1
Exhibit 2.1
Execution Copy
AGREEMENT AND PLAN OF RESTRUCTURING AND MERGER
AMONG
AT&T CORP.
ITALY MERGER CORP.
AND
TELE-COMMUNICATIONS, INC.
Dated as of June 23, 1998
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TABLE OF CONTENTS
ARTICLE I
Definitions............................................... 1
ARTICLE II
The Restructuring and the Merger.......................... 13
2.1. The Restructuring.............................. 13
2.2. The Merger..................................... 14
2.3. Effective Time................................. 14
2.4. Closing........................................ 15
ARTICLE III
Terms of Merger........................................... 15
3.1. Certificate of Incorporation................... 15
3.2. The By-Laws.................................... 15
3.3. Directors...................................... 15
3.4. Officers....................................... 15
ARTICLE IV
Share Consideration; Conversion or
Cancellation of Shares in the Merger................... 16
4.1. Share Consideration; Conversion or
Cancellation of Shares in the Merger......... 16
4.2. Payment for Shares in the Merger............... 21
4.3. Fractional Shares.............................. 25
4.4. Transfer of Shares after the Effective
Time......................................... 28
4.5. Treatment of Series F Preferred Stock ......... 28
4.6. Company Series Preferred Stock................. 28
ARTICLE V
Representations and Warranties of the Company............. 28
5.1. Organization, Etc. of the Company.............. 28
5.2. Subsidiaries................................... 29
5.3. Agreement...................................... 29
5.4. Permits; Compliance............................ 30
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5.5. Opinion of the Company's Financial Advisor..... 30
5.6. Capital Stock.................................. 30
5.7. Litigation..................................... 33
5.8. Compliance with Other Instruments, Etc......... 34
5.9. Employee Benefit Plans......................... 34
5.10. Taxes.......................................... 37
5.11. Intellectual Property.......................... 38
5.12. Reports and Financial Statements............... 38
5.13. Absence of Certain Changes or Events........... 39
5.14. Affiliated Transactions and Certain
Other Agreements............................. 40
5.15. Brokers and Finders............................ 40
5.16. Registration Statement......................... 40
5.17. Separation of Assets and Liabilities........... 41
ARTICLE VI
Representations and Warranties of Parent and
Merger Sub............................................. 43
6.1. Organization, Etc. of Parent................... 43
6.2. Subsidiaries................................... 43
6.3. Agreement...................................... 43
6.4. Permits; Compliance............................ 44
6.5. Opinions of Parent's Financial Advisors........ 44
6.6. Capital Stock.................................. 44
6.7. Parent Shares.................................. 44
6.8. Litigation..................................... 45
6.9. Compliance with Other Instruments, Etc......... 45
6.10. Taxes.......................................... 46
6.11. Intellectual Property.......................... 46
6.12. Reports and Financial Statements............... 47
6.13. Brokers and Finders............................ 48
6.14. Registration Statement......................... 48
6.15. Ownership of Merger Sub; No Prior Activities;
Assets of Merger Sub......................... 48
6.16. Ownership of Company Stock..................... 49
ARTICLE VII
Additional Covenants and Agreements....................... 49
7.1. Conduct of Business of the Company............. 49
7.2. Other Transactions............................. 55
7.3. Stockholder Approval........................... 56
7.4. Registration Statement and Proxy Statement..... 57
7.5. Reasonable Efforts............................. 58
7.6. Access to Information.......................... 60
7.7. Indemnification of Directors and Officers...... 61
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7.8. Registration and Listing of Parent
Common Shares................................ 63
7.9. Affiliates of Parent and the Company........... 63
7.10. Tax Matters.................................... 64
7.11. New York Real Property Transfer Tax............ 64
7.12. Employee Matters............................... 64
7.13. Tax Sharing Agreement.......................... 66
7.14. Other Intercompany Agreements.................. 66
7.15. Parent Board of Directors...................... 66
7.16. Parent Charter Amendment; Bylaw Amendment
and Policy Statement......................... 67
7.17. Intercompany Transactions...................... 67
7.18. Certain Inter-Group Relationships.............. 67
7.19. TCI Joint Ventures............................. 67
7.20. Certain Actions by Parent and the
Surviving Corporation........................ 67
ARTICLE VIII
Conditions................................................ 68
8.1. Conditions to Each Party's Obligations......... 68
8.2. Conditions to Obligations of Parent
and Merger Sub............................... 69
8.3. Conditions to Obligations of the Company....... 71
ARTICLE IX
Termination............................................... 72
9.1. Termination by Mutual Consent.................. 72
9.2. Termination by Either Parent or the Company.... 72
9.3. Termination by the Company..................... 73
9.4. Termination by Parent and Merger Sub........... 73
9.5. Effect of Termination and Abandonment.......... 73
9.6. Payment of Certain Fees........................ 73
ARTICLE X
Miscellaneous and General................................. 74
10.1. Expenses....................................... 74
10.2. Notices, Etc................................... 74
10.3. Amendments, Waivers, Etc....................... 75
10.4. No Assignment.................................. 75
10.5. Entire Agreement............................... 75
10.6. Specific Performance........................... 76
10.7. Remedies Cumulative............................ 76
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10.8. No Waiver...................................... 76
10.9. No Third Party Beneficiaries................... 76
10.10. Jurisdiction................................... 77
10.11. Public Announcements........................... 77
10.12. Governing Law.................................. 77
10.13. Name, Captions, Etc............................ 77
10.14. Counterparts................................... 77
10.15. Survival of Representations, Warranties,
Covenants and Agreements..................... 77
10.16. Severability................................... 78
10.17. Disclosure Statements.......................... 78
EXHIBITS
A Form of Amendment to the Parent Charter
B Form of Affiliate Letter
C Terms of Amendment to Tax Sharing Agreement
D Form of Bylaw Amendment and Policy Statement
SCHEDULES
2.1(a) Terms of the Company Restructuring
2.1(c)(i) Form of Certificate of Incorporation and Bylaws
of Liberty Media Corporation
2.1(c)(ii) Form of Contribution Agreement
2.1(c)(iii) Form of LLC Agreement of Liberty Group LLC
2.1(c)(iv) Form of Section 2.1(c)(iv) Letter
7.12(b) Definitions of "Good Reason" and "Cause"
7.12(e) Form of Tax Protection Agreement
7.14 Intercompany Agreement Principles
7.18 Certain Terms of Inter-Group Relationship
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
June 23, 1998, among AT&T Corp., a New York corporation ("Parent"),
Italy Merger Corp., a Delaware corporation and a direct wholly owned
subsidiary of Parent ("Merger Sub"), and Tele-Communications, Inc., a
Delaware corporation (the
"Company").
RECITALS
WHEREAS, the Boards of Directors of Parent, Merger Sub and
the Company each have determined that it is advisable and in the best
interests of their respective stockholders for Merger Sub to merge with
and into the Company, upon the terms and subject to the conditions of
this Agreement (the "Merger");
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger shall qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Code;
WHEREAS, Parent, Merger Sub and the Company desire to make
certain representations, warranties, covenants and agreements in
connection with the Merger; and
WHEREAS, Parent and Merger Sub have required, as a condition
to their willingness to enter into this Agreement, that the
Stockholders contemporaneously enter into the Voting Agreement
concurrently with the execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements set forth herein,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
respective meanings set forth below:
"Adjusted Liberty Media Group Outstanding Interest
Fraction": As defined in the Company Charter.
"Adjusted TCI Ventures Group Outstanding Interest
Fraction": As defined in the Company Charter.
"Affiliate": As defined in Rule 12b-2 under the Ex-
change Act.
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"@Home": At Home Corporation, a Delaware corpora-
tion.
"@Home Class A Shares": Series A Common Stock, par
value $.01 per share, of @Home.
"@Home Class B Shares": Series B Common Stock, par
value $.01 per share, of @Home.
"@Home Shares": Collectively, @Home Class A Shares
and @Home Class B Shares.
"Authorization": Any consent, approval or authorization of,
expiration or termination of any waiting period requirement (including
pursuant to the HSR Act) by, or filing, registration, qualification,
declaration or designation with, any Governmental Body.
"Benefit Arrangement": As defined in Section 5.9(a).
"Capital Spending Plan": As defined in Section 7.1.
"Certificate of Merger": The certificate of merger with
respect to the merger of Merger Sub with and into the Company,
containing the provisions required by, and executed in accordance with,
Section 251 of the DGCL.
"Certificates": Collectively, TCI Group Certificates,
Liberty Media Certificates and, if applicable, TCI Ventures
Certificates.
"Claim": As defined in Section 7.7(a).
"Closing": The closing of the Merger.
"Closing Date": The date on which the Closing occurs.
"Code": The Internal Revenue Code of 1986, as amended,
and all regulations promulgated thereunder, as in effect
from time to time.
"Committed Acquisition Shares": As defined in the
Company Charter.
"Company": Tele-Communications, Inc., a Delaware
corporation.
"Company Charter": The Amended and Restated Certifi-
cate of Incorporation of the Company, as amended to the date
hereof and as it may be further amended prior to the Effective
Date with the consent of Parent pursuant to Section 7.1.
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"Company Class A Preferred Stock": As defined in
Section 5.6(c).
"Company Class B Junior Preferred Stock": As defined
in Section 5.6(c).
"Company Common Stock": As defined in Section
5.6(a).
"Company Disclosure Statement": The disclosure
statement, dated the date of this Agreement, delivered by the
Company to Parent.
"Company Employees": As defined in Section 7.12(d).
"Company Permits": As defined in Section 5.4.
"Company Preferred Stock": As defined in Section
5.6(a).
"Company Representatives": As defined in Section
7.6.
"Company SEC Reports": As defined in Section 5.12.
"Company Series Preferred Stock": As defined in Sec-
tion 5.6(c).
"Company Stockholders Meeting": The stockholders
meeting of the Company in connection with the transactions con-
templated hereby, including any adjournments or postponements
thereof.
"Confidentiality Agreement": The Nondisclosure
Agreement, dated as of May 26, 1998, between Parent and the
Company.
"Contribution Agreement": As defined in Section
2.1(c).
"Control": With respect to any Person, the possession, direct
or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership
of voting securities, by contract, or otherwise.
"Controlled Group Liability": As defined in Section
5.9(e).
"DGCL": The Delaware General Corporation Law.
"Effective Time": As defined in Section 2.3.
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"Employee Plan": As defined in Section 5.9(a).
"Employees": As defined in Section 5.9(a).
"ERISA": The Employee Retirement Income Security Act
of 1974, as amended, and all regulations promulgated thereun-
der, as in effect from time to time.
"ERISA Affiliates": Any trade or business, whether or not
incorporated, that is treated as a single employer with the Company or
any of its Subsidiaries under Section 414(b) or (c) of the Code.
"Excess Parent Common Shares": As defined in Section
4.3(a).
