive the Grantee's death, the Option and
Tandem SARs shall pass by will or the laws of descent and distribution.
Following Grantee's death, the Option and any Tandem SARs, if otherwise
exercisable, may be exercised by the person to whom such option or right passes
accordingly to the foregoing and such person shall be deemed the Grantee for
purposes of any applicable provisions of this Agreement.
11. NO SHAREHOLDER RIGHTS. The Grantee shall not be
deemed for any purpose to be, or to have any of the rights of, a stockholder of
the Company with respect to any shares of Common Stock as to which this
Agreement relates until such shares shall have been issued to Grantee by the
Company. Furthermore, the existence of this Agreement shall not affect in any
way the right or power of the Company or its stockholders to accomplish any
corporate act, including, without limitation, the acts referred to in Section
10.18 of the Plan.
-6-
<PAGE> 7
12. ADJUSTMENTS.
(a) The Option and Tandem SARs shall be subject to
adjustment (including, without limitation, as to the number of Option Shares
and the Option Price per share) in the sole discretion of the Committee and in
such manner as the Committee may deem equitable and appropriate in connection
with the occurrence of any of the events described in Section 4.2 of the Plan
following the Grant Date.
(b) In the event of any Approved Transaction, Board
Change or Control Purchase, the Option and all Tandem SARs shall become
exercisable in full without regard to paragraph 4(a); provided, however, that
to the extent not theretofore exercised the Option and all Tandem SARs shall
terminate upon the first to occur of the consummation of the Approved
Transaction, the expiration of the Option Term or the earlier termination of
the Option and Tandem SARs pursuant to paragraph 8 hereof. Notwithstanding the
foregoing, the Committee may, in its discretion, determine that the Option and
Tandem SARs will not become exercisable on an accelerated basis in connection
with an Approved Transaction and/or will not terminate if not exercised prior
to consummation of the Approved Transaction, if the Board or the surviving or
acquiring corporation, as the case may be, shall have taken or made effective
provision for the taking of such action as in the opinion of the Committee is
equitable and appropriate to substitute a new Award for the Award evidenced by
this Agreement or to assume this Agreement and the Award evidenced hereby and
in order to make such new or assumed Award, as nearly as may be practicable,
equivalent to the Award evidenced by this Agreement as then in effect (but
before giving effect to any acceleration of the exercisability hereof unless
otherwise determined by the Committee), taking into account, to the extent
applicable, the kind and amount of securities, cash or other assets into or for
which the Common Stock may be changed, converted or exchanged in connection
with the Approved Transaction.
13. RESTRICTIONS IMPOSED BY LAW. Without limiting the
generality of Section 10.9 of the Plan, the Grantee agrees that Grantee will
not exercise the Option or any Tandem SAR and that the Company will not be
obligated to deliver any shares of Common Stock or make any cash payment, if
counsel to the Company determines that such exercise, delivery or payment would
violate any applicable law or any rule or regulation of any governmental
authority or any rule or regulation of, or agreement of the Company with, any
securities exchange or association upon which the Common Stock is listed or
quoted. Except as provided in Section 10.9 of the Plan, the Company shall in
no event be obligated to take any affirmative action in order to cause the
exercise of the Option or any Tandem SAR or the resulting delivery of shares of
Common Stock or other payment to comply with any such law, rule, regulation or
agreement.
14. NOTICE. Unless the Company notifies the Grantee in
writing of a different procedure, any notice or other communication to the
Company with respect to this Agreement shall be in writing and shall be:
-7-
<PAGE> 8
(i) delivered personally to the following address:
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111-3000
and conspicuously marked "Tele-Communications, Inc.
1992 Stock Incentive Plan, c/o General Counsel"; or
(ii) sent by first class mail, postage prepaid, and
addressed as follows:
Tele-Communications, Inc. 1992
Stock Incentive Plan
c/o General Counsel, Tele-Communications,
Inc.
P. O. Box 5630
Denver, Colorado 80217
Any notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delivered personally, or shall be sent by
first class mail, postage prepaid, to Grantee's address as listed in the
records of the Company or the employing Subsidiary on the Grant Date, unless
the Company has received written notification from the Grantee of a change of
address.
15. AMENDMENT. Notwithstanding any other provisions
hereof, this Agreement may be supplemented or amended from time to time as
approved by the Committee as contemplated by Section 10.8(b) of the Plan.
Without limiting the generality of the foregoing, without the consent of the
Grantee,
(a) this Agreement may be amended or supplemented (i) to
cure any ambiguity or to correct or supplement any provision herein which may
be defective or inconsistent with any other provision herein, or (ii) to add to
the covenants and agreements of the Company for the benefit of Grantee or
surrender any right or power reserved to or conferred upon the Company in this
Agreement, subject, however, to any required approval of the Company's
stockholders and, provided, in each case, that such changes or corrections
shall not adversely affect the rights of Grantee with respect to the Award
evidenced hereby, or (iii) to make such other changes as the Company, upon
advice of counsel, determines are necessary or advisable because of the
adoption or promulgation of, or change in or of the interpretation of, any law
or governmental rule or regulation, including any applicable federal or state
securities laws; and
(b) subject to Section 10.8(b) of the Plan and any
required approval of the Company's stockholders, the Award evidenced by this
Agreement may be cancelled by the Committee and a new Award made in
substitution therefor, provided that the Award so substituted shall satisfy all
of the requirements of the Plan as of the date such new Award is
-8-
<PAGE> 9
made and no such action shall adversely affect the Option or any Tandem SAR to
the extent then exercisable.
16. GRANTEE EMPLOYMENT. Nothing contained in this
Agreement, and no action of the Company or the Committee with respect hereto,
shall confer or be construed to confer on the Grantee any right to continue in
the employ of the Company or any of its Subsidiaries or interfere in any way
with the right of the Company or any employing Subsidiary to terminate the
Grantee's employment at any time, with or without cause; subject, however, to
the provisions of any employment agreement between the Grantee and the Company
or any Subsidiary.
17. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of Colorado.
18. CONSTRUCTION. References in this Agreement to "this
Agreement" and the words "herein," "hereof," "hereunder" and similar terms
include all Exhibits and Schedules appended hereto, including the Plan. This
Agreement is entered into, and the Award evidenced hereby is granted, pursuant
to the Plan and shall be governed by and construed in accordance with the Plan
and the administrative interpretations adopted by the Committee thereunder.
All decisions of the Committee upon questions regarding the Plan or this
Agreement shall be conclusive. Unless otherwise expressly stated herein, in
the event of any inconsistency between the terms of the Plan and this
Agreement, the terms of the Plan shall control. The headings of the paragraphs
of this Agreement have been included for convenience of reference only, are not
to be considered a part hereof and shall in no way modify or restrict any of
the terms or provisions hereof.
19. DUPLICATE ORIGINALS. The Company and the Grantee may
sign any number of copies of this Agreement. Each signed copy shall be an
original, but all of them together represent the same agreement.
20. RULES BY COMMITTEE. The rights of the Grantee and
obligations of the Company hereunder shall be subject to such reasonable rules
and regulations as the Committee may, subject to the express provisions of the
Plan, adopt from time to time hereafter.
-9-
<PAGE> 10
21. GRANTEE ACCEPTANCE. Grantee shall signify acceptance
of the terms and conditions of this Agreement by signing in the space provided
below and returning a signed copy to the Company.
ATTEST: TELE-COMMUNICATIONS, INC.
_________________________ By:_______________________________
Assistant Secretary Name:
Title:
ACCEPTED:
__________________________________
Grantee
-10-
<PAGE> 11
Schedule 1 to Non-Qualified Stock Option
and Stock Appreciation Rights Agreement
dated as of November 11, 1992
TELE-COMMUNICATIONS, INC. 1992 STOCK INCENTIVE PLAN
Grantee:
Grant Date: November 11, 1992
Option Price: $16.75 per share
Option Shares: __________ shares of the Company's Class A
Common Stock, $1.00 par value per share
-11-
<PAGE> 12
Exhibit B to Non-Qualified Stock Option
and Stock Appreciation Rights Agreement
dated as of November 11, 1992
TELE-COMMUNICATIONS, INC. 1992 STOCK INCENTIVE PLAN
DESIGNATION OF BENEFICIARY
I, _________________________________ (the "Grantee"), hereby declare
that upon my death ____________________________________ (the "Beneficiary") of
Name
_____________________________________________________________________________,
Street Address City State Zip Code
who is my __________________________________________, shall be entitled to the
Relationship to Grantee
Option, Tandem SARs and all other rights accorded the Grantee by the
above-referenced grant agreement (the "Agreement").
It is understood that this Designation of Beneficiary is made pursuant
to the Agreement and is subject to the conditions stated herein, including the
Beneficiary's survival of the Grantee's death. If any such condition is not
satisfied, such rights shall devolve according to the Grantee's will or the
laws of descent and distribution.
It is further understood that all prior designations of beneficiary
under the Agreement are hereby revoked and that this Designation of Beneficiary
may only be revoked in writing, signed by the Grantee, and filed with the
Company prior to the Grantee's death.
_______________________________ __________________________________________
Date Grantee
<PAGE> 13
1993 GRANT
TELE-COMMUNICATIONS, INC.
1992 STOCK INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION
AND STOCK APPRECIATION RIGHTS AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 12th day of
October, 1993 (the "Grant Date"), by and between TELE-COMMUNICATIONS, INC., a
Delaware corporation (the "Company"), and the person signing adjacent to the
caption "Grantee" on the signature page hereof (the "Grantee").
The Company has adopted the Tele-Communications, Inc. 1992
Stock Incentive Plan (the "Plan"), a copy of which is appended to this
Agreement as Exhibit A and by this reference made a part hereof, for the
benefit of eligible employees of the Company and its Subsidiaries. Capitalized
terms used and not otherwise defined herein shall have the meaning ascribed
thereto in the Plan.
Pursuant to the Plan, the Compensation Committee of the Board
(the "Committee"), which has been assigned responsibility for administering the
Plan, has determined that it would be in the interest of the Company and its
stockholders to grant the options and rights provided herein in order to
provide Grantee with additional remuneration for services rendered, to
encourage Grantee to remain in the employ of the Company or its Subsidiaries
and to increase Grantee's personal interest in the continued success and
progress of the Company.
The Company and Grantee therefore agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions
herein, the Company grants to the Grantee, during the period commencing on the
Grant Date and expiring at 5:00 p.m., Denver, Colorado time ("Close of
Business"), on the day which immediately precedes the tenth anniversary of the
Grant Date (the "Option Term"), subject to earlier termination as provided in
paragraphs 8 and 12(b) below, an option to purchase from the Company, at the
price per share set forth on Schedule 1 hereto (the "Option Price"), the number
of shares of Common Stock set forth on said Schedule 1 (the "Option Shares").
The Option Price and Option Shares are subject to adjustment pursuant to
paragraph 12 below. This option is designated as a "Nonqualified Stock Option"
in accordance with the Plan and is hereinafter referred to as the "Option."
2. GRANT OF STOCK APPRECIATION RIGHTS. Subject to the
terms and conditions herein and in tandem with the Option, the Company grants
to Grantee for the
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<PAGE> 14
Option Term, subject to earlier termination as provided in paragraphs 8 and
12(b) below, a stock appreciation right with respect to each Option Share
(individually, a "Tandem SAR" and collectively, the "Tandem SARs"). Upon
exercise of a Tandem SAR in accordance with this Agreement, the Company shall,
subject to paragraph 6 below, make payment as follows:
(i) the amount of payment shall equal the amount by which
the Fair Market Value of the Option Share on the date of exercise if
the Tandem SAR exceeds the Option Price; and
(ii) payment of the amount determined in accordance with
clause (i) shall be made in shares of Common Stock (valued at their
Fair Market Value as of the date of exercise of such Tandem SAR), or,
in the sole discretion of the Committee, in cash, or partly in cash
and partly in shares of Common Stock.
3. REDUCTION UPON EXERCISE. The exercise of any number
of Tandem SARs shall cause a corresponding reduction in the number of Option
Shares which shall apply against the Option Shares then available for purchase.
The exercise of the Option to purchase any number of Option Shares shall cause
a corresponding reduction in the number of Tandem SARs.
4. CONDITIONS OF EXERCISE. The Option and Tandem SARs
are exercisable only in accordance with the conditions stated in this
paragraph.
