EXHIBIT 2.5.1
FIRST AMENDMENT TO
TAX SHARING AGREEMENT
This First Amendment to Tax Sharing Agreement dated as of October 1995
by and among Tele-Communications, Inc., a Delaware corporation ("TCI"), Liberty
Media Corporation, a Delaware corporation ("Liberty"), Tele-Communications
International, Inc. ("International"), TCI Technology Ventures, Inc.
("Technology"), TCI Communications, Inc. ("TCIC"), TCI Cable Investments, Inc.
("TCICI"), TCI Starz, Inc. ("Starz") and TCI CT Holdings, Inc. ("CT"),
W I T N E S S E T H:
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WHEREAS, TCI, Liberty, International, Technology, TCIC and TCICI have
entered into a Tax Sharing Agreement (the "Agreement"); and
WHEREAS, the parties to the Agreement now wish to amend the Agreement
to reflect the addition of Starz and CT as partners and in certain other
respects;
NOW, THEREFORE, the parties hereby agree as follows:
1. The last sentence of the first paragraph is amended to read as
follows:
TCI is the common parent, and each member (a "Subgroup Member") of the
Liberty Subgroup, the International Subgroup, the Technology Subgroup, the
TCIC Subgroup, the TCICI Subgroup, the Starz Subgroup and the CT Subgroup
(each a "Subgroup") is a member, of an Affiliated Group (the "TCI Group")
which files a consolidated federal income tax return pursuant to Section
1501 of the Code. The term "Subgroup" shall also include each Subgroup
Parent and the Subsidiaries thereof that joins the TCI Group after the date
hereof.
2. Section A of the Agreement is amended by adding thereto the
following new definitions:
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"CT Subgroup" means CT and each corporation that is a Subsidiary of
CT.
"Starz Subgroup" means Starz and each corporation that is a Subsidiary
of Starz.
3. The definition of "Federal Tax Benefit" is amended to read as
follows:
"Federal Tax Benefit," as to any Subgroup, shall mean the amount
determined with respect to such Subgroup under Section C.2. hereof, as
adjusted pursuant to any other provision hereof.
4. The definition of "Federal Tax Liability" is amended to read as
follows:
"Federal Tax Liability," as to any Subgroup, shall mean the amount
determined with respect to such Subgroup under Section C.1. hereof, as
adjusted pursuant to any other provision hereof.
5. The definition of "Subgroup Parent" is amended to read as
follows:
"Subgroup Parent" means each of Liberty, International, Technology,
TCIC, TCICI, Starz, CT and any direct wholly-owned subsidiary of TCI formed
or acquired after the date hereof.
6. The definition of "Tax Benefit" is amended to read as follows:
"Tax Benefit" means, as to any Subgroup, a Federal Tax Benefit of such
Subgroup.
7. The definition of "Tax Liability" is amended to read as follows:
"Tax Liability" means as to any Subgroup, a Federal Tax Liability or
State or Local Tax Liability of such Subgroup.
8. Section B.2. of the Agreement is amended by adding a new
subsection c. at the end thereof to read as follows:
c. In the event that any Subgroup Member is entitled to claim in any
taxable period any net operating loss or other tax benefit attributable to
a prior taxable period ending, and if such net operating loss or other tax
benefit was used by such Subgroup to reduce its Tax Liability or increase
its Tax Benefit for such prior taxable period, then such Subgroup Member
shall (i) take such steps as may be reasonably necessary to claim such net
operating loss or other tax benefit and (ii) promptly upon receipt by such
Subgroup Member (or another member of the Affiliated Group of which such
Subgroup
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Member is a member) of a refund of or reduction in tax liability, such
Subgroup Member shall remit such amount to TCI (or, if such amount is
received prior to the Deconsolidation Date, the Intercompany Account of
such Subgroup Member's Parent shall be appropriately adjusted).