"Excess Parent Liberty Tracking (Liberty) Shares":
As defined in Section 4.3(b).
"Excess Parent Liberty Tracking (Ventures) Shares":
As defined in Section 4.3(c).
"Exchange Act": The Securities Exchange Act of 1934,
as amended.
"Exchange Agent": As defined in Section 4.2(a).
"Exchange Fund": The TCI Group Exchange Fund, the
Liberty Media Exchange Fund or, if applicable, the TCI Ventures
Exchange Fund.
"Exchange Ratios": The TCI Group Exchange Ratios,
the Liberty Media Exchange Ratios and, if applicable, the TCI
Ventures Exchange Ratios.
"Executive Agreements": As defined in Section
7.12(a).
"FCC": The Federal Communications Commission.
"FCC Consent": Actions by the FCC granting its consent to the
transfer of control of the FCC Licenses in connection with the
consummation of the transactions contemplated hereby.
"FCC Licenses": All licenses, permits, construction permits
and other authorizations issued by the FCC in connection with the
business and operations of the Company and its Subsidiaries.
"Fractional Fund": The Fractional Parent Common
Fund, the Fractional Parent Liberty Tracking (Liberty) Fund or,
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if applicable, the Fractional Parent Liberty Tracking (Ven-
tures) Fund.
"Fractional Parent Common Fund": As defined in Sec-
tion 4.3(a).
"Fractional Parent Liberty Tracking (Liberty) Fund":
As defined in Section 4.3(b).
"Fractional Parent Liberty Tracking (Ventures) Fund":
As defined in Section 4.3(c).
"Governmental Body": Any federal, state, municipal,
political subdivision or other governmental department, court,
commission, board, bureau, agency or instrumentality, domestic
or foreign.
"Group": The TCI Group, the Liberty Media Group or
the TCI Ventures Group.
"HSR Act": The ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improve-
ments Act of 1976, as amended.
"Indemnified Parties": As defined in Section 7.7(a).
"Intellectual Property": All industrial and intellectual
property rights, including Proprietary Technology, patents, patent
applications, trademarks, trademark applications and registrations,
service marks, service ▇▇▇▇ applications and registrations, copyrights,
know-how, licenses, trade secrets, proprietary processes, formulae and
customer lists.
"knowledge": With respect to the Company, the actual
knowledge of any executive officer (determined in accordance with Rule
16a-1(f) under the Exchange Act as in effect on the date hereof) of the
Company and, with respect to Parent or Merger Sub, the actual knowledge
of any executive officer (determined in accordance with Rule 16a-1(f)
under the Exchange Act as in effect on the date hereof) of Parent or
Merger Sub, as the case may be.
"Law": Any foreign or domestic law, statute, code,
ordinance, rule, regulation promulgated, or order, judgment,
writ, stipulation, award, injunction or decree entered by a
Governmental Body.
"Liberty Media Corporation": Liberty Media
Corporation, a Delaware corporation.
"Liberty/Ventures Group": Collectively, the TCI
Ventures Group and the Liberty Media Group.
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"Liberty Group LLC": As defined in the Contribution
Agreement.
"Liberty Media Certificates": As defined in Section
4.2(b).
"Liberty Media Class A Exchange Ratio": As defined
in Section 4.1(b).
"Liberty Media Class A Stock": Series A Liberty Me-
dia Group Common Stock, par value $1.00 per share, of the
Company.
"Liberty Media Class B Exchange Ratio": As defined
in Section 4.1(b).
"Liberty Media Class B Stock": Series B Liberty Me-
dia Group Common Stock, par value $1.00 per share, of the
Company.
"Liberty Media Exchange Fund": As defined in Section
4.2(a).
"Liberty Media Exchange Ratios": As defined in Sec-
tion 4.1(b).
"Liberty Media Group": The assets, liabilities and
businesses of the Company known as "Liberty Media Group" (as
represented by the Liberty Media Tracking Shares).
"Liberty Media Group Outstanding Interest Fraction":
As defined in the Company Charter.
"Liberty Media Members": Those Subsidiaries of the
Company whose assets, businesses and results of operations are
attributed to the Liberty Media Group (assuming that the Re-
structuring had occurred as contemplated by Section 2.1).
"Liberty Media Option": As defined in Section
4.1(f).
"Liberty Media Share Consideration": As defined in
Section 4.1(d).
"Liberty Media Tracking Shares": Collectively,
shares of Liberty Media Class A Stock and shares of Liberty
Media Class B Stock.
"Material Adverse Effect": With respect to Parent, a
material adverse effect on the business, properties, operations
or financial condition of Parent and its Subsidiaries taken as
a whole, other than any such effect arising out of or resulting
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from general economic conditions or from changes in or affecting the
long-distance telecommunications industry generally. With respect to
the Company, a material adverse effect on the business, properties,
operations or financial condition of the Company and its Subsidiaries
taken as a whole, other than any such effect arising out of or
resulting from general economic conditions or from changes in or
affecting the cable television industry generally. With respect to the
TCI Group, a material adverse effect on the business, properties,
operations or financial condition of the TCI Group taken as a whole
(and assuming that the Restructuring had occurred as contemplated by
Section 2.1), other than any such effect arising out of or resulting
from general economic conditions or from changes in or affecting the
cable television industry generally. With respect to the
Liberty/Ventures Group, a material adverse effect on the business,
properties, operations or financial condition of the Liberty Media
Group and the TCI Ventures Group, taken as a whole, other than any such
effect arising out of or resulting from general economic conditions or
from changes in or affecting the cable television programming industry
generally.
"Merger": As defined in the Recitals.
"Merger Sub": Italy Merger Corp., a Delaware corpo-
ration and a direct wholly owned subsidiary of Parent.
"NDTC": The assets and business of the Company's
National Digital Television Center.
"Number of Shares Issuable with Respect to the Lib-
erty Media Group Inter-Group Interest": As defined in the Com-
pany Charter.
"Number of Shares Issuable with Respect to the TCI
Ventures Group Inter-Group Interest": As defined in the
Company Charter.
"NASDAQ": The Nasdaq Stock Market.
"NYSE": The New York Stock Exchange, Inc.
"Parent": AT&T Corp., a New York corporation.
"Parent Charter": The Certificate of Incorporation
of Parent, as amended to the date hereof.
"Parent Charter Amendment": The proposed amendment
to the Parent Charter set forth as Exhibit A hereto and ap-
proved by Parent's Board of Directors pursuant to this Agree-
ment.
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"Parent Common Option": As defined in Section
4.1(f).
"Parent Common Shares": Shares of common stock, par
value $1.00 per share, of Parent.
"Parent Disclosure Statement": The disclosure state-
ment, dated the date of this Agreement, delivered by Parent to
the Company.
"Parent Liberty Class A Stock": The Class A Liberty Group
Common Stock, par value $1.00 per share, of Parent having the terms set
forth in the Parent Charter Amendment.
"Parent Liberty Class B Stock": The Class B Liberty Group
Common Stock, par value $1.00 per share, of Parent having the terms set
forth in the Parent Charter Amendment.
"Parent Liberty Group": The Liberty Group as defined
in the Parent Charter Amendment.
"Parent Liberty Tracking Option": As defined in Sec-
tion 4.1(f).
"Parent Liberty Tracking Shares": Collectively, the
shares of Parent Liberty Class A Stock and the shares of Parent
Liberty Class B Stock.
"Parent Permits": As defined in Section 6.4.
"Parent Representatives": As defined in Section 7.6.
"Parent SEC Reports": As defined in Section 6.12(a).
"Parent Shares": Collectively, the Parent Common
Shares and the Parent Liberty Tracking Shares.
"Parent Stockholders Meeting": The stockholders
meeting of Parent in connection with the transactions contem-
plated hereby, including any adjournments or postponements
thereof.
"Permit": Any franchise, grant, authorization, li-
cense, permit, easement, variance, exception, consent, cer-
tificate, approval, clearance or order of any Governmental
Body.
"Person": Any individual or corporation, company,
partnership, trust, incorporated or unincorporated association,
joint venture or other entity of any kind.
"Proprietary Technology": All proprietary processes,
formulae, inventions, trade secrets, know-how, development
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tools and other proprietary rights used by the Company and its
Subsidiaries or Parent and its Subsidiaries, as the case may be,
pertaining to any product, software or service manufactured, marketed,
licensed or sold by the Company and its Subsidiaries or Parent and its
Subsidiaries, as the case may be, in the conduct of their business or
used, employed or exploited in the development, license, sale,
marketing, distribution or maintenance thereof, and all documentation
and media constituting, describing or relating to the above, including
manuals, memoranda, know-how, notebooks, software, records and
disclosures.
"Proxy Statement": The joint proxy statement to be
sent to stockholders of Parent and of the Company to solicit
proxies for use at the Stockholders Meetings.
"Registration Statement": As defined in Section 7.4.
"Restructuring": As defined in Section 2.1(d).
"Rule 145 Affiliate": As defined in Section 7.9.
"SEC": The Securities and Exchange Commission.
"Securities Act": The Securities Act of 1933, as
amended.
"Series C-Liberty Media Conversion Rate": 56.25 per
share.
"Series C-Liberty Media Exchange Ratio": As defined
in Section 4.1(i).
"Series C-Liberty Media Preferred Stock": As defined
in Section 5.6(c).
"Series C Preferred Stock": As defined in Section
5.6(c).
"Series C-TCI Group Preferred Conversion Rate":
132.86 per share.
"Series C-TCI Group Preferred Exchange Ratio": As
defined in Section 4.1(h).
"Series C-TCI Group Preferred Stock": As defined in
Section 5.6(c).
"Series D Preferred Stock": As defined in Section
5.6(c).
"Series E Preferred Stock": As defined in Section
5.6(c).
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"Series F Preferred Stock": As defined in Section
5.6(c).
"Series G Conversion Rate": 1.19 per share.
"Series G Exchange Ratio": As defined in Section
4.1(j).
"Series G Preferred Stock": As defined in Section
5.6(c).
"Series H Conversion Rate": 0.590625 per share.
"Series H Exchange Ratio": As defined in Section
4.1(k).
"Series H Preferred Stock": As defined in Section
5.6(c).
"Series Preferred Exchange Ratios": Collectively,
the Series C-TCI Group Preferred Exchange Ratio, the Series C-
Liberty Media Exchange Ratio, the Series G Exchange Ratio and
the Series H Exchange Ratio.
"Share Consideration": The TCI Group Share Consid-
eration, the Liberty Media Share Consideration or, if ap-
plicable, the TCI Ventures Share Consideration.
"Shares": Collectively, the TCI Group Shares, the
Liberty Media Tracking Shares and the TCI Ventures Tracking
Shares.
"Significant Subsidiary": As defined in Section
7.2(a).
"Sprint PCS Investment": The interests held by the
Company in the Sprint Spectrum partnerships.
"Stockholders": Collectively, ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇▇▇.