(a) Except as otherwise provided in paragraph 12(b) below
or in the last sentence of this subparagraph (a), the Option shall not be
exercisable until the first anniversary of the Grant Date, and on such first
anniversary and thereafter the Option may only be exercised to the extent the
Option Shares have become available for purchase in accordance with the
following schedule:
<TABLE>
<CAPTION>
Anniversary of Percentage of Option Shares
Grant Date Available for Purchase
-------------- ---------------------------
<S> <C>
1st 25%
2nd 50%
3rd 75%
4th 100%
</TABLE>
Notwithstanding the foregoing, all Option Shares shall become available for
purchase if Grantee's employment with the Company and its Subsidiaries (i)
shall terminate by reason of (x) termination by the Company without cause (as
defined in Section 10.2(b) of the Plan), (y) termination by Grantee for good
reason (as defined herein) or (z) Disability, (ii) shall terminate pursuant to
provisions of a written employment agreement, if any, between the Grantee and
the Company which expressly permit the Grantee to terminate such employment
-2-
<PAGE> 15
upon the occurrence of specified events (other than the giving of notice and
passage of time), or (iii) if Grantee dies while employed by the Company or a
Subsidiary.
(b) A Tandem SAR with respect to an Option Share shall be
exercisable only if the Option Share is then available for purchase in
accordance with subparagraph (a).
(c) To the extent the Option or Tandem SARs become
exercisable, such Option or Tandem SARs may be exercised in whole or in part
(at any time or from time to time, except as otherwise provided herein) until
expiration of the Option Term or earlier termination thereof.
(d) Grantee acknowledges and agrees that the Committee
may, in its discretion and as contemplated by Section 7.5 of the Plan, adopt
rules and regulations from time to time after the date hereof with respect to
the exercise of SARs and that the exercise by Grantee of the Tandem SARs will
be subject to the further condition that such exercise is made in accordance
with all such rules and regulations as the Committee may determine are
applicable thereto.
5. MANNER OF EXERCISE. The Option or a Tandem SAR shall
be considered exercised (as to the number of Option Shares or Tandem SARs
specified in the notice referred to in subparagraph (a) below) on the latest of
(i) the date of exercise designated in the written notice referred to in
subparagraph (a) below, (ii) if the date so designated is not a business day,
the first business day following such date or (iii) the earliest business day
by which the Company has received all of the following:
(a) Written notice, in such form as the Committee may
require, designating, among other things, the date of exercise, the number of
Option Shares to be purchased and/or the number of Tandem SARs to be exercised;
(b) If the Option is to be exercised, payment of the
Option Price for each Option Share to be purchased in cash or in such other
form, or combination of forms, of payment contemplated by Section 6.6(a) of the
Plan as the Committee may permit; provided, however, that any shares of Common
Stock or Class B Stock delivered in payment of the Option Price, if such form
of payment is so permitted by the Committee, shall be shares that the Grantee
has owned for a period of at least six months prior to the date of exercise,
and provided, further, that, notwithstanding clause (v) of Section 6.6(a) of
the Plan, Option Shares may not be withheld in payment or partial payment of
the Option Price; and
(c) Any other documentation that the Committee may
reasonably require.
Notwithstanding the foregoing, if in order to meet the
exemptive requirements of Rule 16b-3, the Grantee exercises Tandem SARs during
a quarterly window period determined in accordance with paragraph (e)(3) of
such Rule (including by designating in a written notice of exercise delivered
prior thereto that such exercise is to be effective during
-3-
<PAGE> 16
such window period), then the date of exercise of such Tandem SARs shall be
deemed for purposes of this paragraph 5 and for purposes of the Fair Market
Value determinations to be made pursuant to paragraph 2 hereof, to be the day
during such window period on which the highest reported last sale price of a
share of Common Stock as reported on NASDAQ occurred and the Fair Market Value
of such share shall be deemed to be such highest reported last sale price.
6. MANDATORY WITHHOLDING FOR TAXES. Grantee
acknowledges and agrees that the Company shall deduct from the cash and/or
shares of Common Stock otherwise payable or deliverable upon exercise of the
Option or a Tandem SAR an amount of cash and/or number of shares of Common
Stock (valued at their Fair Market Value on the date of exercise) that is equal
to the amount of all federal, state and local taxes required to be withheld by
the Company upon such exercise, as determined by the Committee.
7. DELIVERY BY THE COMPANY. As soon as practicable
after receipt of all items referred to in paragraph 5, and subject to the
withholding referred to in paragraph 6, the Company shall deliver to the
Grantee certificates issued in Grantee's name for the number of Option Shares
purchased by exercise of the Option and for the number of shares of Common
Stock to which the Grantee is entitled by the exercise of Tandem SARs and any
cash payment to which the Grantee is entitled by the exercise of Tandem SARs.
If delivery is by mail, delivery of shares of Common Stock shall be deemed
effected for all purposes when a stock transfer agent of the Company shall have
deposited the certificates in the United States mail, addressed to the Grantee,
and any cash payment shall be deemed effected when a Company check, payable to
Grantee and in an amount equal to the amount of the cash payment, shall have
been deposited in the United States mail, addressed to the Grantee.
8. EARLY TERMINATION OF OPTION AND TANDEM SARS. Unless
otherwise determined by the Committee in its sole discretion, the Option and
Tandem SARs shall terminate, prior to the expiration of the Option Term, at the
time specified below:
(a) If Grantee's employment with the Company and its
Subsidiaries terminates (i) other than (x) by the Company for "cause" (as
defined in Section 10.2(b) of the Plan), (y) by the Grantee with "good reason"
(as defined herein) or (z) by the Company without cause, and (ii) other than
(x) by reason of death or Disability, (y) with the written consent of the
Company or the applicable Subsidiary or (z) without such consent if such
termination is pursuant to provisions of a written employment agreement, if
any, between the Grantee and the Company which expressly permit the Grantee to
terminate such employment upon the occurrence of specified events (other than
the giving of notice and passage of time), then the Option and all Tandem SARs
shall terminate at the Close of Business on the first business day following
the expiration of the 90-day period which began on the date of termination of
Grantee's employment;
(b) If Grantee dies while employed by the Company or a
Subsidiary, or prior to the expiration of a period of time following
termination of Grantee's employment during
-4-
<PAGE> 17
which the Option and Tandem SARs remain exercisable as provided in paragraph
(a), the Option and all Tandem SARs shall terminate at the Close of Business on
the first business day following the expiration of the one-year period which
began on the date of death;
(c) If Grantee's employment with the Company terminates
by reason of Disability, then the Option and all Tandem SARs shall terminate at
the Close of Business on the first business day following the expiration of the
one-year period which began on the date of termination of Grantee's employment;
(d) If Grantee's employment with the Company and its
Subsidiaries is terminated by the Company for "cause" (as defined in Section
10.2(b) of the Plan), then the Option and all Tandem SARs shall terminate
immediately upon such termination of Grantee's employment; or
(e) If Grantee's employment (i) is terminated by Grantee
(x) with "good reason" (as defined herein), (y) with the written consent of the
Company or the applicable Subsidiary or (z) pursuant to provisions of a written
employment agreement, if any, between the Grantee and the Company which
expressly permit the Grantee to terminate such employment upon the occurrence
of specified events (other than the giving of notice and passage of time), or
(ii) by the Company without "cause" (as defined in Section 10.2(b) of the
Plan), then the Option Term shall terminate early only as provided for in
paragraph 8(b) or 12(b) below.
In any event in which the Option and Tandem SARs remain
exercisable for a period of time following the date of termination of Grantee's
employment as provided above, the Option and Tandem SARs may be exercised
during such period of time only to the extent the same were exercisable as
provided in paragraph 4 above on such date of termination of Grantee's
employment. A change of employment is not a termination of employment within
the meaning of this paragraph 8 provided that, after giving effect to such
change, the Grantee continues to be an employee of the Company or any
Subsidiary. Notwithstanding any period of time referenced in this paragraph 8
or any other provision of this paragraph that may be construed to the contrary,
the Option and all Tandem SARs shall in any event terminate upon the expiration
of the Option Term.
"Good reason" for purposes of the Agreement shall be deemed to
have occurred upon the happening of any of the following:
(i) any reduction in Grantee's annual rate of salary;
(ii) either (x) a failure of the Company to continue in
effect any employee benefit plan in which Grantee was participating or
(y) the taking of any action by the Company that would adversely
affect Grantee's participation in, or materially reduce Grantee's
benefits under, any such employee benefit
-5-
<PAGE> 18
plan, unless such failure or such taking of any action, adversely
affects the senior members of the corporate management of the Company
generally;
(iii) the assignment to Grantee of duties and
responsibilities that are materially more oppressive or onerous than
those attendant to Grantee's position immediately after the date
hereof;
(iv) the relocation of the office location as assigned to
Grantee by the Company to a location more than 20 miles from Grantee's
current location without Grantee's consent; or
(v) the failure of the Company to obtain, prior to the
time of any reorganization, merger, consolidation, disposition of all
or substantially all of the assets of the Company or similar
transaction effective after the date hereof, in which the Company is
not the surviving person, the unconditional assumption in writing or
by operation of law of the Company's obligations to Grantee under this
Agreement by each direct successor to the Company in any such
transaction.
9. AUTOMATIC EXERCISE OF TANDEM SARS. Immediately prior
to the termination of the Option, as provided in paragraph 8 above, or the
expiration of the Option Term, all remaining Tandem SARs shall be deemed to
have been exercised by the Grantee.
10. NONTRANSFERABILITY OF OPTION AND TANDEM SARS. During
Grantee's lifetime, the Option and Tandem SARs are not transferable
(voluntarily or involuntarily) other than pursuant to a qualified domestic
relations order and, except as otherwise required pursuant to a qualified
domestic relations order, are exercisable only by the Grantee or Grantee's
court appointed legal representative. The Grantee may designate a beneficiary
or beneficiaries to whom the Option and Tandem SARs shall pass upon Grantee's
death and may change such designation from time to time by filing a written
designation of beneficiary or beneficiaries with the Committee on the form
annexed hereto as Exhibit B or such other form as may be prescribed by the
Committee, provided that no such designation shall be effective unless so filed
prior to the death of Grantee. If no such designation is made or if the
designated beneficiary does not survive the Grantee's death, the Option and
Tandem SARs shall pass by will or the laws of descent and distribution.
Following Grantee's death, the Option and any Tandem SARs, if otherwise
exercisable, may be exercised by the person to whom such option or right passes
accordingly to the foregoing and such person shall be deemed the Grantee for
purposes of any applicable provisions of this Agreement.
11. NO SHAREHOLDER RIGHTS. The Grantee shall not be
deemed for any purpose to be, or to have any of the rights of, a stockholder of
the Company with respect to any shares of Common Stock as to which this
Agreement relates until such shares shall have been issued to Grantee by the
Company. Furthermore, the existence of this Agreement shall not affect in any
way the right or power of the Company or its stockholders to accomplish any
corporate act, including, without limitation, the acts referred to in Section
10.18 of the Plan.
-6-
<PAGE> 19
12. ADJUSTMENTS.
(a) The Option and Tandem SARs shall be subject to
adjustment (including, without limitation, as to the number of Option Shares
and the Option Price per share) in the sole discretion of the Committee and in
such manner as the Committee may deem equitable and appropriate in connection
with the occurrence of any of the events described in Section 4.2 of the Plan
following the Grant Date.
(b) In the event of any Approved Transaction, Board
Change or Control Purchase, the Option and all Tandem SARs shall become
exercisable in full without regard to paragraph 4(a); provided, however, that
to the extent not theretofore exercised the Option and all Tandem SARs shall
terminate upon the first to occur of the consummation of the Approved
Transaction, the expiration of the Option Term or the earlier termination of
the Option and Tandem SARs pursuant to paragraph 8 hereof. Notwithstanding the
foregoing, the Committee may, in its discretion, determine that the Option and
Tandem SARs will not become exercisable on an accelerated basis in connection
with an Approved Transaction and/or will not terminate if not exercised prior
to consummation of the Approved Transaction, if the Board or the surviving or
acquiring corporation, as the case may be, shall have taken or made effective
provision for the taking of such action as in the opinion of the Committee is
equitable and appropriate to substitute a new Award for the Award evidenced by
this Agreement or to assume this Agreement and the Award evidenced hereby and
in order to make such new or assumed Award, as nearly as may be practicable,
equivalent to the Award evidenced by this Agreement as then in effect (but
before giving effect to any acceleration of the exercisability hereof unless
otherwise determined by the Committee), taking into account, to the extent
applicable, the kind and amount of securities, cash or other assets into or for
which the Common Stock may be changed, converted or exchanged in connection
with the Approved Transaction.