9. Section C of the Agreement is hereby amended to read as follows:
C. Federal Income Taxes.
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1. Federal Tax Liability. For each taxable year or part thereof
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ending after the Effective Date that a Subgroup is included in the TCI
Group, the Federal Tax Liability of such Subgroup shall be equal to the sum
of:
a. The amount by which (i) the product of (x) the amount of
taxable income attributable to such Subgroup for such period calculated, in
accordance with Treasury Regulations section 1.1552-1(a)(1)(ii), as though
such Subgroup were required to file a consolidated corporate federal income
tax return pursuant to the Code (with the timing of the recognition of
income, gain, deduction and loss and other items determined by reference to
the timing of such items for purposes of the preparation of the
consolidated return of the TCI Group except that current year items of loss
and deduction shall be considered regardless of whether or not such items
are utilized by the TCI Group) for such period multiplied by (y) the
maximum corporate federal income tax rate in effect for such taxable year
or part thereof exceeds (ii) the amount of tax credits attributable to such
Subgroup (whether attributable to such taxable year or part thereof or
carried to such taxable year or part thereof from another taxable year)
that are actually utilized by the TCI Group to reduce its consolidated
federal income tax liability for such period; plus
b. The product of (x) the amount of modified alternative minimum
taxable income, within the meaning of Section 59A(b) of the Code,
attributable to such Subgroup for such period calculated, in accordance
with Treasury Regulations section 1.1552-1(a)(1)(ii), as though such
Subgroup were required to file a consolidated corporate federal income tax
return for such period multiplied by (y) the statutory rate set forth in
Section 59A(a) of the Code.
2. Federal Tax Benefit. For each taxable year or part thereof ending
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after the Effective Date that a Subgroup is included in the TCI Group, the
Federal Tax Benefit of such Subgroup shall be equal to the sum of:
a. The product of (i) the amount of taxable loss attributable to
such Subgroup (whether attributable to such taxable year or part thereof or
carried to such taxable year or part thereof from another taxable year) and
actually used by the TCI Group during such taxable year or part thereof to
reduce its consolidated federal income
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tax liability, calculated in accordance with Treasury Regulations section
1.1552-1(a)(1)(ii) (without regard to the last sentence thereof), as though
such Subgroup were required to file a consolidated corporate federal income
tax return pursuant to the Code (with the timing of the recognition of
income, gain, deduction and loss and other items determined by reference to
the timing of such items for purposes of the preparation of the
consolidated return of the TCI Group) for such period, multiplied by (ii)
the maximum corporate federal income tax rate in effect during such taxable
year or part thereof; plus
b. The product of (x) the amount by which zero exceeds the
alternative minimum taxable income, within the meaning of Section 56(d) of
the Code, attributable to such Subgroup for such period and used by the TCI
Group to reduce its consolidated modified alternative taxable income
(within the meaning of Section 59A(b) of the Code), such alternative
minimum taxable income to be calculated, in accordance with Treasury
Regulations section 1.1552-1(a)(1)(ii) (without regard to the last sentence
thereof), as though such Subgroup were required to file a consolidated
corporate federal income tax return for such period, multiplied by (y) the
statutory rate set forth in Section 59A(a) of the Code.
3. Alternative Minimum Tax and AMT Credit. For each taxable year or
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portion thereof that a Subgroup is included in the TCI Group, the Federal
Tax Liability and Federal Tax Benefit of such Subgroup shall be computed
without regard to the Alternative Minimum Tax and the AMT Credit, and the
Alternative Minimum Tax shall be paid by, and any tax benefit attributable
to the AMT Credit shall be reserved to, TCI.
4. Time of Determination: Credits and Charges to the Intercompany
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Accounts. The estimated Federal Tax Benefit and Federal Tax Liability of
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each Subgroup shall be calculated by TCI as promptly as practicable after
the close of each calendar quarter in each taxable year, and the
appropriate credits or charges made to the Intercompany Accounts. As soon
as practicable after the close of each taxable year, TCI shall determine
the final Federal Tax Benefit or final Federal Tax Liability of such
Subgroup for such taxable year and shall:
a. credit the Intercompany Account of the Subgroup Parent of
such Subgroup with the amount by which:
(1) such final Federal Tax Benefit for such taxable year exceeds
the aggregate credits for estimated Federal Tax Benefits made to such
Intercompany Account with respect to such Subgroup for such taxable year,
or
(2) the aggregate charges for estimated Federal Tax Liability
made to such Intercompany Account with respect to such Subgroup for such
taxable year exceed such final Federal Tax Liability for such taxable year;
and
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b. charge the Intercompany Account of the Subgroup Parent of
such Subgroup with the amount by which:
(1) the aggregate credits for estimated Federal Tax Benefits made
to such Intercompany Account with respect to such Subgroup for such taxable
year exceed such final Federal Tax Benefit for such taxable year; or
(2) such final Federal Tax Liability for such taxable year
exceeds the aggregate charges for estimated Federal Tax Liability made to
such Intercompany Account with respect to such Subgroup for such taxable
year.