"Stockholders Meetings": The Company Stockholders
Meeting and the Parent Stockholders Meeting.
"Subsidiary": As to any Person, any other Person of which at
least (i) 50% of the equity and (ii) 50% of the voting interests are
owned, directly or indirectly, by such first Person; provided that, for
purposes of the covenants set forth in Article VII, references to
Subsidiaries shall not include any Person as to which such first
Person's voting interests are subject to a voting agreement, proxy,
management contract or other arrangement as a result of which such
first Person does not Control such other Person.
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"Superior Proposal": As defined in Section 7.2(b).
"Surviving Corporation": The surviving corporation
in the Merger.
"Takeover Proposal": As defined in Section 7.2(a).
"Tax": As defined in Section 5.10(d).
"Tax Return": As defined in Section 5.10(d).
"Tax Sharing Agreement": The Tax Sharing Agreement,
dated as of October 1, 1997, by and among the Company, TCI Com-
munications, Inc., Liberty Media Corporation and TCI Ventures
Group L.L.C.
"TCI Group": As defined in the Company Charter (assuming that
the Restructuring had occurred as contemplated by Section 2.1).
"TCI Group Class B Stock": Series B TCI Group Common
Stock, par value $1.00 per share, of the Company.
"TCI Group Certificates": As defined in Section
4.2(b).
"TCI Group Class A Exchange Ratio": As defined in
Section 4.1(a).
"TCI Group Class A Stock": Series A TCI Group Common
Stock, par value $1.00 per share, of the Company.
"TCI Group Class B Exchange Ratio": As defined in
Section 4.1(a).
"TCI Group Class B Stock": Series B TCI Group Common
Stock, par value $1.00 per share, of the Company.
"TCI Group Exchange Fund": As defined in Section
4.2(a).
"TCI Group Exchange Ratios": As defined in Section
4.1(a).
"TCI Group Members": Those Subsidiaries of the Company whose
assets, businesses and results of operations are attributed to the TCI
Group (assuming that the Restructuring had occurred as contemplated by
Section 2.1).
"TCI Group Option": As defined in Section 4.1(f).
"TCI Group Share Consideration": As defined in Sec-
tion 4.1(d).
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"TCI Group Shares": Collectively, the shares of TCI
Group Class A Stock and the shares of TCI Group Class B Stock.
"TCI Ventures Certificates": As defined in Section
4.2(b).
"TCI Ventures Class A Exchange Ratio": As defined in
Section 4.1(c).
"TCI Ventures Class A Stock": Series A TCI Ventures
Group Common Stock, par value $1.00 per share, of the Company.
"TCI Ventures Class B Exchange Ratio": As defined in
Section 4.1(c).
"TCI Ventures Class B Stock": Series B TCI Ventures
Group Common Stock, par value $1.00 per share, of the Company.
"TCI Ventures Exchange Fund": As defined in Section
4.2(a).
"TCI Ventures Exchange Ratios": As defined in Sec-
tion 4.1(c).
"TCI Ventures Group": The assets, liabilities and
businesses of the Company known as "TCI Ventures Group" (as
represented by the TCI Ventures Tracking Shares).
"TCI Ventures Group Outstanding Interest Fraction":
As defined in the Company Charter.
"TCI Ventures Members": Those Subsidiaries of the Company
whose assets, businesses and results of operations are attributed to
the TCI Ventures Group (assuming that the Restructuring had occurred as
contemplated by Section 2.1).
"TCI Ventures Option": As defined in Section 4.1(f).
"TCI Ventures Group Preferred Interest": As defined
in the Company Charter.
"TCI Ventures Share Consideration": As defined in
Section 4.1(d).
"TCI Ventures Tracking Shares": Collectively, shares
of TCI Ventures Class A Stock and shares of TCI Ventures Class
B Stock.
"TCG": Teleport Communications Group Inc., a Dela-
ware corporation.
"UA Notes": As defined in Section 5.6(e).
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"Voting Agreement": The Voting Agreement, dated the
date hereof, by and among Parent and each of the Stockholders.
"Westmarc Preferred": As defined in Section 7.20(b).
"Wholly Owned Subsidiary": As to any Person, a Sub-
sidiary of such Person 100% of the equity and voting interest
in which is owned, directly or indirectly, by such Person.
ARTICLE II
THE RESTRUCTURING AND THE MERGER
2.1. The Restructuring. (a) Subject to the terms and
conditions of this Agreement, prior to the Effective Time, and provided
that all of the conditions set forth in Article VIII to be satisfied
prior to the Closing have been satisfied or duly waived, the Company
shall take the actions set forth in Schedule 2.1(a). By virtue of the
transfers contemplated by Schedule 2.1(a), TCI Group will obtain
ownership of, among other things, (i) 31,060,000 @Home Class A Shares
and 15,400,000 @Home Class B Shares (representing all of the shares of
capital stock of @Home owned directly or indirectly by the Company),
together with any dividends, distributions or other consideration
whatsoever paid or distributed in respect thereof after the date of
this Agreement, (ii) 1,011,528 shares of Class A common stock of TCG
and 48,779,388 shares of Class B common stock of TCG (representing all
of the shares of capital stock of TCG owned directly or indirectly by
the Company), together with any dividends, distributions or other
consideration whatsoever paid or distributed in respect thereof or in
exchange therefor after the date of this Agreement, and (iii) all of
the assets of or outstanding equity interests in NDTC, together with
any dividends, distributions or other consideration whatsoever paid or
distributed in respect thereof after the date of this Agreement. The
actions contemplated by Schedule 2.1(a) will be effected on a tax-free
basis to the extent feasible, without creating any deferred
intercompany gain or other tax consequences, in a manner reasonably
satisfactory to Parent.
(b) To the extent practicable prior to the Effective Time,
and subject to the reasonable satisfaction of Parent with the form and
substance of such transactions, the Company shall use its reasonable
best efforts to cause direct or indirect TCI Group Subsidiaries owning
TCI Group Shares to merge into the Company (or their respective parent
corporations) or otherwise to liquidate so that such TCI Group Shares
are not outstanding for federal income tax purposes at the Effective
Time, provided that any such merger or liquidation is tax-free.
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(c) At or prior to the Effective Time, to the extent the
Board of Directors of the Company so determines, the Company may, but
shall not be required to: (i) amend and restate the certificate of
incorporation and bylaws of Liberty Media Corporation to be in
substantially the form set forth in Schedule 2.1(c)(i), (ii) cause
Liberty Media Corporation to enter into a Contribution Agreement in the
form set forth in Schedule 2.1(c)(ii) with the other parties set forth
in such agreement (the "Contribution Agreement"), and (iii) create the
Liberty Group LLC pursuant to an LLC Agreement in the form set forth in
Schedule 2.1(c)(iii). In the event the Company takes the foregoing
actions, the rights and obligations of Liberty Media Corporation under
the agreement contemplated by Section 7.18 shall be assignable to the
Liberty Group LLC. In the event the Company causes Liberty Media
Corporation to execute the Contribution Agreement, Parent will execute
and deliver a letter at the Closing in the form attached as Schedule
2.1(c)(iv).
(d) Subject to the terms and conditions of this Agreement,
prior to the Effective Time, provided that all of the conditions set
forth in Article VIII to be satisfied prior to the Closing have been
satisfied or duly waived, the Company and its appropriate Affiliates
shall, on a tax-free basis, make such other transfers of assets and
businesses, and assumptions of liabilities, if any, as are reasonably
necessary in order to cause the representations and warranties in
Section 5.17 to be true and correct in all material respects.
The actions described in this Section 2.1 are collectively re-
ferred to as the "Restructuring."
2.2. The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Merger Sub shall be merged with and
into the Company in accordance with the provisions of Section 251 of
the DGCL and with the effect provided in Sections 259 and 261 of the
DGCL. The separate corporate existence of Merger Sub shall thereupon
cease and the Company shall be the Surviving Corporation and shall
continue its corporate existence as a Subsidiary of Parent and shall
continue to be governed by the laws of the State of Delaware. At the
election of Parent, any direct Wholly Owned Subsidiary of Parent with
respect to which the representation and warranty set forth in Section
6.15 is true and correct may be substituted for Merger Sub as a
constituent corporation in the Merger by an appropriate amendment to
this Agreement complying with the provisions of the DGCL.
2.3. Effective Time. The Merger shall become effective on the
date and at the time (the "Effective Time") that the Certificate of
Merger shall have been accepted for filing by the Secretary of State of
the State of Delaware (or such later date and time as may be specified
in the Certificate of
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Merger by mutual agreement of Parent, Merger Sub and the Company),
which shall be on the Closing Date or as soon as practicable
thereafter.
2.4. Closing. Subject to the fulfillment or waiver of the
conditions set forth in Article VIII, the Closing shall take place (a)
at the offices of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m. on the earliest practicable date (but
no later than the fifth business day) following the satisfaction or
waiver of the conditions set forth in Article VIII (other than those
conditions to be satisfied or waived at the Closing) or (b) at such
other place and/or time and/or on such other date as Parent, Merger Sub
and the Company may agree.
ARTICLE III
TERMS OF MERGER
3.1. Certificate of Incorporation. At the Effective Time, the
Company Charter shall be amended pursuant to the Certificate of Merger
to be identical to the Certificate of Incorporation of Merger Sub in
effect immediately prior to the Effective Time, except that Article
FIRST thereof shall read as follows: "The name of the Corporation
(which is hereinafter called the "Corporation") is Tele-Communications,
Inc." Such Company Charter as so amended shall be the Certificate of
Incorporation of the Surviving Corporation, until duly amended in
accordance with the terms thereof and of the DGCL.
3.2. The By-Laws. The By-Laws of the Company shall be amended
as of the Effective Time to be identical to the ByLaws of Merger Sub
immediately prior to the Effective Time and, in such amended form,
shall be the By-Laws of the Surviving Corporation, until duly amended
in accordance with the terms thereof, of the Certificate of
Incorporation of the Surviving Corporation and of the DGCL.
3.3. Directors. The directors of the Company at the Effective
Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-Laws.
3.4. Officers. The officers of the Company at the Effective
Time shall, from and after the Effective Time, be the officers of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with
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the Surviving Corporation's Certificate of Incorporation and
By-Laws.
ARTICLE IV
SHARE CONSIDERATION; CONVERSION OR
CANCELLATION OF SHARES IN THE MERGER
4.1. Share Consideration; Conversion or Cancellation of
Shares in the Merger. Subject to the provisions of this Article IV, at
the Effective Time, by virtue of the Merger and without any action on
the part of the holders thereof, the shares of the constituent
corporations shall be converted or cancelled as follows:
(a) Each share of TCI Group Class A Stock issued and
outstanding immediately prior to the Effective Time shall be
converted into the right to receive .7757 of a Parent Common Share
(the "TCI Group A Exchange Ratio") and each share of TCI Group
Class B Stock issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive .8533
of a Parent Common Share (the "TCI Group B Exchange Ratio" and,
together with the TCI Group A Exchange Ratio, the "TCI Group
Exchange Ratios"). If, prior to the Effective Time, Parent should
split or combine the Parent Common Shares, or pay a stock dividend
or other stock distribution in Parent Common Shares, or otherwise
effect any transaction that changes the Parent Common Shares into
any other securities (including securities of another
corporation), or make any other dividend or distribution on the
Parent Common Shares (other than normal quarterly cash dividends
as the same may be adjusted from time to time in the ordinary
course consistent with past practice), then the TCI Group Exchange
Ratios and the terms of the foregoing exchanges will be
appropriately adjusted to reflect such split, combination,
transaction, dividend or other distribution or change.