13. RESTRICTIONS IMPOSED BY LAW. Without limiting the
generality of Section 10.9 of the Plan, the Grantee agrees that Grantee will
not exercise the Option or any Tandem SAR and that the Company will not be
obligated to deliver any shares of Common Stock or make any cash payment, if
counsel to the Company determines that such exercise, delivery or payment
would violate any applicable law or any rule or regulation of any governmental
authority or any rule or regulation of, or agreement of the Company with, any
securities exchange or association upon which the Common Stock is listed or
quoted. Except as provided in Section 10.9 of the Plan, the Company shall in
no event be obligated to take any affirmative action in order to cause the
exercise of the Option or any Tandem SAR or the resulting delivery of shares
of Common Stock or other payment to comply with any such law, rule, regulation
or agreement.
14. NOTICE. Unless the Company notifies the Grantee in
writing of a different procedure, any notice or other communication to the
Company with respect to this Agreement shall be in writing and shall be:
-7-
<PAGE> 20
(i) delivered personally to the following address:
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111-3000
and conspicuously marked "Tele-Communications, Inc.
1992 Stock Incentive Plan, c/o General Counsel"; or
(ii) sent by first class mail, postage prepaid, and
addressed as follows:
Tele-Communications, Inc. 1992
Stock Incentive Plan
c/o General Counsel, Tele-Communications,
Inc.
P. O. Box 5630
Denver, Colorado 80217
Any notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delivered personally, or shall be sent by
first class mail, postage prepaid, to Grantee's address as listed in the
records of the Company or the employing Subsidiary on the Grant Date, unless
the Company has received written notification from the Grantee of a change of
address.
15. AMENDMENT. Notwithstanding any other provisions
hereof, this Agreement may be supplemented or amended from time to time as
approved by the Committee as contemplated by Section 10.8(b) of the Plan.
Without limiting the generality of the foregoing, without the consent of the
Grantee,
(a) this Agreement may be amended or supplemented (i) to
cure any ambiguity or to correct or supplement any provision herein which may
be defective or inconsistent with any other provision herein, or (ii) to add to
the covenants and agreements of the Company for the benefit of Grantee or
surrender any right or power reserved to or conferred upon the Company in this
Agreement, subject, however, to any required approval of the Company's
stockholders and, provided, in each case, that such changes or corrections
shall not adversely affect the rights of Grantee with respect to the Award
evidenced hereby, or (iii) to make such other changes as the Company, upon
advice of counsel, determines are necessary or advisable because of the
adoption or promulgation of, or change in or of the interpretation of, any law
or governmental rule or regulation, including any applicable federal or state
securities laws; and
(b) subject to Section 10.8(b) of the Plan and any
required approval of the Company's stockholders, the Award evidenced by this
Agreement may be cancelled by the Committee and a new Award made in
substitution therefor, provided that the Award so substituted shall satisfy all
of the requirements of the Plan as of the date such new Award is
-8-
<PAGE> 21
made and no such action shall adversely affect the Option or any Tandem SAR to
the extent then exercisable.
16. GRANTEE EMPLOYMENT. Nothing contained in this
Agreement, and no action of the Company or the Committee with respect hereto,
shall confer or be construed to confer on the Grantee any right to continue in
the employ of the Company or any of its Subsidiaries or interfere in any way
with the right of the Company or any employing Subsidiary to terminate the
Grantee's employment at any time, with or without cause; subject, however, to
the provisions of any employment agreement between the Grantee and the Company
or any Subsidiary.
17. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of Colorado.
18. CONSTRUCTION. References in this Agreement to "this
Agreement" and the words "herein," "hereof," "hereunder" and similar terms
include all Exhibits and Schedules appended hereto, including the Plan. This
Agreement is entered into, and the Award evidenced hereby is granted, pursuant
to the Plan and shall be governed by and construed in accordance with the Plan
and the administrative interpretations adopted by the Committee thereunder.
All decisions of the Committee upon questions regarding the Plan or this
Agreement shall be conclusive. Unless otherwise expressly stated herein, in
the event of any inconsistency between the terms of the Plan and this
Agreement, the terms of the Plan shall control. The headings of the paragraphs
of this Agreement have been included for convenience of reference only, are not
to be considered a part hereof and shall in no way modify or restrict any of
the terms or provisions hereof.
19. DUPLICATE ORIGINALS. The Company and the Grantee may
sign any number of copies of this Agreement. Each signed copy shall be an
original, but all of them together represent the same agreement.
20. RULES BY COMMITTEE. The rights of the Grantee and
obligations of the Company hereunder shall be subject to such reasonable rules
and regulations as the Committee may, subject to the express provisions of the
Plan, adopt from time to time hereafter.
-9-
<PAGE> 22
21. GRANTEE ACCEPTANCE. Grantee shall signify acceptance
of the terms and conditions of this Agreement by signing in the space provided
below and returning a signed copy to the Company.
ATTEST: TELE-COMMUNICATIONS, INC.
_________________________ By:_________________________________
Assistant Secretary Name:
Title:
ACCEPTED:
____________________________________
Grantee
-10-
<PAGE> 23
Schedule 1 to Non-Qualified Stock Option
and Stock Appreciation Rights Agreement
dated as of October 12, 1993
TELE-COMMUNICATIONS, INC. 1992 STOCK INCENTIVE PLAN
Grantee:
Grant Date: October 12, 1993
Option Price: $16.75 per share
Option Shares: __________ shares of the Company's Class A
Common Stock, $1.00 par value per share
-11-
<PAGE> 24
Exhibit B to Non-Qualified Stock Option
and Stock Appreciation Rights Agreement
dated as of October 12, 1993
TELE-COMMUNICATIONS, INC. 1992 STOCK INCENTIVE PLAN
DESIGNATION OF BENEFICIARY
I, __________________________________ (the "Grantee"), hereby declare
that upon my death ____________________________________ (the "Beneficiary") of
Name
_____________________________________________________________________________,
Street Address City State Zip Code
who is my __________________________________________, shall be entitled to the
Relationship to Grantee
Option, Tandem SARs and all other rights accorded the Grantee by the
above-referenced grant agreement (the "Agreement").
It is understood that this Designation of Beneficiary is made pursuant
to the Agreement and is subject to the conditions stated herein, including the
Beneficiary's survival of the Grantee's death. If any such condition is not
satisfied, such rights shall devolve according to the Grantee's will or the
laws of descent and distribution.
It is further understood that all prior designations of beneficiary
under the Agreement are hereby revoked and that this Designation of Beneficiary
may only be revoked in writing, signed by the Grantee, and filed with the
Company prior to the Grantee's death.
_______________________________ __________________________________________
Date Grantee
<PAGE> 25
TELE-COMMUNICATIONS, INC.
NON-QUALIFIED STOCK OPTION
AND STOCK APPRECIATION RIGHTS AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 12th day of
October, 1993, by and between TELE-COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), and JEROME H. KERN (the "Grantee").
The Company has adopted the Tele-Communications, Inc. 1992
Stock Incentive Plan (the "Plan"), a copy of which is appended to this
Agreement as Exhibit A. Capitalized terms used and not otherwise defined
herein shall have the meaning ascribed thereto in the Plan.
The Board of Directors of the Company has determined that it
would be in the interest of the Company and its stockholders to grant the
options and rights provided herein in order to provide Grantee with additional
remuneration for non-legal services rendered, to encourage Grantee to become a
member of the Board and to increase Grantee's personal interest in the
continued success and progress of the Company.
The Company and Grantee therefore agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions
herein, the Company grants to the Grantee, during the period commencing
on the Grant Date (as defined in Schedule 1 hereto) and expiring at 5:00 p.m.,
Denver, Colorado time ("Close of Business") on the day which immediately
precedes the fifth anniversary of the Grant Date (the "Option Term"), subject
to earlier termination as provided in paragraphs 8 and 12(b) below, an option
to purchase from the Company, at the price per share set forth on Schedule 1
hereto (the "Option Price"), the number of shares of Common Stock set forth on
said Schedule 1 (the "Option Shares"). The Option Price and Option Shares are
subject to adjustment pursuant to paragraph 12 below. This option is as a
"Nonqualified Stock Option" and is hereinafter referred to as the "Option".
2. GRANT OF STOCK APPRECIATION RIGHTS. Subject to the
terms and conditions herein and in tandem with the Option, the Company grants
to Grantee for the Option Term, subject to earlier termination as provided in
paragraphs 8 and 12(b) below, a stock appreciation right with respect to each
Option Share (individually, a "Tandem SAR" and collectively, the "Tandem
SARs"). Upon exercise of a Tandem SAR in accordance with this Agreement, the
Company shall, subject to paragraph 6 below, make payment as follows:
(i) the amount of payment shall equal the amount
by which the Fair Market Value of the Option Share on the date
of exercise if the Tandem SAR exceeds the Option Price; and
-1-
<PAGE> 26
(ii) payment of the amount determined in
accordance with clause (i) shall be made in shares of Common
Stock (valued at their Fair Market Value as of the date of
exercise of such Tandem SAR), or, in the sole discretion of
the Committee, in cash, or partly in cash and partly in shares
of Common Stock.
3. REDUCTION UPON EXERCISE. The exercise of any number
of Tandem SARs shall cause a corresponding reduction in the number of Option
Shares which shall apply against the Option Shares then available for purchase.
The exercise of the Option to purchase any number of Option Shares shall cause
a corresponding reduction in the number of Tandem SARs.
4. CONDITIONS OF EXERCISE. The Option and Tandem SARs
are exercisable only in accordance with the conditions stated in this
paragraph.
(a) Except as otherwise provided in paragraph
12(b) below or in the last sentence of this subparagraph (a), 20% of the shares
subject to the Option shall be exercisable on the Grant Date and the remaining
shares subject to the Option shall not be exercisable until the first
anniversary of the Grant Date, and on such first anniversary and thereafter the
Option may only be exercised to the extent the Option Shares have become
available for purchase in accordance with the following schedule:
<TABLE>
<CAPTION>
Anniversary of Percentage of Option Shares
Grant Date Available for Purchase
-------------- ---------------------------
<S> <C>
1st 40%
2nd 60%
3rd 80%
4th 100%
</TABLE>
Notwithstanding the foregoing, all Option Shares shall become available for
purchase if Grantee's status as a member of the Board (or of the board of
directors of any successor to the Company) shall terminate for any reason other
than Grantee's voluntarily terminating such status.
(b) A Tandem SAR with respect to an Option Share
shall be exercisable only if the Option Share is then available for purchase in
accordance with subparagraph (a).
(c) To the extent the Option or Tandem SARs
become exercisable, such Option or Tandem SARs may be exercised in whole or in
part (at any time or from time to time, except as otherwise provided herein)
until expiration of the Option Term or earlier termination thereof.
5. MANNER OF EXERCISE. The Option or a Tandem SAR shall
be considered exercised (as to the number of Option Shares or Tandem SARs
specified in the notice referred to in subparagraph (a) below) on the latest of
(i) the date of exercise designated in the written notice referred to in
subparagraph (a) below, (ii) if the date so designated is not a business day,
-2-
<PAGE> 27
the first business day following such date or (iii) the earliest business day
by which the Company has received all of the following:
(a) Written notice, in such form as the
Compensation Committee of the Board (the "Committee") may require, designating,
among other things, the date of exercise, the number of Option Shares to be
purchased and/or the number of Tandem SARs to be exercised;
(b) If the Option is to be exercised, payment of
the Option Price for each Option Share to be purchased in cash or in such other
form, or combination of forms, of payment contemplated by Section 6.6(a) of the
Plan as the Committee may permit; provided, however, that any shares of Common
Stock or Class B Stock delivered in payment of the Option Price, if such form
of payment is so permitted by the Committee, shall be shares that the Grantee
has owned for a period of at least six months prior to the date of exercise,
and provided, further, that, notwithstanding clause (v) of Section 6.6(a) of
the Plan, Option Shares may not be withheld in payment or partial payment of
the Option Price; and
(c) Any other documentation that the Committee
may reasonably require.
6. MANDATORY WITHHOLDING FOR TAXES. Grantee
acknowledges and agrees that the Company shall deduct from the cash and/or
shares of Common Stock otherwise payable or deliverable upon exercise of the
Option or a Tandem SAR an amount of cash and/or number of shares of Common
Stock (valued at their Fair Market Value on the date of exercise) that is equal
to the amount of all federal, state and local taxes required to be withheld by
the Company upon such exercise, as determined by the Committee.