For purposes of this Section C.4., for the first two calendar quarters of
1995, the Intercompany Account of such Subgroup Parent shall be deemed to
have been credited or charged, as the case may be, with the estimated
Federal Tax Benefit or Federal Tax Liability for which such Subgroup
Parent's Subgroup was credited or charged with respect to such calendar
quarters in connection with the preparation of the financial statements of
such Subgroup for such calendar quarters.
5. Filings and Procedural Matters.
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a. TCI shall continue to prepare and file all federal income Tax
Returns (the "TCI Consolidated Returns") which are required to be filed by
the TCI Group for all periods and will pay all Taxes shown as due thereon.
The costs of such preparation and filing shall be allocated among and paid
by the Subgroup Parents in accordance with TCI's policy of allocating
corporate general and administrative costs among the Subgroups. Such
returns shall include all Tax Items of the Subgroup Members for all tax
periods or portions thereof ending on or before the Deconsolidation Date
with respect to such Subgroup Members. TCI will make all decisions
relating to the preparation and filing of such returns. Each Subgroup
Member whose Tax Items are includable in any such return shall, upon the
request of TCI, consent to be included in the TCI Consolidated Return on
any form as may be prescribed for such consent.
b. So as to enable TCI to prepare accurately and completely the
TCI Consolidated Returns and in order to provide for accurate financial
reporting, for tax periods or portions thereof ending on or before the
Deconsolidation Date as to any Subgroup Parent, such Subgroup Parent shall
provide such information with respect to Taxes (including forecasts,
projections and tax accruals) as TCI may reasonably request. Each Subgroup
Parent shall bear all costs and expenses of preparation and submission of
such information, including accountants' and attorneys' fees.
c. TCI may claim the benefit for federal income tax purposes of
any net operating loss or other tax benefit carryback resulting from a loss
or tax benefit incurred by any Subgroup for any taxable period after the
Deconsolidation Date of such
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Subgroup, provided that TCI pays to such Subgroup the amount of any refund
of Taxes resulting from such net operating loss or other tax benefit
carryback, together with the interest received in respect of such refund,
promptly after receipt thereof from the IRS. However, with respect to any
such net operating loss or other tax benefit that is attributable to a
taxable period of a Subgroup after the Deconsolidation Date with respect to
such Subgroup and as to which such Subgroup has the option to waive its
right to carry such net operating loss or other tax benefit back, such
Subgroup shall exercise such option and elect to carry such net operating
loss or other tax benefit forward unless either (x) TCI requests such
Subgroup not to exercise such option and instead to carry such net
operating loss back to a period prior to the Deconsolidation Date with
respect to such Subgroup or (y) TCI consents in writing to the failure of
such Subgroup to exercise any such option to waive such carryback period.
If such Subgroup fails to exercise any such option to waive the right to
carry back any such net operating loss or other tax benefit without such a
request or consent from TCI, TCI shall not be obligated to compensate such
Subgroup for any benefit that TCI may receive from such net operating loss
or other tax benefit.
d. In the event that, after the Deconsolidation Date as to any
Subgroup, such Subgroup receives any benefit from an AMT Credit
attributable to any period ending on or before such Deconsolidation Date
(by way of reduction in federal income tax liability or otherwise), such
Subgroup shall promptly pay to TCI the amount of such benefit plus any
associated interest thereon. Notwithstanding anything to the contrary
herein, the provisions of this Section C.5.d. shall survive the termination
of this Agreement.
10. The second sentence of Section H.8. is amended to read as follows:
This Agreement shall constitute a direct obligation of each Subgroup
Parent and Subgroup Member and of each member of the TCI Group that is not
a Subgroup Parent or a Subgroup Member, and shall be deemed to have been
adopted and affirmed on behalf of any corporation which becomes a Subgroup
Parent or a Subgroup Member or a member of the TCI Group other than a
Subgroup Parent or a Subgroup Member.
11. The last sentence of the Agreement is amended to read as follows:
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the Effective Date.
12. Except as otherwise expressly provided herein, the Agreement shall
continue in full force and effect without modification.
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IN WITNESS WHEREOF, the parties have executed this Amendment effective
as of the Effective Date (as defined in the Agreement).
TELE-COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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LIBERTY MEDIA CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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TELE-COMMUNICATIONS INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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TCI COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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TCI CABLE INVESTMENTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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TCI TECHNOLOGY VENTURES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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TCI STARZ, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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TCI CT HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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