(b) Each share of Liberty Media Class A Stock issued and
outstanding immediately prior to the Effective Time shall be
converted into the right to receive one share of Parent Liberty
Class A Stock (the "Liberty Media Class A Exchange Ratio") and
each share of Liberty Media Class B Stock issued and outstanding
immediately prior to the Effective Time shall be converted into
the right to receive one share of Parent Liberty Class B Stock
(the "Liberty Media Class B Exchange Ratio" and, together with the
Liberty Media Class A Exchange Ratio, the "Liberty Media Exchange
Ratios"). If, prior to the Effective Time, Parent should effect
any transaction that changes the Parent Common Shares into the
securities of another corporation, the
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Liberty Media Exchange Ratios and the terms of the foregoing
exchanges will be appropriately adjusted to provide for the
issuance of shares of such other corporation having terms
identical to the appropriate series of Parent Liberty Tracking
Shares.
(c) To the extent that any TCI Ventures Tracking Shares
remain outstanding as of the Effective Time, each share of TCI
Ventures Class A Stock issued and outstanding immediately prior to
the Effective Time shall be converted into the right to receive
.52 of a share of Parent Liberty Class A Stock (the "TCI Ventures
Class A Exchange Ratio") and each share of TCI Ventures Class B
Stock issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive .52 of a share
of Parent Liberty Class B Stock (the "TCI Ventures Class B
Exchange Ratio" and, together with the TCI Ventures Class A
Exchange Ratio, the "TCI Ventures Exchange Ratios"); provided that
the Company may, in its discretion, adjust the TCI Ventures
Exchange Ratios as it deems appropriate to reflect the relative
values of the TCI Ventures Group and the Liberty Media Group. If,
prior to the Effective Time, Parent should effect any transaction
that changes the Parent Common Shares into the securities of
another corporation, the Liberty Media Exchange Ratios and the
terms of the foregoing exchanges will be appropriately adjusted to
provide for the issuance of shares of such other corporation
having terms identical to the appropriate series of Parent Liberty
Tracking Shares.
(d) All Shares converted into the right to receive Parent
Common Shares or Parent Liberty Tracking Shares pursuant to this
Section 4.1 shall cease to be outstanding, shall be canceled and
retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall thereafter cease to have any
rights with respect to such Shares, except the right to receive
for each of the Shares, upon the surrender of such certificate in
accordance with Section 4.2, (i) in the case of each series of TCI
Group Shares, the amount of Parent Common Shares with respect to
each such series specified above (the "TCI Group Share
Consideration") and cash in lieu of fractional Parent Common
Shares as contemplated by Section 4.3, (ii) in the case of Liberty
Media Tracking Shares, the amount of Parent Liberty Tracking
Shares specified above (the "Liberty Media Share Consideration")
and cash in lieu of fractional Parent Liberty Tracking Shares as
contemplated by Section 4.3 and (iii) in the case of TCI Ventures
Tracking Shares, if applicable, the amount of Parent Liberty
Tracking Shares specified above (the "TCI Ventures Share
Consideration") and cash in lieu of fractional Parent Liberty
Tracking Shares as contemplated by Section 4.3.
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(e) Each share of Common Stock, par value $0.01 per share, of
Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock,
par value $0.01 per share, of the Surviving Corporation.
(f) (i) Each of the then outstanding stock options, if any,
to purchase TCI Group Shares (each, a "TCI Group Option") issued
by the Company pursuant to any stock option or similar plan of the
Company, and any non-plan options to acquire TCI Group Shares set
forth in Section 5.6 of the Company Disclosure Statement issued by
the Company pursuant to an option agreement or otherwise issued by
the Company, shall, by virtue of the Merger, and without any
further action on the part of any holder thereof, be assumed by
Parent and converted into a option (a "Parent Common Option") to
purchase that number of Parent Common Shares determined by
multiplying the number of TCI Group Shares subject to such TCI
Group Option at the Effective Time by the appropriate TCI Group
Exchange Ratio, at an exercise price per Parent Common Share equal
to the exercise price per share of such TCI Group Option
immediately prior to the Effective Time divided by such TCI Group
Exchange Ratio, rounded down to the nearest whole cent. If the
foregoing calculation results in an assumed TCI Group Option being
exercisable for a fraction of a Parent Common Share, then the
number of Parent Common Shares subject to such option shall be
rounded up to the nearest whole number of shares, with no cash
being payable for such fractional share. The terms and conditions
of each Parent Common Option shall otherwise remain as set forth
in the TCI Group Option converted into such Parent Common Option.
(ii) Each of the then outstanding stock options, if any, to
purchase Liberty Media Tracking Shares (each, a "Liberty Media
Option") issued by the Company pursuant to any stock option or
similar plan of the Company, and any non-plan options to acquire
Liberty Media Tracking Shares set forth in Section 5.6 of the
Company Disclosure Statement issued by the Company pursuant to an
option agreement or otherwise issued by the Company, shall, by
virtue of the Merger, and without any further action on the part
of any holder thereof, be assumed by Parent and converted into an
option (a "Parent Liberty Tracking Option") to purchase a number
of Parent Liberty Tracking Shares equal to the number of Liberty
Media Tracking Shares subject to such Liberty Media Option at the
Effective Time, at an exercise price per Parent Liberty Tracking
Share equal to the exercise price per share of such Liberty Media
Option immediately prior to the Effective Time. The terms and
conditions of each Parent Liberty Tracking Option shall otherwise
remain as set forth in the Liberty Media Option converted into
such Parent Liberty Tracking Option.
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(iii) Each of the then outstanding stock options, if any, to
purchase TCI Ventures Tracking Shares (each, a "TCI Ventures
Option") issued by the Company pursuant to any stock option or
similar plan of the Company, and any non-plan options to acquire
TCI Ventures Tracking Shares set forth in Section 5.6 of the
Company Disclosure Statement issued by the Company pursuant to an
option agreement or otherwise issued by the Company, shall, by
virtue of the Merger, and without any further action on the part
of any holder thereof, be assumed by Parent and converted into a
Parent Liberty Tracking Option to purchase that number of Parent
Liberty Tracking Shares determined by multiplying the number of
TCI Ventures Tracking Shares subject to such TCI Ventures Option
at the Effective Time by the appropriate TCI Ventures Exchange
Ratio, at an exercise price per Parent Liberty Tracking Share
equal to the exercise price per share of such TCI Ventures Option
immediately prior to the Effective Time divided by such TCI
Ventures Exchange Ratio, rounded down to the nearest whole cent.
If the foregoing calculation results in an assumed TCI Ventures
Option being exercisable for a fraction of a Parent Liberty
Tracking Share, then the number of Parent Liberty Tracking Shares
subject to such option shall be rounded up to the nearest whole
number of shares, with no cash being payable for such fractional
share. The terms and conditions of each Parent Liberty Tracking
Option shall otherwise remain as set forth in the TCI Ventures
Option converted into such Parent Liberty Tracking Option.
(iv) The adjustment provided herein with respect to any
options which are "incentive stock options" (as defined in Section
422 of the Code) shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Code.
(v) All restricted Shares granted pursuant to any Employee
Plan or Benefit Arrangement, and all individual awards of
restricted Shares not granted pursuant to any Employee Plan or
Benefit Arrangement, shall be converted into restricted Parent
Common Shares or Parent Liberty Tracking Shares, as the case may
be, pursuant to this Section 4.1 and will remain subject to the
same restrictions applicable to such restricted Shares immediately
prior to the Effective Time.
(vi) The Company shall take all action necessary to provide
that all outstanding awards of any type granted pursuant to any
Employee Plan or Benefit Arrangement, and all outstanding
individual awards not granted pursuant to any Employee Plan or
Benefit Arrangement, will not vest or become exercisable on an
accelerated basis in connection
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with the Merger and will not terminate if not exercised
prior to the Closing Date.
(g) Each share of Company Class B Junior Preferred Stock
issued and outstanding immediately prior to the Effective Time,
other than any shares with respect to which appraisal rights are
perfected under the DGCL, shall remain outstanding in the Merger
as one share of Class B Junior Preferred Stock of the Surviving
Corporation.
(h) Each share of Series C-TCI Group Preferred Stock issued
and outstanding immediately prior to the Effective Time, other
than any shares with respect to which appraisal rights are
perfected under the DGCL, shall be converted into the right to
receive a number of Parent Common Shares equal to the product of
(i) the Series C-TCI Group Preferred Conversion Rate, and (ii) the
TCI Group A Exchange Ratio (the "Series C-TCI Group Preferred
Exchange Ratio").
(i) Each share of Series C-Liberty Media Preferred Stock
issued and outstanding immediately prior to the Effective Time
shall be converted into the right to receive a number of shares of
Parent Liberty Class A Stock equal to the product of (i)the Series
C-Liberty Media Conversion Rate, and (ii) the Liberty Media Class
A Exchange Ratio (the "Series C-Liberty Media Exchange Ratio").
(j) Each share of Series G Preferred Stock issued and
outstanding immediately prior to the Effective Time, other than
any shares with respect to which appraisal rights are perfected
under the DGCL, shall be converted into the right to receive a
number of Parent Common Shares equal to the product of (i) the
Series G Conversion Rate, and (ii) the TCI Group A Exchange Ratio
(the "Series G Preferred Ratio").
(k) Each share of Series H Preferred Stock issued and
outstanding immediately prior to the Effective Time shall be
converted into the right to receive a number of shares of Parent
Liberty Class A Stock equal to the product of (i)the Series H
Conversion Rate, and (ii) the Liberty Media Class A Exchange Ratio
(the "Series H Preferred Ratio").
(l) If, prior to the Effective Time, Parent should split or
combine the Parent Common Shares, or pay a stock dividend or other
stock distribution in Parent Common Shares, or otherwise effect
any transaction that changes the Parent Common Shares into any
other securities (including securities of another corporation), or
make any other dividend or distribution on the Parent Common
Shares (other than normal quarterly cash dividends as the same
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may be adjusted from time to time in the ordinary course
consistent with past practice), the Series Preferred Exchange
Ratios and the terms of the exchanges described in Sections 4.1(h)
through (k) will be appropriately adjusted to provide for the
issuance of shares of such other corporation having terms
substantially identical to the Parent Common Shares or identical
to the appropriate series of Parent Liberty Tracking Shares, as
appropriate.