7. DELIVERY BY THE COMPANY. As soon as practicable
after receipt of all items referred to in paragraph 5, and subject to the
withholding referred to in paragraph 6, the Company shall deliver to the
Grantee certificates issued in Grantee's name for the number of Option Shares
purchased by exercise of the Option and for the number of shares of Common
Stock to which the Grantee is entitled by the exercise of Tandem SARs and any
cash payment to which the Grantee is entitled by the exercise of Tandem SARs.
If delivery is by mail, delivery of shares of Common Stock shall be deemed
effected for all purposes when a stock transfer agent of the Company shall have
deposited the certificates in the United States mail, addressed to the Grantee,
and any cash payment shall be deemed effected when a Company check, payable to
Grantee and in an amount equal to the amount of the cash payment, shall have
been deposited in the United States mail, addressed to the Grantee.
8. EARLY TERMINATION OF OPTION AND TANDEM SARS. Unless
otherwise determined by the Committee in its sole discretion, the Option and
Tandem SARs shall terminate, prior to the expiration of the Option Term, only
if Grantee's status as a member of the Board (or of the board of directors of
any successor to the Company) is terminated voluntarily by Grantee.
-3-
<PAGE> 28
In any event in which the Option and Tandem SARs remain
exercisable for a period of time following the Grantee's voluntary termination
of his status as a member of the Board, the Option and Tandem SARs may be
exercised during such period of time only to the extent the same were
exercisable as provided in paragraph 4 above on such date of termination of
Grantee's status. Notwithstanding any period of time referenced in this
paragraph 8 or any other provision of this paragraph that may be construed to
the contrary, the Option and all Tandem SARS shall in any event terminate upon
the expiration of the Option Term.
9. AUTOMATIC EXERCISE OF TANDEM SARS. Immediately prior
to the termination of the Option, as provided in paragraph 8 above, or the
expiration of the Option Term, all remaining Tandem SARs shall be deemed to
have been exercised by the Grantee.
10. NONTRANSFERABILITY OF OPTION AND TANDEM SARS. During
Grantee's lifetime, the Option and Tandem SARs are not transferable
(voluntarily or involuntarily) other than pursuant to a qualified domestic
relations order and, except as otherwise required pursuant to a qualified
domestic relations order, are exercisable only by the Grantee or Grantee's
court appointed legal representative. The Grantee may designate a beneficiary
or beneficiaries to whom the Option and Tandem SARs shall pass upon Grantee's
death and may change such designation from time to time by filing a written
designation of beneficiary or beneficiaries with the Committee on the form
annexed hereto as Exhibit B or such other form as may be prescribed by the
Committee, provided that no such designation shall be effective unless so filed
prior to the death of Grantee. If no such designation is made or if the
designated beneficiary does not survive the Grantee's death, the Option and
Tandem SARs shall pass by will or the laws of descent and distribution.
Following Grantee's death, the Option and any Tandem SARs, if otherwise
exercisable, may be exercised by the person to whom such option or right passes
accordingly to the foregoing and such person shall be deemed the Grantee for
purposes of any applicable provisions of this Agreement.
11. NO SHAREHOLDER RIGHTS. The Grantee shall not be
deemed for any purpose to be, or to have any of the rights of, a stockholder of
the Company with respect to any shares of Common Stock as to which this
Agreement relates until such shares shall have been issued to Grantee by the
Company. Furthermore, the existence of this Agreement shall not affect in any
way the right or power of the Company or its stockholders to accomplish any
corporate act, including, without limitation, the acts referred to in Section
10.18 of the Plan.
12. ADJUSTMENTS.
(a) The Option and Tandem SARs shall be subject
to adjustment (including, without limitation, as to the number of Option Shares
and the Option Price per share) in the sole discretion of the Committee and in
such manner as the Committee may deem equitable and appropriate in connection
with the occurrence of any of the events described in Section 4.2 of the Plan
following the Grant Date.
-4-
<PAGE> 29
(b) In the event of any Approved Transaction,
Board Change or Control Purchase, the Option and all Tandem SARs shall become
exercisable in full without regard to paragraph 4(a); provided, however, that
to the extent not theretofore exercised the Option and all Tandem SARs shall
terminate upon the first to occur of the consummation of the Approved
Transaction, the expiration of the Option Term or the earlier termination of
the Option and Tandem SARs pursuant to paragraph 8 hereof. Notwithstanding the
foregoing, the Committee may, in its discretion, determine that the Option and
Tandem SARs will not become exercisable on an accelerated basis in connection
with an Approved Transaction and/or will not terminate if not exercised prior
to consummation of the Approved Transaction, if the Board or the surviving or
acquiring corporation, as the case may be, shall have taken or made effective
provision for the taking of such action as in the opinion of the Committee is
equitable and appropriate to substitute a new Award for the Award evidenced by
this Agreement or to assume this Agreement and the Award evidenced hereby and
in order to make such new or assumed Award, as nearly as may be practicable,
equivalent to the Award evidenced by this Agreement as then in effect (but
before giving effect to any acceleration of the exercisability hereof unless
otherwise determined by the Committee), taking into account, to the extent
applicable, the kind and amount of securities, cash or other assets into or for
which the Common Stock may be changed, converted or exchanged in connection
with the Approved Transaction.
13. RESTRICTIONS IMPOSED BY LAW. Without limiting the
generality of Section 10.9 of the Plan, the Grantee agrees that Grantee will
not exercise the Option or any Tandem SAR and that the Company will not be
obligated to deliver any shares of Common Stock or make any cash payment, if
counsel to the Company determines that such exercise, delivery or payment would
violate any applicable law or any rule or regulation of any governmental
authority or any rule or regulation of, or agreement of the Company with, any
securities exchange or association upon which the Common Stock is listed or
quoted. The Company shall in no event be obligated to take any affirmative
action in order to cause the exercise of the Option or any Tandem SAR or the
resulting delivery of shares of Common Stock or other payment to comply with
any such law, rule, regulation or agreement.
14. NOTICE. Unless the Company notifies the Grantee in
writing of a different procedure, any notice or other communication to the
Company with respect to this Agreement shall be in writing and shall be:
(i) delivered personally to the following address:
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111-3000
-5-
<PAGE> 30
or
(ii) sent by first class mail, postage prepaid and
addressed as follows
Tele-Communications, Inc.
c/o General Counsel,
Tele-Communications, Inc.
P. O. Box 5630
Denver, Colorado 80217
Any notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delive
red personally, or shall be sent by
first class mail, postage prepaid, to Grantee's address as listed in the
records of the Company on the Grant Date, unless the Company has received
written notification from the Grantee of a change of address.
15. AMENDMENT. Notwithstanding any other provisions
hereof, this Agreement may not be supplemented or amended from time to time
without the consent of the Grantee.
16. GRANTEE STATUS AS A DIRECTOR. Nothing contained in
this Agreement, and no action of the Company or the Committee with respect
hereto, shall confer or be construed to confer on the Grantee any right to
continue as a member of the Board or interfere in any way with the right of the
Company to terminate the Grantee's status as a member of the Board at any time,
with or without cause; subject, however, to the provisions of applicable law.
17. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of Colorado.
18. CONSTRUCTION. References in this Agreement to "this
Agreement" and the words "herein", "hereof", "hereunder" and similar terms
include all Exhibits and Schedules appended hereto. The headings of the
paragraphs of this Agreement have been included for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
19. DUPLICATE ORIGINALS. The Company and the Grantee may
sign any number of copies of this Agreement. Each signed copy shall be an
original, but all of them together represent the same agreement.
20. RULES BY COMMITTEE. The rights of the Grantee and
obligations of the Company hereunder shall be subject to such reasonable rules
and regulations as the Committee may adopt from time to time hereafter.
-6-
<PAGE> 31
21. GRANTEE ACCEPTANCE. Grantee shall signify acceptance
of the terms and conditions of this Agreement by signing in the space provided
below and returning a signed copy to the Company.
ATTEST: TELE-COMMUNICATIONS, INC.
_________________________ By:_______________________________
Assistant Secretary Name:
Title:
ACCEPTED:
__________________________________
Jerome H. Kern, Grantee
-7-
<PAGE> 32
Schedule 1 to Non-Qualified Stock Option
and Stock Appreciation Rights Agreement
dated as of October 12, 1993
TELE-COMMUNICATIONS, INC.
Grantee:
Grant Date: October 12, 1993
Option Price: $16.75 per share
Option Shares: 2,000,000 shares of the Company's Class A
Common Stock, $1.00 par value per share
<PAGE> 33
Exhibit B to Non-Qualified Stock Option
and Stock Appreciation Rights Agreement
dated as of October 12, 1993
TELE-COMMUNICATIONS, INC.
DESIGNATION OF BENEFICIARY
I, __________________________ (the "Grantee") hereby declare,
that upon my death ____________________________________ (the "Beneficiary") of
Name
____________________________________ __________________________________________
Street Address City State Zip Code
who is my ___________________________________________, shall be entitled to the
Relationship to Grantee
Option, Tandem SARs, and all other rights accorded the Grantee by the above
referenced grant agreement (the "Agreement").
It is understood that this Designation of Beneficiary is made
pursuant to the Agreement and is subject to the conditions stated herein
including the Beneficiary's survival of the Grantee's death. If any such
condition is not satisfied, such rights shall devolve according to the
Grantee's will or the laws of descent and distribution.
It is further understood that all prior designations of
beneficiary under the Agreement are hereby revoked and that this Designation of
Beneficiary may only be revoked in writing, signed by the Grantee, and filed
with the Company prior to the Grantee's death.
_______________________________ __________________________________________
Date Grantee
<PAGE> 34
FORM OF AGREEMENT
INDEMNIFICATION AGREEMENT
This AGREEMENT is made and entered into this _____ day of
_________, 1994, by and between Tele-Communications, Inc., a Delaware
corporation (the "Company"), and [name of director] (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and attract
as directors the most capable persons available;
WHEREAS, Indemnitee is a director of the Company;
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims routinely being asserted against
directors of public companies in today's environment, and the attendant costs
of defending even wholly frivolous claims;
WHEREAS, it has become increasingly difficult to obtain
insurance against the risk of personal liability of directors on terms
providing reasonable protection at reasonable cost;
WHEREAS, the Bylaws of the Company provide certain
indemnification rights to the directors of the Company, and its directors have
been otherwise assured indemnification, as provided by Delaware law;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's
continued service to the Company in an effective manner, the increasing
difficulty in obtaining and maintaining satisfactory insurance coverage, and
Indemnitee's reliance on past assurances of indemnification, the Company wishes
to provide in this Agreement for the indemnification of and the advancing of
expenses to Indemnitee to the fullest extent permitted by law (whether partial
or complete) and as set forth in this Agreement, and, to the extent insurance
is maintained, for the continued coverage of Indemnitee under the Company's
directors' and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and Indemnitee's continuing to serve
as a director of the Company, the parties hereto agree as follows:
1. Certain Definitions:
(a) Change in Control: shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended), other
than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned directly or
indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under such
Act), directly or indirectly, of securities of the Company
representing 20% or more of the total voting power represented by the
Company's then outstanding Voting Securities (other than any such
person or any affiliate thereof that is such a 20% beneficial owner as
of the date hereof), or (ii) during any period of two consecutive
years,
<PAGE> 35
individuals who at the beginning of such period constitute the Board
of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the Voting
Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 80%
of the total voting power represented by the Voting Securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation, or the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of (in one transaction or a series
of transactions) all or substantially all the Company's assets.
(b) Claim: any threatened, pending or completed
action, suit or proceeding, whether instituted by the Company or any
other party, or any inquiry or investigation that Indemnitee in good
faith believes might lead to the institution of any such action, suit
or proceeding, whether civil (including intentional and unintentional
tort claims), criminal, administrative, investigative or other.
(c) Expenses: include attorneys' fees and all
other costs, expenses and obligations paid or incurred in connection
with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or
participate in any Claim relating to any Indemnifiable Event.
(d) Indemnifiable Event: any event or occurrence
related to the fact that Indemnitee is or was a director, officer,
employee, agent or fiduciary of the Company, or is or was serving at
the request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, or by reason of
anything done or not done by Indemnitee in any such capacity.
(e) Independent Legal Counsel: an attorney or
firm of attorneys, selected in accordance with the provisions of
Section 3, who shall not have otherwise performed services for the
Company or Indemnitee within the last five years (other than with
respect to matters concerning the rights of Indemnitee under this
Agreement, or of other indemnitees under similar indemnification
agreements).