4.2. Payment for Shares in the Merger. The manner of making
payment for Shares in the Merger shall be as follows:
(a) At the Effective Time, Parent shall make available to an
exchange agent selected by Parent and reasonably acceptable to the
Company (the "Exchange Agent"), (i) for the benefit of those
Persons who immediately prior to the Effective Time were the
holders of TCI Group Shares, a sufficient number of certificates
representing Parent Common Shares required to effect the delivery
of the aggregate TCI Group Share Consideration required to be
issued pursuant to Section 4.1 (the certificates representing
Parent Common Shares comprising such aggregate TCI Group Share
Consideration being hereinafter referred to as the "TCI Group
Exchange Fund"), (ii) for the benefit of those Persons who
immediately prior to the Effective Time were the holders of
Liberty Media Tracking Shares, a sufficient number of certificates
representing the appropriate series of Parent Liberty Tracking
Shares required to effect the delivery of the aggregate Liberty
Media Share Consideration required to be issued pursuant to
Section 4.1 (the certificates representing Parent Liberty Tracking
Shares comprising such aggregate Liberty Media Share Consideration
being hereinafter referred to as the "Liberty Media Exchange
Fund"), and (iii) if applicable, for the benefit of those Persons
who immediately prior to the Effective Time were the holders of
TCI Ventures Tracking Shares, a sufficient number of certificates
representing the appropriate series of Parent Liberty Tracking
Shares required to effect the delivery of the aggregate TCI
Ventures Share Consideration required to be issued pursuant to
Section 4.1 (the certificates representing Parent Liberty Tracking
Shares comprising such aggregate TCI Ventures Share Consideration
being hereinafter referred to as the "TCI Ventures Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Parent Common Shares and the Parent
Liberty Tracking Shares contemplated to be issued pursuant to
Section 4.1 and effect the sales provided for in Section 4.3 out
of the applicable Exchange Fund. The Exchange Funds shall not be
used for any other purpose.
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(b) (i) Promptly after the Effective Time, the Exchange Agent
shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time
represented outstanding TCI Group Shares (the "TCI Group
Certificates") (1) a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and
title to the TCI Group Certificates shall pass, only upon proper
delivery of the TCI Group Certificates to the Exchange Agent) and
(2) instructions for use in effecting the surrender of the TCI
Group Certificates for payment therefor. Upon surrender of TCI
Group Certificates for cancellation to the Exchange Agent,
together with such letter of transmittal duly executed and any
other required documents, the holder of such TCI Group
Certificates shall be entitled to receive for each of the TCI
Group Shares represented by such TCI Group Certificates the
appropriate TCI Group Share Consideration and the TCI Group
Certificates so surrendered shall forthwith be canceled. Until so
surrendered, TCI Group Certificates shall represent solely the
right to receive the appropriate TCI Group Share Consideration and
any cash in lieu of fractional Parent Common Shares as
contemplated by Section 4.3 with respect to each of the TCI Group
Shares represented thereby. No dividends or other distributions
that are declared on the Parent Common Shares and payable to the
holders of record thereof after the Effective Time will be paid to
Persons entitled by reason of the Merger to receive Parent Common
Shares until such Persons surrender their TCI Group Certificates.
Upon such surrender, there shall be paid to the Person in whose
name the Parent Common Shares are issued any dividends or other
distributions having a record date after the Effective Time and
payable with respect to such Parent Common Shares between the
Effective Time and the time of such surrender. After such
surrender, there shall be paid on the applicable payment date, to
the Person in whose name the Parent Common Shares are issued, any
dividends or other distributions on such Parent Common Shares, as
applicable, which shall have a record date after the Effective
Time and prior to such surrender and a payment date after such
surrender. In no event shall the Persons entitled to receive such
dividends or other distributions be entitled to receive interest
on such dividends or other distributions.
(ii) Promptly after the Effective Time, the Exchange
Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time
represented outstanding Liberty Media Tracking Shares (the
"Liberty Media Certificates") (1) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of
loss and title to the Liberty Media Certificates shall pass, only
upon proper delivery of the Liberty Media Certificates to the
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Exchange Agent) and (2) instructions for use in effecting the
surrender of the Liberty Media Certificates for payment therefor.
Upon surrender of Liberty Media Certificates for cancellation to
the Exchange Agent, together with such letter of transmittal duly
executed and any other required documents, the holder of such
Liberty Media Certificates shall be entitled to receive for each
of the Liberty Media Tracking Shares represented by such Liberty
Media Certificates the appropriate Liberty Media Share
Consideration and the Liberty Media Certificates so surrendered
shall forthwith be canceled. Until so surrendered, Liberty Media
Certificates shall represent solely the right to receive the
appropriate Liberty Media Share Consideration and any cash in lieu
of fractional Parent Liberty Tracking Shares as contemplated by
Section 4.3 with respect to each of the Liberty Media Tracking
Shares represented thereby. No dividends or other distributions
that are declared on the Parent Liberty Tracking Shares and
payable to the holders of record thereof after the Effective Time
will be paid to Persons entitled by reason of the Merger to
receive Parent Liberty Tracking Shares until such Persons
surrender their Liberty Media Certificates. Upon such surrender,
there shall be paid to the Person in whose name the Parent Liberty
Tracking Shares are issued any dividends or other distributions
having a record date after the Effective Time and payable with
respect to such Parent Liberty Tracking Shares between the
Effective Time and the time of such surrender. After such
surrender, there shall be paid on the applicable payment date, to
the Person in whose name the Parent Liberty Tracking Shares are
issued, any dividends or other distributions on such Parent
Liberty Tracking Shares, as applicable, which shall have a record
date after the Effective Time and prior to such surrender and a
payment date after such surrender. In no event shall the Persons
entitled to receive such dividends or other distributions be
entitled to receive interest on such dividends or other
distributions.
(iii) Promptly after the Effective Time, the Exchange
Agent shall mail to each holder of record, if any, of a
certificate or certificates which immediately prior to the
Effective Time represented outstanding TCI Ventures Tracking
Shares (the "TCI Ventures Certificates") (1) a form of letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the TCI Ventures Certificates shall
pass, only upon proper delivery of the TCI Ventures Certificates
to the Exchange Agent) and (2) instructions for use in effecting
the surrender of the TCI Ventures Certificates for payment
therefor. Upon surrender of TCI Ventures Certificates for
cancellation to the Exchange Agent, together with such letter of
transmittal duly executed and any
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other required documents, the holder of such TCI Ventures
Certificates shall be entitled to receive for each of the TCI
Ventures Tracking Shares represented by such TCI Ventures
Certificates the appropriate TCI Ventures Share Consideration and
the TCI Ventures Certificates so surrendered shall forthwith be
canceled. Until so surrendered, TCI Ventures Certificates shall
represent solely the right to receive the appropriate TCI Ventures
Share Consideration and any cash in lieu of fractional Parent
Liberty Tracking Shares as contemplated by Section 4.3 with
respect to each of the TCI Ventures Tracking Shares represented
thereby. No dividends or other distributions that are declared on
the Parent Liberty Tracking Shares and payable to the holders of
record thereof after the Effective Time will be paid to Persons
entitled by reason of the Merger to receive Parent Liberty
Tracking Shares until such Persons surrender their TCI Ventures
Certificates. Upon such surrender, there shall be paid to the
Person in whose name the Parent Liberty Tracking Shares are issued
any dividends or other distributions having a record date after
the Effective Time and payable with respect to such Parent Liberty
Tracking Shares between the Effective Time and the time of such
surrender. After such surrender, there shall be paid on the
applicable payment date, to the Person in whose name the Parent
Liberty Tracking Shares are issued, any dividends or other
distributions on such Parent Liberty Tracking Shares, as
applicable, which shall have a record date after the Effective
Time and prior to such surrender and a payment date after such
surrender. In no event shall the Persons entitled to receive such
dividends or other distributions be entitled to receive interest
on such dividends or other distributions.
(iv) If any cash or any certificate representing Parent
Common Shares or Parent Liberty Tracking Shares is to be paid to
or issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the Certificate so surrendered
shall be properly endorsed and otherwise in proper form for
transfer and that the Person requesting such exchange shall pay to
the Exchange Agent any transfer or other taxes required by reason
of the issuance of certificates for such Parent Common Shares or
Parent Liberty Tracking Shares, as applicable, in a name other
than that of the registered holder of the Certificate surrendered,
or shall establish to the reasonable satisfaction of the Exchange
Agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of Shares for any Parent
Common Shares or Parent Liberty Tracking Shares, as applicable, or
dividends thereon or other distributions with respect thereto
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or, in accordance with Section 4.3, proceeds of the sale of
fractional interests, delivered to a public official pursuant to
applicable escheat law. The Exchange Agent shall not be entitled
to vote or exercise any rights of ownership with respect to the
Parent Common Shares or Parent Liberty Tracking Shares held by it
from time to time hereunder, except that, subject to applicable
escheat law, it shall receive and hold all dividends or other
distributions paid or distributed with respect to such Parent
Common Shares or Parent Liberty Tracking Shares, as applicable,
for the account of the Persons entitled thereto.
(c) Certificates surrendered for exchange by any Person
constituting a Rule 145 Affiliate of the Company shall not be
exchanged for certificates representing Parent Common Shares or
Parent Liberty Tracking Shares, as applicable, until Parent has
received a written agreement from such Person as provided in
Section 7.9.
(d) Any portion of the applicable Exchange Fund and the
applicable Fractional Fund (and any dividends or other
distributions with respect to such portion of the applicable
Exchange Fund) which remains unclaimed by the former stockholders
of the Company for one year after the Effective Time shall be
delivered to Parent, upon demand of Parent, and any former
stockholders of the Company shall thereafter look only to Parent
for payment of their claim for the applicable Share Consideration
(and any such dividends or other distributions) or for any cash in
lieu of fractional Parent Common Shares or Parent Liberty Tracking
Shares, as applicable.
(e) In the event that any Certificate has been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such
Person of a bond in such reasonable amount as Parent may direct as
indemnity against any claim that may be made against it with
respect to such Certificate, Parent will, in exchange for such
lost, stolen or destroyed Certificate, issue or cause to be issued
the number of Parent Common Shares or Parent Liberty Tracking
Shares, as applicable, and pay or cause to be paid any amounts
deliverable in respect thereof pursuant to this Article IV.
4.3. Fractional Shares. (a) No fractional Parent Common
Shares shall be issued in the Merger. In lieu of any such fractional
securities, each holder of TCI Group Shares who would otherwise have
been entitled to a fraction of a Parent Common Share upon surrender of
TCI Group Certificates for exchange pursuant to this Article IV will be
paid an amount in cash (without interest) equal to such holder's
proportionate
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interest in the net proceeds from the sale or sales in the open market
by the Exchange Agent, on behalf of all such holders, of the aggregate
fractional Parent Common Shares issued pursuant to this Article IV. As
soon as practicable following the Effective Time, the Exchange Agent
shall determine the excess of (i) the number of full Parent Common
Shares delivered to the Exchange Agent by Parent over (ii) the
aggregate number of full Parent Common Shares to be distributed to
holders of TCI Group Shares (such excess being herein called the
"Excess Parent Common Shares"). The Exchange Agent, as agent for the
former holders of TCI Group Shares, shall sell the Excess Parent Common
Shares at the prevailing prices on the NYSE. The sales of the Excess
Parent Common Shares by the Exchange Agent shall be executed on the
NYSE through one or more member firms of the NYSE and shall be executed
in round lots to the extent practicable. Parent shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent, incurred
in connection with such sale of Excess Parent Common Shares. Until the
net proceeds of such sale have been distributed to the former holders
of TCI Group Shares, the Exchange Agent will hold such proceeds in
trust for such former holders (the "Fractional Parent Common Fund"). As
soon as practicable after the determination of the amount of cash to be
paid to former holders of TCI Group Shares in lieu of any fractional
interests, the Exchange Agent shall make available in accordance with
this Agreement such amounts to such former holders.
(b) No fractional Parent Liberty Tracking Shares shall be
issued in the Merger to any former holder of Liberty Media Tracking
Shares. In lieu of any such fractional securities, each holder of
Liberty Media Tracking Shares who would otherwise have been entitled to
a fraction of a Parent Liberty Tracking Share upon surrender of Liberty
Media Certificates for exchange pursuant to this Article IV will be
paid an amount in cash (without interest) equal to such holder's
proportionate interest in the net proceeds from the sale or sales in
the open market by the Exchange Agent, on behalf of all such holders,
of the aggregate fractional Parent Liberty Tracking Shares attributable
to the Liberty Media Tracking Shares and issued pursuant to this
Article IV. As soon as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (i) the number of full
Parent Liberty Tracking Shares delivered to the Exchange Agent by
Parent over (ii) the aggregate number of full Parent Liberty Tracking
Shares to be distributed to holders of Liberty Media Tracking Shares
(such excess being herein called the "Excess Parent Liberty Tracking
(Liberty) Shares"). The Exchange Agent, as agent for the former holders
of Liberty Media Tracking Shares, shall sell the Excess Parent Liberty
Tracking (Liberty) Shares at the prevailing prices on the NYSE (or on
such other exchange or trading system on which the Parent Liberty
Tracking Shares are authorized). The sales of the Excess Parent Liberty
Tracking (Liberty) Shares by the
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Exchange Agent shall be executed in such manner as determined
reasonably by the Exchange Agent. Parent shall pay all commissions,
transfer taxes and other out-of-pocket transaction costs, including the
expenses and compensation of the Exchange Agent, incurred in connection
with such sale of Excess Parent Liberty Tracking (Liberty) Shares.
Until the net proceeds of such sale have been distributed to the former
holders of Liberty Media Tracking Shares, the Exchange Agent will hold
such proceeds in trust for such former holders (the "Fractional Parent
Liberty Tracking (Liberty) Fund"). As soon as practicable after the
determination of the amount of cash to be paid to former holders of
Liberty Media Tracking Shares in lieu of any fractional interests, the
Exchange Agent shall make available in accordance with this Agreement
such amounts to such former holders.
(c) If applicable, no fractional Parent Liberty Tracking
Shares shall be issued in the Merger to any former holder of TCI
Ventures Tracking Shares. In lieu of any such fractional securities,
each holder of TCI Ventures Tracking Shares who would otherwise have
been entitled to a fraction of a Parent Liberty Tracking Share upon
surrender of TCI Ventures Certificates for exchange pursuant to this
Article IV will be paid an amount in cash (without interest) equal to
such holder's proportionate interest in the net proceeds from the sale
or sales in the open market by the Exchange Agent, on behalf of all
such holders, of the aggregate fractional Parent Liberty Tracking
Shares attributable to the TCI Ventures Tracking Shares and issued
pursuant to this Article IV. As soon as practicable following the
Effective Time, the Exchange Agent shall determine the excess of (i)
the number of full Parent Liberty Tracking Shares delivered to the
Exchange Agent by Parent over (ii) the aggregate number of full Parent
Liberty Tracking Shares to be distributed to holders of TCI Ventures
Tracking Shares (such excess being herein called the "Excess Parent
Liberty Tracking (Ventures) Shares"). The Exchange Agent, as agent for
the former holders of TCI Ventures Tracking Shares, shall sell the
Excess Parent Liberty Tracking (Ventures) Shares at the prevailing
prices on the NYSE (or on such other exchange or trading system on
which the Parent Liberty Tracking Shares are authorized). The sales of
the Excess Parent Liberty Tracking (Ventures) Shares by the Exchange
Agent shall be executed in such manner as determined reasonable by the
Exchange Agent. Parent shall pay all commissions, transfer taxes and
other out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent, incurred in connection with such
sale of Excess Parent Liberty Tracking (Ventures) Shares. Until the net
proceeds of such sale have been distributed to the former holders of
TCI Ventures Tracking Shares, the Exchange Agent will hold such
proceeds in trust for such former holders (the "Fractional Parent
Liberty Tracking (Ventures) Fund"). As soon as practicable after the
determination of the amount of cash to be paid to former holders of TCI
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33
Ventures Tracking Shares in lieu of any fractional interests, the
Exchange Agent shall make available in accordance with this Agreement
such amounts to such former holders.
4.4. Transfer of Shares after the Effective Time. No
transfers of Shares shall be made on the stock transfer books of the
Company after the close of business on the day prior to the date of the
Effective Time.
4.5. Treatment of Series F Preferred Stock. Prior to the
Effective Time, the Company shall take all action necessary either (a)
to cause each share of Series F Preferred Stock beneficially owned by
it or any of its Subsidiaries to be converted into 1,496.65 shares of
TCI Group Class A Stock in accordance with the terms of the Company
Charter, or (b) to redeem all shares of Series F Preferred Stock in
exchange for an aggregate of 416,528,172 shares of TCI Group Class A
Stock, plus any additional shares of TCI Group Class A Stock issuable
in accordance with the Company Charter as a result of the accrual of
dividends thereon after the date hereof.
4.6. Company Series Preferred Stock. After the Effective
Time, Parent and the Surviving Corporation shall establish reasonable
procedures to facilitate the exchange of the Company Series Preferred
Stock for Parent Common Shares or Parent Liberty Tracking Shares as
contemplated by Sections 4.1(g) through (l). All shares of Company
Series Preferred Stock converted into the right to receive Parent
Common Shares or Parent Liberty Tracking Shares pursuant to Section 4.1
shall cease to be outstanding, shall be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such
shares of Company Series Preferred Stock shall thereafter cease to have
any rights with respect to such shares of Company Series Preferred
Stock, except the right to receive therefor, upon the surrender of such
certificate in accordance with such procedures, the Parent Common
Shares or Parent Liberty Tracking Shares specified therein and cash in
lieu of any fractional shares as reasonably determined by the Surviving
Corporation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub that, except as set forth in the Company Disclosure
Statement:
5.1. Organization, Etc. of the Company. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all
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34
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now conducted and proposed
by the Company to be conducted. The Company is duly qualified and in
good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes
such qualification necessary and where the failure to be so qualified
or in good standing has or would have, individually or in the
aggregate, a Material Adverse Effect on the Company or on the TCI
Group.
5.2. Subsidiaries. Section 5.2 of the Company Disclosure
Statement contains a complete and accurate list of all of the
Subsidiaries of the Company (by Group) as of the date hereof. Each
Subsidiary of the Company (a) is a corporation or other legal entity
duly organized, validly existing and (if applicable) in good standing
under the laws of the jurisdiction of its organization and has all
requisite corporate, partnership or similar power and authority to own
its properties and conduct its business and operations as currently
conducted, except where the failure to be duly organized, validly
existing and in good standing or to have such power and authority does
not and would not have, individually or in the aggregate, a Material
Adverse Effect on the Company or on the TCI Group, and (b) is duly
qualified and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the
failure to be so qualified or in good standing does not and would not
have, individually or in the aggregate, a Material Adverse Effect on
the Company or on the TCI Group.
5.3. Agreement. The Company has all necessary corporate power
and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement and the consummation of the transactions
contemplated hereby have been approved by the Board of Directors of the
Company and have been duly authorized by all other necessary corporate
action on the part of the Company, except for the approval of the
Company's stockholders contemplated by Section 7.3. This Agreement has
been duly executed and delivered by a duly authorized officer of the
Company and (assuming the due execution and delivery of this Agreement
by the other parties hereto) constitutes a valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms. The Board of Directors of the Company has approved the
transactions contemplated by this Agreement and the Voting Agreement,
including the Merger, so as to render the provisions of Section 203 of
the DGCL inapplicable to the transactions contemplated by this
Agreement and to Parent and Merger Sub in connection with this
Agreement and the Voting Agreement. The Board of Directors of the
Company
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35
has directed that this Agreement be submitted to the stockholders of
the Company for their approval. The affirmative approval, by vote or
written consent, of the holders of Shares representing a majority of
the votes that may be cast by the holders of all outstanding Shares
(voting as a single class) is the only vote of the holders of any class
or series of capital stock of the Company necessary to adopt this
Agreement and approve the Merger.
5.4. Permits; Compliance. Each of the Company and its
Subsidiaries is in possession of all Permits from appropriate
Governmental Bodies (including the FCC) necessary for the Company or
any of its Subsidiaries to own, lease and operate its properties or to
carry on their respective businesses as they are now being conducted
(the "Company Permits"), and all such Company Permits are valid, and in
full force and effect, except where the failure to have, or the
suspension or cancellation of, any of the Company Permits does not and
would not, individually or in the aggregate, (a) have a Material
Adverse Effect on the Company or on the TCI Group or (b) prevent or
materially delay the consummation of the Merger. No suspension or
cancellation of any of the Company Permits is pending or, to the
knowledge of the Company, threatened, except where the failure to have,
or the suspension or cancellation of, any of the Company Permits does
not and would not, individually or in the aggregate, (x) have a
Material Adverse Effect on the Company or on the TCI Group or (y)
prevent or materially delay the consummation of the Merger. Neither the
Company nor any of its Subsidiaries is in conflict with, or in default
or violation of, (i) any Law applicable to the Company or any of its
Subsidiaries or by which any property, asset or operation of the
Company or any of its Subsidiaries is bound or affected or (ii) any
Company Permits, except for such conflicts, defaults or violations that
do not and would not, individually or in the aggregate, (A) have a
Material Adverse Effect on the Company or on the TCI Group or (B)
prevent or materially delay the consummation of the Merger.
5.5. Opinion of the Company's Financial Advisor. The Board of
Directors of the Company has received the opinion, dated as of the date
hereof, of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation to the
effect that the Exchange Ratios are fair to the stockholders of the
Company from a financial point of view.