(f) Reviewing Party: any appropriate person or
body consisting of a member or members of the Company's Board of
Directors or any other person or body appointed by the Company's Board
of Directors who is not a party to the particular Claim for which
Indemnitee is seeking indemnification, or Independent Legal Counsel.
(g) Voting Securities: any securities of the
Company which vote generally in the election of directors.
-2-
<PAGE> 36
2. Basic Indemnification Arrangement.
(a) In the event Indemnitee was, is or becomes a
party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, a Claim by reason
of (or arising in part out of) an Indemnifiable Event, the Company
shall indemnify Indemnitee to the fullest extent permitted by law as
soon as practicable but in any event no later than thirty days after
written demand is presented to the Company, against any and all
Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable
in connection with or in respect of such Expenses, judgments, fines,
penalties or amounts paid in settlement) of such Claim. If so
requested by Indemnitee, the Company shall advance (within two
business days of such request) any and all Expenses to Indemnitee (an
"Expense Advance").
(b) Notwithstanding the foregoing, (i) the
obligations of the Company under Section 2(a) shall be subject to the
condition that the Reviewing Party shall not have determined (in a
written opinion, in any case in which the Independent Legal Counsel
referred to in Section 3 hereof is involved) that Indemnitee would not
be permitted to be indemnified under applicable law, and (ii) the
obligation of the Company to make an Expense Advance pursuant to
Section 2(a) shall be subject to the condition that, if, when and to
the extent that the Reviewing Party determines that Indemnitee would
not be permitted to be so indemnified under applicable law, the
Company shall be entitled to be reimbursed by Indemnitee (who hereby
agrees to reimburse the Company) for all such amounts theretofore
paid; provided, however, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of competent
jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee
shall not be required to reimburse the Company for any Expense Advance
until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or
lapsed). If there has not been a Change in Control, the Reviewing
Party shall be selected by the Board of Directors, and if there has
been such a Change in Control (other than a Change in Control which
has been approved by a majority of the Company's Board of Directors
who were directors immediately prior to such Change in Control), the
Reviewing Party shall be the Independent Legal Counsel referred to in
Section 3 hereof. If there has been no determination by the Reviewing
Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or in
part under applicable law, Indemnitee shall have the right to commence
litigation in any court in the State of Delaware or the State of
Colorado having subject matter jurisdiction thereof and in which venue
is proper seeking an initial determination by the court or challenging
any such determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company hereby
consents to service of process and agrees to appear in any such
proceeding. Any determination by the Reviewing Party otherwise shall
be conclusive and binding on the Company and Indemnitee.
-3-
<PAGE> 37
3. Change in Control. The Company agrees that if there
is a Change in Control of the Company (other than a Change in Control which has
been approved by a majority of the Company's Board of Directors who were
directors immediately prior to such Change in Control) then with respect to all
matters thereafter arising concerning the rights of Indemnitee to indemnity
payments and Expense Advances under this Agreement or any other agreement or
Company Bylaw now or hereafter in effect relating to Claims for Indemnifiable
Events, the Company shall seek legal advice only from Independent Legal Counsel
selected by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law. The
Company agrees to pay the reasonable fees of the Independent Legal Counsel
referred to above and to fully indemnify such counsel against any and all
expenses (including attorneys' fees), claims, liabilities and damages arising
out of or relating to this Agreement or its engagement pursuant hereto.
4. Indemnification for Additional Expenses. The Company
shall indemnify Indemnitee against any and all expenses (including attorneys'
fees) and, if requested by Indemnitee, shall (within two business days of such
request) advance such expenses to Indemnitee, which are incurred by Indemnitee
in connection with any action brought by Indemnitee for (i) indemnification or
advance payment of Expenses by the Company under this Agreement or any other
agreement or Company Bylaw now or hereafter in effect relating to Claims for
Indemnifiable Events or (ii) recovery under any directors' and officers'
liability insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such indemnification,
advance expense payment or insurance recovery, as the case may be.
5. Partial Indemnity. If Indemnitee is entitled under
any provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines, penalties and amounts paid in
settlement of a Claim but not, however, for all of the total amount thereof,
the Company shall nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Moreover, notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the merits
or otherwise in defense of any or all Claims relating in whole or in part to an
Indemnifiable Event or in defense of any issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith.
6. Burden of Proof. In connection with any
determination by the Reviewing Party or otherwise as to whether Indemnitee is
entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish that Indemnitee is not so entitled.
7. No Presumptions. For purposes of this Agreement, the
termination of any claim, action, suit or proceeding, by judgment, order,
settlement (whether with or without court approval) or conviction, or upon a
plea of nolo contendere, or its equivalent, shall not create a presumption that
Indemnitee did not meet any particular standard of conduct or have any
-4-
<PAGE> 38
particular belief or that a court has determined that indemnification is not
permitted by applicable law. In addition, neither the failure of the Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law shall be a defense to Indemnitee's
claim or create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief.
8. Nonexclusivity; Subsequent Change in Law. The rights
of the Indemnitee hereunder shall be in addition to any other rights Indemnitee
may have under the Company's Bylaws or the General Corporation Law of the State
of Delaware or otherwise. To the extent that a change in the General
Corporation Law of the State of Delaware (whether by statute or judicial
decision) permits greater indemnification by agreement than would be afforded
currently under the Company's Bylaws and this Agreement, it is the intent of
the parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change.
9. Liability Insurance. To the extent the Company
maintains an insurance policy or policies providing directors' and officers'
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
10. Amendments; Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
11. Subrogation. In the event of payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of Indemnitee, who shall execute all papers required
and shall do everything that may be necessary to secure such rights, including
the execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
12. No Duplication of Payments. The Company shall not be
liable under this Agreement to make any payment in connection with any Claim
made against Indemnitee to the extent Indemnitee has otherwise actually
received payment (under any insurance policy, Bylaw or otherwise) of the
amounts otherwise indemnifiable hereunder.
13. Binding Effect. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors (including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
or assets of the Company), assigns, spouses, heirs, executors and personal and
legal representatives. This Agreement shall continue in effect regardless of
whether Indemnitee continues to serve as a director of the Company or of any
other enterprise at the Company's request.
-5-
<PAGE> 39
14. Severability. The provisions of this Agreement shall
be severable in the event that any of the provisions hereof (including any
provision within a single section, paragraph or sentence) is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable in any
respect, and the validity and enforceability of any such provision in every
other respect and of the remaining provisions hereof shall not be in any way
impaired and shall remain enforceable to the fullest extent permitted by law.
15. Effective Date. This Agreement shall be effective as
of the date hereof and shall apply to any claim for indemnification by the
Indemnitee on or after such date.
16. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such state without giving
effect to the principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
TELE-COMMUNICATIONS, INC.
By:_____________________________________
Name:
Title:
_____________________________________
[name of director]
-6-
<PAGE> 1
EXHIBIT 21
A table of the subsidiaries of the Company, as of March 1, 1994, is set
forth below, indicating as to each the state or the jurisdiction of
incorporation or organization ("org.") and the names under which such
subsidiaries do business ("d/b/a"). Subsidiaries not included in the table are
inactive and, considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
1st Cablevision, Inc.
816 Enterprises OK
Alabama T.V. Cable, Inc. AL
American Cable of Redlands Joint Venture CO
American Cable TV Investors 2 CA
American Cable TV Investors 3 CA
American Cable TV Investors 4, Ltd. CO Sun Cablevision
American Cable TV Investors 5, Ltd. CO American Cable TV of Lower
Delaware
American Cable TV of St. Mary's
County
American Heritage Cablevision, Inc. IA
American Microwave & Communications, Inc. MI
American Mobile Systems Incorporated DE
American Movie Classics Investment, Inc. CO
American TeleVenture Corporation CO
American Televenture of Minersville, Inc. CO
American Televenture of Utah, Inc. UT
American Televenture West, Inc. CO
American Televenture, Inc. UT TCI of Colorado, Inc.
Ames Cablevision, Inc. IA TCI of Central Iowa
Andover Cablevision Ltd. UK
Anfel-Kabelkom Kabelcommunikacios KFT HUNGARY
Antares Satellite Corporation CO
ARP Partnership DE
Asia Business News PTE Limited SINGAPORE
Athena Cablevision Corporation of Knoxville TN
</TABLE>
-1-
<PAGE> 2
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
Athena Cablevision of Tennessee and Kentucky, Inc. TN
Athena Realty, Inc. NV
Atlantic American Cablevision of Florida, Inc. FL TCI Cablevision of Pasco County
Atlantic American Cablevision, Inc. DE
Atlantic American Holdings, Inc. FL
Atlantic Cablevision of Florida, Inc. FL
Avon Cable Investments Limited UK
Avon Cable Joint Venture UK
Avon Cable Limited Partnership CO
Baton Rouge Cablevision Associates, L.P. CO
Bay Cable Advertising/Bay Area Interconnect CA
Beamlink Limited UK
Beatrice Cable TV Company NE TCI Cable of Beatrice
Bellevue Cable Television Limited Partnership NE TCI Cable of the Midlands
Bellevue Cable Television Operators, Inc. NE Bellevue Cable Television
Company;
TCI Cable of the Midlands
Bellevue Cablevision, Inc. DE
Billings Tele-Communications, Inc. OR
Birmingham Cable Corporation Limited UK
Birmingham Cable Limited UK
Bitteroot Cable TV, Inc. UT TCI of Colorado, Inc.
Bob Magness, Inc. WY
Bravo Classic Movies Limited UK
Brenmor Cable Partners, L.P. CA
Bresnan Communications Company Limited Partnership MI
Brigand Pictures, Inc. NY
Brookhaven Cable TV, Inc. NY TCI Cable of Brookhaven
Brookings Cablevision CO
Brookside Antenna Company OH
C3W Ltd. UK
C3W (Management) Ltd. UK
C3WW Ltd. UK
Cable Accounting, Inc. CO
Cable AdNet of Puerto Rico, Inc. CO Cable AdNet
Cable AdNet Partners DE Cable AdNet
</TABLE>
-2-
<PAGE> 3
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
Hudson Valley Cable Cable Group
Cable Alarms Ltd. UK
Cable Camden Limited UK
Cable Educational Network, Inc. MD The Discovery Channel
Cable Enfield Limited UK
Cable Guide Limited UK
Cable Hackney and Islington Limited UK
Cable Haringey Limited UK
Cable London PLC UK
Cable Network Television, Inc. NV
Cable North (Forth District) Ltd. UK
Cable Programme Partners-1 Limited Partnership DE
Cable Programme Partners (1) Ltd. UK
Cable Shopping Investment, Inc. CO
Cable Soft Network Corporation JAPAN
Cable Telecom Ltd. UK
Cable Television Advertising Group, Inc. WY
Cable Television of Gary, Inc. IN
Cablephone Ltd. UK
Cabletime, Inc. CO
Cablevision Associates of Gary Joint Venture IN
Cablevision IV, Ltd. IA
Cablevision of Arcadia/Sierra Madre, Inc. DE
Cablevision of Baton Rouge, Ltd. CO United Artists Cable of Baton
Rouge
Cablevision V, Inc. IA
Cablevision VI, Inc. IA TCI of the Heartlands
TCI Cablevision of the Rockies,
Inc.
Cablevision VII, Inc. IA TCI Cablevision of the Rockies,
Inc.
TCI of Eastern Iowa
TCI of the Heartlands
Caguas/Humacao Cable Systems CT
Capital City Cablevision Limited UK
Carver-Scott County Cable, Inc. CA
CAT Partnership DE
CATV Facility Co., Inc. CO
</TABLE>
-3-
<PAGE> 4
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
Century 21 Cable Communitaions Ltd. UK
Channel 64 Acquisition, Inc. DE
Channel 64 Joint Venture OH
Chicago Cable Network Joint Venture IL
Cincinnati Television Incorporated DE
Clinton Cablevision IA
Clinton TV Cable Company, Inc. IA
Colorado Cablevision Company CO TCI of Colorado, Inc.
Colorado Terrace Tower II Corporation CO
Comment Cablevision Tyneside Limited UK
Communication Capital Corp. DE Colorado Communications Capital
Corp.
Communications & Cable of Chicago, Inc. IL Chicago Cable TV
Communications Services, Inc. KS TCI Cablevision of Central Texas
TCI Cablevision of East Oklahoma
TCI Cablevision of North Texas
TCI Cablevision of Northeast
Texas
TCI Cablevision of Oklahoma
(CSI), Inc.
TCI Cablevision of Texas (CSI),
Inc.
TCI Communications Services,
Inc.