5.6. Capital Stock. (a) The authorized capital stock of the
Company consists of 3,602,375,096 shares, consisting of 3,550,000,000
shares of common stock, par value $1.00 per share ("Company Common
Stock"), and 52,375,096 shares of preferred stock, par value $.01 per
share ("Company Preferred Stock").
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36
(b) The authorized Company Common Stock consists of (1)
1,750,000,000 shares of TCI Group Class A Stock, (2) 150,000,000 shares
of TCI Group Class B Stock, (3) 750,000,000 shares of Liberty Media
Class A Stock, (4) 75,000,000 shares of Liberty Media Class B Stock,
(5) 750,000,000 shares of TCI Ventures Class A Stock, and (6)
75,000,000 shares of TCI Ventures Class B Stock. As of the close of
business on April 30, 1998, there were issued and outstanding (net of
shares held in treasury and shares held by Subsidiaries all of the
common stock of which is beneficially owned by the Company):
472,207,363 shares of TCI Group Class A Stock, 50,126,345 shares of TCI
Group Class B Stock, 326,076,668 shares of Liberty Media Class A Stock,
31,745,757 shares of Liberty Media Class B Stock, 377,114,654 shares of
TCI Ventures Class A Stock and 45,367,134 shares of TCI Ventures Class
B Stock. As of the close of business on April 30, 1998, there were held
in the treasury of the Company (including shares held by Subsidiaries):
137,008,021 shares of TCI Group Class A Stock, 23,954,972 shares of TCI
Group Class B Stock, 31,780,822 shares of Liberty Media Class A Stock,
3,499,261 shares of Liberty Media Class B Stock, 61,450 shares of TCI
Ventures Class A Stock and 432,196 shares of TCI Ventures Class B
Stock. Except for one share of TCI Group Class A Stock owned by a
Liberty Media Member, there are no TCI Group Shares, shares of Company
Class B Junior Preferred Stock, Series C-TCI Group Preferred Stock,
Series F Preferred Stock, Series G Preferred Stock or any other
securities convertible into or exchangeable or exercisable for TCI
Group Shares held by any Liberty Media Member or TCI Ventures Member.
(c) The Company Preferred Stock consists of (1) 700,000
shares of Class A Preferred Stock ("Company Class A Preferred Stock"),
(2) 1,675,096 shares of Class B 6% Cumulative Redeemable Exchangeable
Junior Preferred Stock ("Company Class B Junior Preferred Stock"), and
(3) 50,000,000 shares of Series Preferred Stock ("Company Series
Preferred Stock"). Of the Company Series Preferred Stock, 80,000 shares
have been designated Convertible Preferred Stock, Series C ("Series C
Preferred Stock"), 70,575 shares have been designated Convertible
Preferred Stock, Series C-TCI Group ("Series C-TCI Group Preferred
Stock"), 70,575 shares have been designated Convertible Preferred
Stock, Series C-Liberty Media ("Series C-Liberty Media Preferred
Stock"), 1,000,000 shares have been designated Convertible Preferred
Stock, Series D ("Series D Preferred Stock"), 400,000 shares have been
designated Redeemable Convertible Preferred Stock, Series E ("Series E
Preferred Stock"), 500,000 shares have been designated Convertible
Redeemable Participating Preferred Stock, Series F ("Series F Preferred
Stock"), 7,259,380 shares have been designated Redeemable Convertible
TCI Group Preferred Stock, Series G ("Series G Preferred Stock"), and
7,259,380 shares have been designated Redeemable Convertible Liberty
Media Group Common Stock, Series H ("Series H Preferred Stock"). As of
the close
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37
of business on April 30, 1998, there were issued and outstanding no
shares of Company Class A Preferred Stock, 1,552,490 shares of Company
Class B Junior Preferred Stock, no shares of Series C Preferred Stock,
53,120 shares of Series C- TCI Group Preferred Stock, 70,575 shares of
Series C-Liberty Media Preferred Stock, no shares of Series D Preferred
Stock, no shares of Series E Preferred Stock, 278,307 shares of Series
F Preferred Stock, 6,547,294 shares of Series G Preferred Stock and
6,567,794 shares of Series H Preferred Stock.
(d) All outstanding shares of Company Common Stock and
Company Preferred Stock are duly authorized, validly issued, fully paid
and nonassessable, and no class of capital stock of the Company is
entitled to preemptive rights.
(e) As of March 31, 1998, there were no options, warrants or
other rights to acquire capital stock (or securities convertible into
or exercisable or exchangeable for capital stock) from the Company,
other than (i) the right of the holders of (A) TCI Group Class B Stock
to convert shares of TCI Group Class B Stock into TCI Group Class A
Stock, (B) Liberty Media Class B Stock to convert shares of Liberty
Media Class B Stock into Liberty Media Class A Stock, and (C) TCI
Ventures Class B Stock to convert shares of TCI Group Class B Stock
into TCI Group Class A Stock, in each case, pursuant to the Company
Charter, (ii) options or other rights outstanding as of the close of
business on March 31, 1998 representing in the aggregate the right to
purchase or otherwise acquire up to 15,256,188 shares of TCI Group
Class A Stock, 14,511,570 shares of TCI Group Class B Stock, 11,986,412
shares of Liberty Media Class A Stock, no shares of Liberty Media Class
B Stock, 13,700,856 shares of TCI Ventures Class A Stock, and 2,800,000
shares of TCI Ventures Class B Stock, pursuant to Employee Plans or
Benefit Arrangements or otherwise, (iii) 24,163,259 shares of TCI Group
Class A Stock, 19,416,910 shares of Liberty Media Class A Stock, and
20,711,373 shares of TCI Ventures Class A Stock issuable upon exchange
of the TCI UA, Inc. Convertible Notes due December 12, 2021 (the "UA
Note"), and (iv)(A) 7,057,523 shares of TCI Group Class A Stock
issuable upon conversion of the Series C-TCI Group Preferred Stock, at
a conversion rate equal to the Series C-TCI Group Preferred Conversion
Rate, (B) 3,969,844 shares of Liberty Media Class A Stock issuable upon
conversion of the Series C-Liberty Media Preferred Stock, at a
conversion rate equal to the Series C- Liberty Media Conversion Rate,
(C) 60,210 shares of TCI Group Class A Stock and 33,868 shares of
Liberty Media Class A Stock issuable upon conversion of the Series D
Preferred Stock, (D) 7,791,280 shares of TCI Group Class A Stock
issuable upon conversion of the Series G Preferred Stock, at a
conversion rate equal to the Series G Conversion Rate, (E) 3,879,103
shares of Liberty Media Class A Stock issuable upon conversion of the
Series H Preferred Stock, at a conversion rate equal to the Series H
Conversion Rate, (F) 9,747,400 shares of TCI Group
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Class A Stock issuable upon exchange of the shares of Series A
Preferred Stock, par value $.01 per share, of TCI Communications, Inc.,
(G) 34,087,114 shares of TCI Group Class A Stock issuable upon exchange
of the shares of Class A Senior Cumulative Exchangeable Preferred
Stock, par value $100 per share, of TCI Pacific Communications, Inc.,
and (H) 1,084,056 shares of TCI Group Class A Stock issuable upon
exchange of the Exchangeable Preferred Stock, Series A, par value $.01
per share, of ETC NSCI Holdings, Inc. Upon consummation of the Merger,
none of such options or convertible securities will be exercisable for
or convertible into any shares of capital stock of the Company, but
instead, will either be exchanged in the Merger or be adjusted to be
exercisable for or convertible into Parent Common Shares or Parent
Liberty Tracking Shares (and, if applicable, will continue to be
exercisable for or convertible into TSATA shares) in accordance with
the terms of this Agreement and of such securities.
(f) Since March 31, 1998 until the execution of this
Agreement, the Company has not issued any capital stock or any options,
warrants or other rights to acquire capital stock (or securities
convertible into or exercisable or exchangeable for capital stock)
other than (i) the issuance of shares of Company Common Stock pursuant
to options referred to in clause (ii) of the foregoing paragraph (e)
that were outstanding as of March 31, 1998 or that were issued
subsequently as set forth in clause (ii) of this paragraph (f), and
(ii) the award of options to purchase or restricted shares under
Employee Plans and Benefits Arrangements with respect to an aggregate
of not more than 1,350,000 shares of TCI Group Class A Stock (and
grants of options and awards with respect to Liberty Media Class A
Stock or TCI Ventures Class A Stock). Except as disclosed in Section
5.6 of the Company Disclosure Statement, all outstanding shares of
capital stock of, or other equity or voting interest in, the
Significant Subsidiaries of the Company are owned by the Company or a
direct or indirect Wholly Owned Subsidiary of the Company, free and
clear of all liens, charges, encumbrances, claims and options of any
nature and no Person has any right to acquire any shares of capital
stock of, or other equity or voting interest in, any Subsidiary of the
Company.
(g) As of March 31, 1998 and the date hereof, the following
were all zero: Number of Shares Issuable with Respect to the Italy
Programming Group Inter-Group Interest, the Number of Shares Issuable
with Respect to the Italy Ventures Inter-Group Interest, the Committed
Acquisition Shares and the Italy Ventures Preferred Interest.
5.7. Litigation. Except as disclosed in the Company
SEC Reports filed prior to the date hereof, there are, as of
the date hereof, no actions, suits, investigations or
proceedings (adjudicatory, rulemaking or otherwise) pending or,
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to the knowledge of the Company, threatened against the Company or any
of its Subsidiaries (or any Employee Plan or Benefit Arrangement), or
any property of the Company or any such Subsidiary (including
Intellectual Property), before any arbitrator of any kind or in or
before or by any Governmental Body, except actions, suits,
investigations or proceedings which, individually or in the aggregate,
would not, if adversely determined, (a) have a Material Adverse Effect
on the Company or on the TCI Group or (b) prevent or materially delay
the consummation of the Merger.
5.8. Compliance with Other Instruments, Etc. Neither the
Company nor any Subsidiary of the Company is in violation of any term
of (a) its charter, by-laws or other organizational documents, or (b)
any agreement or instrument related to indebtedness for borrowed money
or any other agreement to which it is a party or by which it is bound,
the consequences of which violation, whether individually or in the
aggregate, do or would (i) have a Material Adverse Effect on the
Company or on the TCI Group or (ii) prevent or materially delay the
consummation of the Merger. Assuming the approval of the Company's
stockholders as contemplated by Section 7.3, the execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in any violation of or
conflict with, or constitute a default under, the charter, bylaws or
other organizational documents of the Company (or any of its
Subsidiaries). Except as set forth in Section 5.8 of the Company
Disclosure Statement, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
will not result in any violation of or conflict with, constitute a
default under, require any consent, waiver or notice under any term of,
or result in the reduction or loss of any benefit or the creation or
acceleration of any right or obligation under, any agreement, note,
bond, mortgage, indenture, contract, lease, Permit or other obligation
or right (excluding options, restricted stock, employment contracts and
other employee related obligations or rights which are addressed in
Section 5.9(f)) to which the Company or any of its Subsidiaries is a
party or by which any of the assets or properties of the Company or any
of its Subsidiaries is bound, or any instrument or Law, or result in
the creation of (or impose any obligation on the Company or any of its
Subsidiaries to create) any mortgage, lien, charge, security interest
or other encumbrance upon any of the properties or assets of the
Company or any of its Subsidiaries pursuant to any such term, except
where any of the foregoing, individually or in the aggregate, does not
and would not (i) have a Material Adverse Effect on the Company or on
the TCI Group or (ii) prevent or materially delay the consummation of
the Merger.