TCI of Arkansas
TCI of Arkansas (CSI), Inc.
TCI of Kansas (CSI), Inc.
TCI of Louisiana
TCI of Louisiana (CSI), Inc.
Community Cable Television WY TCI Cablevision of Southwest
Texas
TCI Cablevision of West Oakland
County
Community Realty, Inc. NV Nevada Community Realty, Inc.
Community Television Systems, Inc. DE TCI Cablevision of South Central
Connecticut
Consumer Entertainment Services, Inc. WY
Cork Communications Ltd. IRELAND
Corsair Pictures, Inc. DE Brigand Pictures, Inc.
Cotswold Cable Joint Venture UK
Cotswold Cable Limited Partnership CO
Croydon Cable Venture UK
Crystal Palace Radio Limited UK
</TABLE>
-4-
<PAGE> 5
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
Crystalvision Productions Limited UK
Culross Investments Ltd. IRELAND
Custom Cableventure of Colorado, Inc. CO
DD Cable Holdings, Inc. CA
DD Cable Partners, L.P. CA
Daniels & Associates, Inc. DE
Daniels Baton Rouge Ventures, Inc. CO
Daniels Cablevision of Baker/Zachary, Inc. DE TCI of Louisiana
Daniels Cablevision of Leesville, Inc. DE
Daniels Cablevision of St. Bernard, Inc. LA TCI of Louisiana
Daniels Communications Partners Limited Partnership DE
Daniels-Hauser Holdings CO
Daniels Private Ventures, Inc. CO
Daniels Ventures Five, Inc. CO
Daniels Ventures Four, Inc. CO
Daniels Ventures, Inc. CO
Daniels Woodlands Ventures, Inc. CO
Davis County Cablevision, Inc. UT
DCP-85, Ltd. CO
Digital Direct, Inc. CO TCI Telephony, Inc.
Digital Direct of Chicago, Inc. IL
Digital Direct of Dallas, Inc. TX
Digital Direct of Pittsburgh, Inc. PA Penn Access Corporation
Digital Direct of Seattle, Inc. WA
Direct Broadcast Satellite Services, Inc. DE
Discovery Communications, Inc. MD
Discovery Programming Investment, Inc. CO
Discovery (UK) Limited UK
District Cablevision Limited Partnership DC
Dundee Cable and Satellite Ltd. UK
East Arkansas Cablevision, Inc. AR TCI of Arkansas
East Arkansas Investments, Inc. CO
Eastex Microwave, Inc. TX
East/West Uplink Partnership CO
ECP Holdings, Inc. OK
</TABLE>
-5-
<PAGE> 6
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
Edinburgh Cable Limited Partnership CO
Edinburgh Cablevision Ltd.
Elbert County Cable Partners, L.P. CO TCI of Colorado, Inc.
Estuaries Cable Limited Partnership CO
European Business Network Ltd. UK
Execulines of the Northwest, Inc. WA ENWI
FAB Communications, Inc. OK
Fleximedia Ltd. UK
Flexodrilling (Holdings) Ltd. UK
Flextech Children's Channel Ltd. UK
Flextech Communications Limited UK
Flextech Distribution Ltd. UK
Flextech IVS Ltd. UK
Flextech Media Holdings Ltd. UK
Flextech-Flexinvest Ltd. UK
Flextech (1992) plc UK
Flextech plc UK
Foothills Cablevision Associates, L.P. CO
Foothills Cablevision, Ltd. CO
Four Flags Cable TV MI
Four Flags Cablevision MI
General Communications and Entertainment Company, Inc. DE
Gill Bay Interconnect, Inc. CA
Greater Birmingham Interconnect AL
Greater Portland Interconnect OR
Hadjukabelkom Kabeltelvizio KFT HUNGARY
Halcyon Communications Partners OK
Halcyon Communications Limited Partnership OK
Harbor Communications Joint Venture WA
Hawkeye Communications of Clinton, Inc. IA
Heritage Cable Partners, Inc. IA
Heritage Cablevision Associates, A Limited Partnership IA Indiana Cable Advertising
TCI of Bedford
TCI of Michiana
Heritage Cablevision, Inc. IA TCI of Central Iowa
</TABLE>
-6-
<PAGE> 7
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
TCI of Eastern Iowa
TCI of Northern Iowa
TCI of Southern Iowa
TCI of the Heartlands
Heritage Cablevision, Inc. TX
Heritage Cablevision of California, Inc. DE TCI Cablevision of San Jose
Heritage Cablevision of Colorado, Inc. CO TCI Cablevision of Southern
Colorado, Inc.
Heritage Cablevision of Dallas, Inc. IA
Heritage Cablevision of Delaware, Inc. DE TCI Cablevision of New Castle
County
Heritage Cablevision of Maine II, Inc. ME
Heritage Cablevision of Massachusetts, Inc. MA TCI Cablevision of Andover
Heritage Cablevision of South East Massachusetts, Inc. MA
Heritage Cablevision of Tennessee, Inc. TN TCI of Colorado, Inc.
Heritage Cablevision of Texas, Inc. IA TCI Cablevision of South Texas
Heritage CableVue, Inc. DE TCI Cablevision of New England
Heritage Communications, Inc. IA
Heritage Communications Products Corp. IA
Heritage/Indiana Cablevision, Inc. IA
Heritage Investments, Inc. IA
Heritage ROC Holdings Corp. IA
Hieronymous Limited UK
Hillcrest Cablevision Company OH
HIT Entertainment plc UK
HKP Partners of New Zealand, Limited NZ
Home Sports Network, Inc. CO
Horizon Communications Ltd. IRELAND
Horizon T.V. Distribution Ltd. IRELAND
Independence Cable TV Company MI TCI Cablevision of Oakland
County, Inc.
Independent Wireless Cable Ltd. IRELAND
Interactive Network, Inc. CA
Intermedia Capital Partners III, L.P. CA
Intermedia Partners CA
Intermedia Partners II, L.P. CA
Intermedia Partners III, L.P. CA
Intermedia Partners V, L.P. CA
</TABLE>
-7-
<PAGE> 8
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
Intermedia Partners of Carolina, L.P. CA
Intermedia Partners of Maryland, L.P. CA
Intermedia Partners of West Tennessee, L.P. CA
International Cablecasting Technologies Eurpoe N.V. NETHERLANDS
International Telemeter Corporation NV
Ionian Communications, L.P. DE
IR-Daniels Partners II CA
IR-Daniels Partners III CA
IR-Daniels Partners IV, L.P. CO
IR-Daniels Partners V, L.P. CO
IVS Cable Holdings Ltd. UK
IVS Cable Services Ltd. UK
Jersey Cable Ltd. UK
Kabelkom-Dunaujvaros Kabelcommunikacios KFT HUNGARY
Kabelkom-Szged Kabelcommunikacios KFT HUNGARY
Kabelkom-Veszprem Kabelcommunikacios KFT HUNGARY
Kabelcom Holding Co. DE
Kabelcom Kabeltelevizio KFT HUNGARY
Kabelcom Management Co. DE
Kabelkom Nyireghyaza Kabelcommunikacios KFT HUNGARY
Kabelkom Szekesfehervar Kabelcommunikacios KFT HUNGARY
Kanal 2 A/S NORWAY
Kauai Cablevision HI
Kenniv Securities IRELAND
KFT HUNGARY
Kids Are People Too
Kingdom Cablevision Ltd. UK
Knox Cable T.V., Inc. TN
KTMA-TV, Inc. TX
LaSalle Telecommunications, Inc. IL Chicago Cable TV-IV
L-TCI Associates DE
Lawrence County Cable Partners CO
Liberty Broadcasting, Inc. OR
Liberty of Northern Indiana, Inc. DE
Liberty-CSI, Inc. CO
</TABLE>
-8-
<PAGE> 9
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
London Interconnect Ltd. UK
London South Cable Partnership CO
LVO Cable Properties, Inc. OK
LVOC Management, Inc. OK
Materials Handling Services, Inc. CO Western Communications Materials
Handling Services, Inc.
MCNS Holdings, L.P. NY
Melita Cable Holdings Ltd. MALTA
Melita Partnership CO
Melita Cable TV Ltd. MALTA
Metro Network Ltd. UK
Metro Network (Hounslow) Ltd. UK
Metro Network (Hillingdon) Ltd. UK
Miami Tele-Communications, Inc. FL
Microband United Corporation DE
Micro-Relay, Inc. MD
Microwave Distribution Systems Ltd. IRELAND
Mile Hi Cable Partners, L.P. CO
Middlesex Cable Limited UK
Mid-Kansas, Inc. KS
Mississippi Cablevision, Inc. MS TCI of North Mississippi
Moonlight Bowl, Inc. CA
Mountain Cable Network, Inc. NV Mountain Cable Advertising
Mountain States General Partner Co. CO
Mountain States Limited Partner Co. CO
Mountain States Video CO TCI of Colorado, Inc.
Mountain States Video Communications Co., Inc. CO TCI of Colorado, Inc.
Mountain States Video, Inc. CO TCI of Colorado, Inc.
MSV Subsidiary, Inc. CO
MT Venture I TX
Muskegon Cable TV Co. MI TCI Cablevision of Greater
Michigan, Inc.
Narragansett Cablevision Corporation RI Heritage Cablevision of
Narragansett
National Cable Acquisition Associates, L.P. DE
Netlink International, Inc. CO
Netlink USA CO
Network 21 Ltd. UK
</TABLE>
-9-
<PAGE> 10
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
Newport News Cablevision Associates, L.P. CO
Newport News Cablevision, Ltd. CO United Artists Cablevision of
Newport News
NHT Parntership NY
NorKabel A/S NORWAY
NorKabel Groupen A/S NORWAY
North London Channel Ltd. UK
Northern Video,Inc. MN TCI of Central Minnesota
Northwest Cable Advertising NY
Northwest Illinois Cable Corporation DE
Northwest Illinois TV Cable Co. DE TCI Cablevision of
Galesburg/Monmouth
Northwest Illinois TV Cable Company IL TCI Cablevision of
Galesburg/Monmouth
Northwest Network Communications, Inc. NV
Ohio Cablevision Network, Inc. IA TCI Cablevision of Northwestern
Ohio
Oslo Kabelanlagg A/S NORWAY
Ottumwa Cablevision, Inc. IA TCI of Southern Iowa
Oxford Cable Services Ltd. UK
Pacific Microwave Joint Venture CA
Perth Cable Television Ltd. UK
Pesci Kabeltelevizio KFT HUNGARY
Pittsburg Cable TV, Inc. KS TCI of Pittsburg
Preview Magazine Corporation NY
Prime Time Tonight, Inc. DE
Primestar Partners L.P. DE
Princes Holdings Ltd. IRELAND
Public Cable Company ME
QE+ Ltd. CO
QVC Investment, Inc. CO
QVC Network, Inc. DE
Reiss Media Enterprises, Inc. DE
Republic Pictures TV DE
Robert Fulk, Ltd. DE
Robin Cable Systems, L.P. CA
Robin Cable Systems II, L.P. CA
Robin Cable Systems II, Inc. NV
Robin Cable Systems of Tucson, L.P. AZ
</TABLE>
-10-
<PAGE> 11
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
Robin Media Group, Inc. NV
Rocky Mountain Leonard vs. Hearns II, Joint Venture CO
Rocky Mountain Prime Sports Network CO
Rocky Mountain Sports and Lifestyle Channel, Inc. DE
RTV Associates, L.P. DE
S/D Cable Partners, Ltd. CO TCI Cablevision of Princeton,
L.P.
TCI Cablevision of Rock Falls,
L.P.
Saguaro Cable Television Investors Limited Partnership CO
San Leandro Cable Television, Inc. CA TCI Cablevision of Hayward
Santa Fe Cablevision Co. NM
Santa Fe Cablevision Company NM TCI Cablevision of Santa Fe
Satellite Services of Puerto Rico, Inc. DE
Satellite Services, Inc. DE
SCC Programs, Inc. IL
SCD Invest AB SWEDEN
Scotcable (Cumbernauld) Ltd. UK
Scotcable (Dumbarton) Ltd. UK
Scotcable (Motherwell) Ltd. UK
Semaphore Partners CO
Silver Spur Land and Cattle Co. WY Silver Spur Ranch
Sky Network Television, Limited NZ
Sonic Communications San Luis Obispo and Santa Cruz CA
Sonic Partners, L.P. CA
South Chicago Cable, Inc. IL Chicago Cable TV-V
South Florida Cable Advertising FL
Southeast Cable Ltd. UK
Southwest Cablevision Associates, L.P. CO
Southwest Cablevision, Ltd. CO
Southwest Washington Cable, Inc. WA
SSI 2, Inc. NV
Stafford Communications Ltd. UK
Starstream Limited UK
St. Louis Tele-Communications, Inc. MO TCI Cablevision of St. Louis
SVHH Cable Acquisitions, L.P. DE
Sweden Cable & Dish AB SWEDEN
</TABLE>
-11-
<PAGE> 12
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
Syracuse Hilton Head Holdings, L.P. DE
Tampa Bay Interconnect FL
Tayside Cable Systems Ltd. UK
TCG Chicago NY
TCG Connecticut NY
TCG Dallas NY
TCG Detroit NY
TCG Illinois NY
TCG Partners NY
TCG South Florida NY
TCI Cable Education, Inc. CO
TCI Cable Management Corporation CO
TCI Cable Programme Partners, Inc. CO
TCI Cablevision of Alabama, Inc. AL
TCI Cablevision of Arizona, Inc. AZ
TCI Cablevision of California, Inc. CA
TCI Cablevision of Colorado, Inc. CO TCI of Colorado, Inc.
TCI Cablevision of Dallas, Inc. TX
TCI Cablevision of Florida, Inc. FL TCI of Colorado, Inc.
TCI Cablevision of Georgia, Inc. GA
TCI Cablevision of Great Falls, Inc. DE
TCI Cablevision of Idaho, Inc. ID
TCI Cablevision of Kentucky, Inc. KY Indiana Cable Advertising
TCI Cablevision of Kiowa, Inc. CO
TCI Cablevision of Maryland, Inc. MD
TCI Cablevision of Massachusetts, Inc. MA
TCI Cablevision of Michigan, Inc. MI Michigan Cable Advertising
TCI Cablevision of Minnesota, Inc. MN TCI of Minnesota
TCI Cablevision of Missouri, Inc. MO
TCI Cablevision of Montana, Inc. MT
TCI Cablevision of Nebraska, Inc. NE
TCI Cablevision of Nevada, Inc. NV
TCI Cablevision of New Hampshire, Inc. NH
TCI Cablevision of New Mexico, Inc. NM
TCI Cablevision of North Carolina, Inc. NC
</TABLE>
-12-
<PAGE> 13
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
TCI Cablevision of North Central Kentucky, Inc. KY
TCI Cablevision of Ohio, Inc. OH Northeast Television Advertising
TCI Cablevision of Okanogan Valley, Inc. WA
TCI Cablevision of Oklahoma, Inc. OK
TCI Cablevision of Oregon, Inc. OR
TCI Cablevision of Pasco County FL
TCI Cablevision of Pinellas County, Inc. FL
TCI Cablevision of Puerto Rico, Inc. DE
TCI Cablevision of South Dakota, Inc. SD
TCI Cablevision of Southwest Washington, Inc. WA
TCI Cablevision of Texas, Inc. TX
TCI Cablevision of Twin Cities, Inc. WA
TCI Cablevision of Utah, Inc. UT
TCI Cablevision of Vermont, Inc. DE
TCI Cablevision of Washington, Inc. WA PACCOM
TCI Cablevision of Wisconsin, Inc. WI
TCI Cablevision of Wyoming, Inc. WY
TCI Cablevision of Yakima Valley, Inc. WA
TCI Cablevision of Yakima, Inc. WA
TCI Central, Inc. DE
TCI CablePCS, Inc. CO
TCI CablePhone, Inc. CO
TCI Development Corporation CO
TCI East, Inc. DE
TCI Fleet Services, Inc. CO
TCI Great Lakes, Inc. DE
TCI Holdings, Inc. CO
TCI Holdings II, Inc. CO
TCI Investments, Inc. CO
TCI IP, Inc. DE
TCI K-1, Inc. CO
TCI Liberty, Inc. DE
TCI Mergerco, Inc. DE
TCI Microwave, Inc. DE
</TABLE>
-13-
<PAGE> 14
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
TCI News, Inc. CO
TCI North Central, Inc. DE
TCI Northeast, Inc. DE
TCI of Arkansas, Inc. AR
TCI of Auburn, Inc. DE
TCI of Connecticut, Inc. CT
TCI of D.C., Inc. DC
TCI of Delaware, Inc. DE
TCI of Greensburg CO
TCI of Illinois, Inc. IL Chicago Cable Advertising
Illinois Cable Advertising
TCI Cablevision of Dubuque, Inc.
TCI of Indiana, Inc. IN Indiana Cable Advertising
TCI of Iowa, Inc. IA TCI Cablevision of Dubuque, Inc.
TCI of Kansas, Inc. KS
TCI of Maine, Inc. ME
TCI of Mississippi, Inc. MS
TCI of New Jersey, Inc. NV
TCI of New York, Inc. NY
TCI of North Central Kentucky, Inc. KY
TCI of North Dakota, Inc. ND
TCI of Northern New Jersey, Inc. WA TCI Cablevision of Central
Colorado, Inc.
TCI Cablevision of
Northeastern Oregon
TCI Cablevision of Southeast
Washington
TCI Cablevision of the
Treasure Coast
TCI of Northern New Jersey
TCI of Pennsylvania, Inc. PA Northeast Television Advertising
TCI of California
TCI of PR, Inc. CO
TCI of Puerto Rico, Inc. CO
TCI of Rhode Island, Inc. RI
TCI of Seattle, Inc. DE
TCI of South Carolina, Inc. SC
TCI of Southern Maine, Inc. ME
</TABLE>
-14-
<PAGE> 15
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
TCI of Southern Minnesota, Inc. DE TCI of Southern Minnesota
TCI of Tacoma, Inc. DE
TCI of Tennessee, Inc. TN
TCI of the Blufflands, Inc. DE TCI Cable of La Crosse
TCI of Southern Minnesota
TCI of Virginia, Inc. VA
TCI of Watertown, Inc. IA
TCI of West Virginia, Inc. WV Northeast Television Advertising
TCI Oscar I, Inc. CO
TCI Pacific Microwave, Inc. CO Pacific Microwave
TCI Realty Investments Company DE
TCI Request, Inc. CO
TCI Southeast Divisional Headquarters, Inc. AL
TCI Southeast, Inc. DE
TCI Sports UT
TCI Sports, Inc. NV
TCI Starz, Inc. CO
TCI Technology, Inc. CO
TCI Teleport of Boston, Inc. MA
TCI Teleport of Chicago, Inc. IL
TCI Teleport of Chicago-Switch, Inc. IL
TCI Teleport of Dallas, Inc. TX
TCI Teleport of Detroit, Inc. MI
TCI Teleport of Hartford, Inc. CT
TCI Teleport of Houston, Inc. TX
TCI Teleport of Los Angeles, Inc. CA
TCI Teleport of Miami, Inc. FL
TCI Teleport of Phoenix, Inc. AZ
TCI Teleport of Pittsburgh, Inc. PA
TCI Teleport of San Francisco, Inc. CA
TCI Teleport of Seattle, Inc. WA
TCI Teleport of St. Louis, Inc. MO
TCI Teleport, Inc. CO
TCI Teleport Partners, Inc. CO
TCI TKR Cable I, Inc. DE
</TABLE>
-15-
<PAGE> 16
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
TCI TKR Cable II, Inc. DE
TCI TKR Cable III, Inc. DE
TCI TKR Limited Partnership CO
TCI TKR of Alabama, Inc. DE TCI of Alabama
TCI TKR of Central Florida, Inc. FL TCI of Central Florida
TCI TKR of Dallas, Inc. DE
TCI TKR of Florida, Inc. DE
TCI TKR of Georgia, Inc. DE TCI of Georgia
TCI TKR of Hollywood, Inc. DE TCI of Hollywood
TCI TKR of Houston, Inc. TX TCI Cablevision of Houston
TCI TKR of Jefferson County, Inc. KY TKR Cable of Greater Louisville,
Inc.
TCI TKR of Kentucky, Inc. DE
TCI TKR of Metro Dade, Inc. DE
TCI TKR of Northern Kentucky, Inc. KY TKR Cable of Northern Kentucky,
Inc.
TCI TKR of South Dade, Inc. FL TCI of South Dade
TCI TKR of South Florida, Inc. DE TCI of South Florida
TCI TKR of Southeast Texas, Inc. DE
TCI TKR of Southern Kentucky, Inc. DE TKR Cable of Southern Kentucky,
Inc.
TCI TKR of the Gulf Plains, Inc. DE TCI of the Gulf Plains
TCI TKR of the Metroplex, Inc. TX TCI Cablevision of the Metroplex
TCI TKR of Wyoming, Inc. WY
TCI TKR, Inc. DE
TCI Turner Preferred, Inc. CO
TCI TVRO Management Corporation CO
TCI UA, Inc. DE
TCI UA I, Inc. CO
TCI West, Inc. DE
TCI-Euromusic, Inc. CO
TCI-TVGOS, Inc. CO
TCI-UC, Inc. DE
TCI/Fox Funding Partnership NY
TCI/Liberty Holding Company DE
TCI/US WEST Cable Communications Group CO
TCI/US West Cable Communications, Inc. CO
TCI/US WEST Parliamentary Holdings Limited UK
</TABLE>
-16-
<PAGE> 17
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
TCID - WW, Inc. CO
TCID Data Transport, Inc. CO
TCID Games, Inc. CO
TCID Networks, Inc. DE
TCID of Carson, Inc. CA
TCID of Chicago, Inc. IL
TCID of Florida, Inc. FL TCI Cablevision of Pasco County
TCID of Michigan, Inc. NV
TCID of New Zealand Limited NZ
TCID of Puerto Rico, Inc. NV
TCID Partners, Inc. CO
TCID Partners II, Inc. CO
TCID of South Chicago, Inc. IL
TCID Video Enterprises, Inc. CO
TCID Virtual I/O, Inc. CO
TCID X*Press, Inc. CO
TCID-Commercial Music, Inc. CO
TCID-ICP III, Inc. CO
TCID-IP III, Inc. CO
TCID-IP V, Inc. CO
TCID-SVHH, Inc. DE
TCIP, Inc. CO
Telecable Nacional CXA DR
Telecommunications Cable Systems, Inc. LA TCI of Louisiana
Tele-Communications Dominicana, Inc. DE
Tele-Communications, Inc. DE TCI Cablevision of Durango, Inc.
Tele-Communications of Colorado, Inc. CO TCI Colorado Community Cable
Television, Inc.
Tele-Communications of South Suburbia, Inc. IL
Telenois, Inc. IL
Teleport Communications Group, Inc.
Telestar-Kabelkom Kabelcommunikacios KFT HUNGARY
Televents Group Joint Venture CO TCI of Central Iowa
TCI of Eastern Iowa
TCI of the Heartlands
Televents Group, Inc. NV
</TABLE>
-17-
<PAGE> 18
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
Televents, Inc. NV TCI Cablevision of Contra Costa
County
Televents of Colorado, Inc. CO
Televents of East County, Inc. WY TCI Cablevision of East County
Televents of Florida, Inc. WY
Televents of Powder River, Inc. WY
Televents of San Joaquin, Inc. WY TCI Cablevision of San Joaquin
Televents of Wyoming, Inc. WY
Television Cable Service, Inc. TX TCI Cablevision of Abilene
TCI Cablevision of East Texas
TCI Cablevision of Perryton
TCI Cablevision of West Texas
TeleWest Communications Group Ltd. UK
TeleWest Europe Group CO
TeleWest Ltd. UK
Telford Cable Ltd. UK
Telluride Cablevision, Inc. DE
TEMPO Cable, Inc. OK TCI of Arkansas (Tempo), Inc.
TCI Cablevision of Central
Oklahoma, Inc.
TCI Cablevision of Nocona
TCI Cablevision of Oklahoma
(Tempo), Inc.
TCI Cablevision of Texas
(Tempo), Inc.
TEMPO Development Corporation OK
TEMPO Enterprises, Inc. OK TEMPO Enterprises, Inc. (of
Oklahoma)
TEMPO Satellite, Inc. OK
TEMPO Television, Inc. OK
Tennessee-Kentucky Cable TV Company TN
Tevel Israel International Communications Ltd. ISRAEL
The Alpine Tower Company NJ
The Cable Corporation Limited UK
The Fashion Channel Network, Inc. DE
The Greater Chicago Interconnect IL
The Greater Philadelphia Cable Interconnect PA
The Hiline Network MT
The Parliamentary Channel Limited UK
</TABLE>
-18-
<PAGE> 19
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
The Wolfdale Corporation CO
The Woodlands Communications Network TX
Tishdoret Achzakot Ltd. Israel
Trans-Muskingum, Incorporated WV
Tri Cities Cable Television Company NE
Tri Cities Cable Television Operators NE
Tribune Company Cable of Michigan, Inc. DE Tribune/United Cable of Oakland
County
Tribune-United Cable of Oakland County MI TCI Cablevision of Oakland
County, Inc.
Tulsa Cable Television, Inc. OK TCI Cablevision of Tulsa
Turner Broadcasting System, Inc.
T.V. Sports Ltd. IRELAND
Tyneside Cable Limited Partnership CO
UA European Theatres, Inc. CO
UA Think, Inc. CO
UA-Columbia Alpine Tower, Inc. NJ
UA-Columbia Cablevision of Massachusetts, Inc. MA TCI Cablevision of North
Attleboro\Taunton
UA-Columbia Cablevision of New Jersey, Inc. NJ
UA-Columbia Cablevision of Westchester, Inc. NY TCI Cable of Westchester
TCI of Northern New Jersey
UA-France, Inc. CO
UA-UII, Inc. CO
UA-UII Management, Inc. CO
UACC Midwest, Inc. DE Indiana Cable Advertising
TCI Cablevision of Asheville
TCI Cablevision of Central
Illinois
TCI Cablevision of Decatur
TCI Cablevision of Merced County
TCI Cablevision of Northshore
TCI Cablevision of Santa Cruz
County
TCI Cablevision of Tracy
TCI Cablevision of Vacaville
TCI Cablevision of Walnut Creek
TCI Cablevision of West
Michigan, Inc.
TCI of Central Indiana
</TABLE>
-19-
<PAGE> 20
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
TCI of Evansville
TCI of South Mississippi
UAII Merger Corp. DE
UAII Sub No. 24, Inc. DE
UAII Turner Investment, Inc. CO
UATC Merger Corp. NY
UCI Enterprises, Inc. CO
UCT Aircraft, Inc. CO
UCT Investments (Colorado), Inc. CO
UCT Video, Inc. CO
UCT-Netherlands, B.V. NETHERLANDS
UCTC LP Company DE
UCTC of Baltimore, Inc. DE
UCTC of Los Angeles County, Inc. DE TCI Cablevision of Los Angeles
County
UII-Ireland Limited Liability Company UT
UII-Ireland, Ltd. CO
UII Management CO
UK Gold Broadcasting Ltd. UK
UK Gold Services Ltd. UK
UK Gold Television Limited UK
UK Living Ltd. UK
United Advertising Network, Inc. CO
United Artists B.V. NETHERLANDS
United Artists Broadcast Properties, Inc. DE
United Artists Cable Holdings, Inc. CO
United Artists Cable Investments, Inc. DE
United Artists Cable Television Avon, Inc. CO
United Artists Cable Television Cotswolds, Inc. CO
United Artists Cable Television Edinburgh, Inc. CO
United Artists Cable Television Estuaries, Inc. CO
United Artists Cable Television International Holdings, Inc. CO
United Artists Cable Television International Investments, Inc. CO
United Artists Cable Television International Limited UK
United Artists Cable Television International Service Company, Inc. CO
United Artists Cable Television Tyneside, Inc. CO
</TABLE>
-20-
<PAGE> 21
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
United Artists Cable Television UK Holdings, Inc. DE
United Artists Cable Television-UK, Inc. CO
United Artists Cablesystems Corporation DE
United Artists (Childrens Channel) Limited UK
United Artists Communications (Avon) Limited UK
United Artists Communications (Cotswolds) Limited UK
United Artists Communications (London South) Plc UK
United Artists Communications (Nominees) Limited UK
United Artists Communications (North East) Limited UK
United Artists Communications (North East) Partnership UK
United Artists Communications (North Thames Estuary) Limited UK
United Artists Communications (Scotland) Ltd. UK
United Artists Communications (Scotland) Venture UK
United Artists Communications (South East) Partnership UK
United Artists Communications (South Thames Estuary) Limited UK
United Artists Communications (Thames Estuary) Partnership UK
United Artists Communications (Tyneside) Ltd. UK
United Artists Cotswolds Partnership Holdings L.P. CO
United Artists Entertainment Company DE
United Artists Entertainment (Programming) Ltd. UK
United Artists European Holdings Limited UK
United Artists Holdings, Inc. DE
United Artists International, Inc. CO
United Artists Investments, Inc. CO
United Artists Investments Ltd. UK
United Artists K-1 Investments, Inc. CO
United Artists (Learning Channel) Limited UK
United Artists Operator Services Corporation CO
United Artists Payphone Corporation CO
United Artists Preferred Investment, Inc. CO
United Artists Programme Management Limited UK
United Artists Programming International, Inc. CO
United Artists Programming-Europe, Inc. CO
United Artists Republic Investments, Inc. CO
United Artists Satellite, Inc. CO
</TABLE>
-21-
<PAGE> 22
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
United Artists TeleCommunications, Inc. DE
United Cable Ad-Link, Inc. CO
United Cable Advertising, Inc. CO
United Cable and Microwave Ltd. IRELAND
United Cable Entertainment Corporation CO
United Cable Investment of Baltimore, Inc. MD
United Cable (London South) Limited Partnership CO
United Cable Productions, Inc. CO
United Cable Realty Co. of California, Inc. CO
United Cable Shopping Channel, Inc. CO
United Cable T.V. of Oakland County, Inc. MI TCI Cablevision of Oakland
County, Inc.
United Cable Television Acquisition Corporation CO TCI of Colorado, Inc.
United Cable Television Corp. of Eastern Connecticut CT TCI Cablevision of Central
Connecticut
United Cable Television Corporation DE TCI Cable of the Midlands
TCI Cablevision of Hayward
TCI Cablevision of Treasure
Valley
United Cable Television Corporation of Michigan MI TCI Cablevision of Woodhaven,
Inc.
United Cable Television Corporation of Northern Illinois IL TCI Cablevision of Northern
Illinois
United Cable Television Financing Corporation CO
United Cable Television Investments, Ltd. CO
United Cable Television of Alameda, Inc. CA UCT of Alameda, Inc. #2
TCI Cablevision of Alameda
United Cable Television of Baldwin Park, Inc. CO TCI Cablevision of Los Angeles
County
United Cable Television of Baltimore Limited Partnership CO United Artists Cable of
Baltimore
United Cable Television of Bossier City, Inc. DE TCI of Louisiana
United Cable Television of California, Inc. CO TCI Cablevision of Cupertino\Los
Altos
TCI Cablevision of Davis
United Cable Television of Chaska, Inc. CO
United Cable Television of Colorado, Inc. CO TCI of Colorado, Inc.
United Cable Television of Cupertino, Inc. CA TCI Cablevision of Cupertino\Los
Altos
United Cable Television of East San Fernando Valley, Ltd. CO
United Cable Television of Eastern Shore, Inc. DE TCI Cablevision of Eastern Shore
United Cable Television of Hillsborough, Inc. CO TCI Cablevision of Hayward
United Cable Television of Illinois Valley, Inc. IL TCI Cablevision of Illinois
Valley
United Cable Television of Jeffco, Inc. CO TCI of Colorado, Inc.
</TABLE>
-22-
<PAGE> 23
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
United Cable Television of Los Angeles, Inc. CA TCI Cablevision of Los Angeles
County
United Cable Television of Los Angeles County, Ltd. CO
United Cable Television of Mid-Michigan, Inc. MI TCI Cablevision of Mid-Michigan,
Inc.
United Cable Television of Northern Indiana, Inc. DE TCI of Northern Indiana
United Cable Television of Oakland County, Ltd. CO
United Cable Television of Pico Rivera, Inc. CO
United Cable Television of Santa Cruz, Inc. CO TCI Cablevision of Santa Cruz
County
United Cable Television of Sarpy County, Inc. NE TCI Cable of the Midlands
United Cable Television of Scottsdale, Inc. AZ TCI Cable of Scottsdale
United Cable Television of Southern Illinois, Inc. DE TCI Cablevision of Southern
Illinois
United Cable Television of Western Colorado, Inc. CO TCI Cablevision of Western
Colorado, Inc.
United Cable Television Real Estate Corporation CO
United Cable Television Services Corporation OK TCI Cablevision of Central
Connecticut
United Cable Television Services of Colorado, Inc. CO
United Cable Turner Investment, Inc. CO
United Cable Video Investment, Inc. CO
United Carphone Corporation CO
United CATV, Inc. MD TCI Cablevision of Annapolis
United Communications International CO
United Corporate Communications Company CO
United Entertainment Corporation CO
United Entertainment Network, Inc. NE
United Hockey, Inc. CO
United International Investments CO
United Microwave Corporation DE
United of Oakland, Inc. DE TCI Cablevision of Oakland
County, Inc.
Tribune/United Cable of
Oakland County
United Paging Corporation CO
United Tribune Paging Corporation CO
United's Home Video Centers, Inc. CO
Upper Valley Telecable Company, Inc. IN TCI Cablevision of Idaho (UVTC),
Inc.
Vacationland Cablevision, Inc. WI TCI of South Central Wisconsin
Valley Cable TV, Inc. TX
Videopole FRANCE
Vision Group Incorporated CO
</TABLE>
-23-
<PAGE> 24
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
Waltham Tele-Communications MA TCI Cablevision of Waltham
Waltham Tele-Communications, Inc. CO
Wasatch Community T.V., Incorporated UT
Wentronics, Inc. NM TCI Cablevision of Casper
TCI Cablevision of Gallup
TCI Cablevision of Moab
TCI Cablevision of Western
Colorado, Inc.
Wessex Cable Ltd. UK
Western Community TV, Inc. MT
Western Information Systems, Inc. CO WIS
Western New York Cable Advertising, L.P. NY
Western Satellite 2, Inc. CO
Western Tele-Communications, Inc. DE
Westlink, Inc. CO
WestMarc Cable Group, Inc. DE
WestMarc Cable Holding, Inc. DE TCI of Central Minnesota
TCI of Northern Iowa
TCI of Northern Minnesota
TCI of the Valley
WestMarc Communications, Inc. NV
WestMarc Communications of Minnesota, Inc. DE TCI of Central Minnesota
TCI of Southern Minnesota
WestMarc Development II, Inc. CO
WestMarc Development III, Inc. CO
WestMarc Development IV, Inc. CO
WestMarc Development Joint Venture CO Michigan Cable Advertising
TCI Cablevision of Greater
Michigan, Inc.
TCI Cablevision of Northwestern
Connecticut
TCI Cablevision of Cape Cod
TCI Cablevision of Nantucket
TCI Twin State Cable TV
TCI/Twin Valley Cable
TCI Cable of Vermont
WestMarc Development, Inc. CO
WestMarc Realty, Inc. CO
</TABLE>
-24-
<PAGE> 25
<TABLE>
<CAPTION>
Subsidiary Org. d/b/a
- ---------- ---- -----
<S> <C> <C>
Westward Cables Ltd. IRELAND
Westward Horizon Ltd. IRELAND
Windsor Alarms Ltd. UK
Windsor Television Ltd. UK
Woodlands Cablevision Associates, L.P. CO
WTCI Uplink, Inc. PA
</TABLE>
-25-
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to incorporation by reference in the Registration Statement (No.
33-59058) on Form S-8 of Tele-Communications, Inc. Employee Stock Purchase
Plan; Registration Statement (No. 2-87938) on Form S-8 of Tele-Communications,
Inc. 1982 Incentive Stock Option Plan; Registration Statement (No. 33-44532) on
Form S-8 of United Artists Theatre Circuit, Inc. Employee Stock Purchase Plan;
Registration Statements (Nos. 2-96706, 2-99512, 33-12385, 33-51104, 33-58198
and 33-60982) on Form S-3; the Post-Effective Amendment No. 1 to Form S-4
Registration Statement (No. 33-43009) on Form S-8 Registration Statement of
Tele-Communications, Inc. of our reports dated March 21, 1994, relating to the
consolidated balance sheets of Tele-Communications, Inc. and subsidiaries as of
December 31, 1993 and 1992, and the related consolidated statements of
operations, stockholders' equity, and cash flows and related financial
statement schedules for each of the years in the three-year period ended
December 31, 1993, which reports appear in the December 31, 1993 annual report
on Form 10-K of Tele-Communications, Inc.
Our reports refer to a change in the method of accounting for income taxes.
/s/ KPMG PEAT MARWICK
KPMG Peat Marwick
Denver, Colorado
March 21, 1994