5.9. Employee Benefit Plans. (a) The Company Dis-
closure Statement sets forth as of the date hereof a true and
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complete list of each material "employee benefit plan" (as defined in
Section 3(3) of ERISA) of the Company and its Subsidiaries in which
current or former employees, agents, directors, or independent
contractors of the Company or its Subsidiaries ("Employees")
participate or pursuant to which the Company or any of its Subsidiaries
may have a liability with respect to Employees (each, an "Employee
Plan"), and each other material plan, program, policy, contract or
arrangement of the Company and its Subsidiaries providing for bonuses,
pensions, deferred pay, stock or stock related awards, severance pay,
salary continuation or similar benefits, hospitalization, medical,
dental or disability benefits, life insurance or other employee
benefits, or compensation to or for any Employees or any beneficiaries
or dependents of any Employees (other than directors' and officers'
liability policies), whether or not insured or funded (each, a "Benefit
Arrangement"). Except as disclosed on the Company Disclosure Statement,
neither the Company nor any of its Subsidiaries has any commitment to
establish any material additional Employee Plans or Benefit
Arrangements or to modify or change materially any existing Employee
Plan or Benefit Arrangement. The Company has made available to Parent
with respect to each Employee Plan and Benefit Arrangement: (i) a true
and complete copy of all written documents comprising such Employee
Plan or Benefit Arrangement (including amendments and individual
agreements relating thereto) or, if there is no such written document,
an accurate and complete description of such Employee Plan or Benefit
Arrangement; (ii) the most recent Form 5500 or Form 5500-C (including
all schedules thereto), if applicable; (iii) the most recent financial
statements and actuarial reports, if any; (iv) the summary plan
description currently in effect and all material modifications thereof,
if any; and (v) the most recent Internal Revenue Service determination
letter, if any. For purposes of the Company Disclosure Statement and
for making available documents with respect to Employee Plans and
Benefit Arrangements, but not for purposes of the remainder of this
Section 5.9, Employee Plans and Benefit Arrangements shall be limited
to Employee Plans and Benefit Arrangements of the Company and its ERISA
Affiliates.
(b) Each Employee Plan and Benefit Arrangement has been
established and maintained in accordance with its terms and in
compliance with all applicable Laws, including ERISA and the Code (and
the prohibited transaction provisions of ERISA and the Code), and all
contributions required to be made to the Employee Plans and Benefit
Arrangements have been made in a timely fashion, except where such
failure to establish, maintain or comply, or to make such
contributions, individually or in the aggregate, does not and would not
have a Material Adverse Effect on the Company or on the TCI Group. Each
Employee Plan that is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter or is subject to
a favorable notification letter from the Internal
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41
Revenue Service, and, to the knowledge of the Company, no event has
occurred which results or would result in a revocation of such letter.
(c) Except as set forth in Section 5.9 of the Company
Disclosure Statement, no Employee Plan is subject to Title IV of ERISA.
(d) Except as set forth in Section 5.9 of the Company
Disclosure Statement, no Employee Plan is a "multiemployer plan" (as
defined in Section 3(37) of ERISA) or a "multiple employer plan"
described in Section 4063(a) of ERISA, and the Company has not at any
time in the past five years, contributed to or been obligated to
contribute to such a multiemployer plan or multiple employer plan.
(e) Neither the Company nor any ERISA Affiliate has any
Controlled Group Liability, nor do any circumstances exist that could
result in any of them having any Controlled Group Liability, which
would have a Material Adverse Effect on the Company or on the TCI
Group. "Controlled Group Liability" means any and all liabilities under
(i) Title IV of ERISA, (ii) Section 302 of ERISA, (iii) Sections 412
and 4971 of the Code, or (iv) the continuation coverage requirements of
Sections 601 et seq. of ERISA and section 4980B of the Code.
(f) Except as set forth in Section 5.9 of the Company
Disclosure Statement, none of the execution or delivery of this
Agreement, the Voting Agreement, stockholder approval of the Merger by
the stockholders of the Company at the Company Stockholders Meeting or
otherwise, or the consummation of the transactions contemplated hereby
or thereby (either alone or together with any additional or subsequent
events), constitutes an event under any Employee Plan, Benefit
Arrangement, loan to, or individual agreement or contract with, an
Employee that may result in any material payment (whether of severance
pay or otherwise), restriction or limitation upon the assets of any
Employee Plan or Benefit Agreement, acceleration of payment or vesting,
increase in benefits or compensation, or required funding, with respect
to any Employee, or the forgiveness of any loan or other commitment of
any Employees.
(g) There are no actions, suits, arbitrations, inquiries,
investigations or other proceedings (other than routine claims for
benefits) pending or, to the Company's knowledge, threatened, with
respect to any Employee Plan or Benefit Arrangement, except for any of
the foregoing that do not and would not have, individually or in the
aggregate, a Material Adverse Effect on the Company or on the TCI
Group.
(h) Except as disclosed on the Company Disclosure Statement,
no material amounts paid or payable by the Company or any ERISA
Affiliate to or with respect to any Employee
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(including any such amounts that may be payable as a result of the
execution and delivery of this Agreement or the Voting Agreement or the
consummation of the transactions contemplated hereby or thereby) will
fail to be deductible for United States federal income tax purposes by
reason of Section 280G of the Code.
(i) Except as set forth in Section 5.9 of the Company
Disclosure Statement, no Employees and no beneficiaries or dependents
of Employees are entitled under any Employee Plan or Benefit
Arrangement to post-employment welfare benefits of any kind, including
death or medical benefits, other than coverage mandated by Section
4980B of the Code.
(j) Except as set forth in Section 5.9 of the Company
Disclosure Statement, there are no agreements with, or pending
petitions for recognition of, a labor union or association as the
exclusive bargaining agent for any of the employees of the Company or
any of its Subsidiaries; no such petitions have been pending at any
time within two years of the date of this Agreement and, to the
knowledge of the Company, there has not been any organizing effort by
any union or other group seeking to represent any employees of the
Company or any of its Subsidiaries as their exclusive bargaining agent
at any time within two years of the date of this Agreement. There are
no labor strikes, work stoppages or other labor troubles, other than
routine grievance matters, now pending, or, to the Company's knowledge,
threatened, against the Company or any of its Subsidiaries which have
or would have, individually or in the aggregate, a Material Adverse
Effect on the Company or on the TCI Group, and there have not been any
such labor strikes, work stoppages or other labor troubles, other than
routine grievance matters, with respect to the Company or any of its
Subsidiaries at any time within two years of the date of this
Agreement.
5.10. Taxes. (a) The Company and its Subsidiaries have filed
all income Tax Returns and all material other United States federal,
state, county, local and foreign Tax Returns required to be filed by
them. The Company and its Subsidiaries have paid all material Taxes
due, other than Taxes appropriate reserves for which have been made in
the Company's financial statements (and, to the extent material, such
reserves have been accurately described in the Company SEC Reports).
There are no material assessments or adjustments that have been
asserted in writing against the Company or its Subsidiaries for any
period for which the Company has not made appropriate reserves in the
Company's financial statements included in the Company SEC Reports.
(b) There are no material claims or assessments pending
against the Company or any of its Subsidiaries for any alleged
deficiency in any Tax, and the Company has not been
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notified in writing of any proposed material Tax claims or assessments
against the Company or any of its Subsidiaries (other than, in each
case, claims or assessments for which adequate reserves in the Company
financial statements have been established or which are being contested
in good faith or are immaterial in amount). Except as set forth in
Section 5.10(b) of the Company Disclosure Statement and subject to the
qualifications set forth therein, there are no material "deferred
intercompany transactions" or "intercompany transactions" the gain or
loss in which has not yet been taken into account under the
consolidated return Treasury Regulations currently or previously in
effect.
(c) There are no liens for Taxes on the assets of the Company
or any of its Subsidiaries, except for statutory liens for current
Taxes not yet due and payable (and except for liens which do not and
would not, individually or in the aggregate, have a Material Adverse
Effect on the Company or on the TCI Group).
(d) For purposes of this Agreement, the term "Tax" means any
United States federal, state, county or local, or foreign or provincial
income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, value added, alternative or added
minimum, ad valorem or transfer tax, or any other tax, custom, duty or
governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty imposed by any
Governmental Body. The term "Tax Return" means a report, return or
other information (including any attached schedules or any amendments
to such report, return or other information) required to be supplied to
or filed with a Governmental Body with respect to any Tax, including an
information return, claim for refund, amended return or declaration or
estimated Tax.
5.11. Intellectual Property. The Company and its Subsidiaries
own, have the defensible right to use, or are indemnified for or
otherwise protected from any material risk for using, the Intellectual
Property used in their respective businesses, except where the failure
to own, have the right to use or be indemnified for or protected from
any material risk of using such Intellectual Property, individually or
in the aggregate, does not and would not have a Material Adverse Effect
on the Company or on the TCI Group.
5.12. Reports and Financial Statements. (a) The Company has
filed all Reports on Form 10-K, Form 10-Q and Form 8-K, registration
statements and proxy statements required to be filed with the SEC since
January 1, 1996 (collectively, the "Company SEC Reports"). The Company
has previously furnished or made available to Parent true and complete
copies of all the Company SEC Reports filed prior to the date hereof.
None of
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the Company SEC Reports, as of their respective dates, contained any
untrue statement of material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets (including the
related notes) included in the Company SEC Reports presents fairly, in
all material respects, the consolidated financial position of the
Company and its Subsidiaries as of the respective dates thereof, and
the other related statements (including the related notes) included in
the Company SEC Reports present fairly, in all material respects, the
results of operations and the changes in financial position of the
Company and its Subsidiaries for the respective periods or as of the
respective dates set forth therein, all in conformity with generally
accepted accounting principles consistently applied during the periods
involved, except as otherwise noted therein and subject, in the case of
the unaudited interim financial statements, to normal year-end
adjustments. All of the Company SEC Reports, as of their respective
dates, complied as to form in all material respects with the
requirements of the Exchange Act, the Securities Act and the applicable
rules and regulations thereunder.
(b) The Company and its Subsidiaries have not made any
misstatements of fact, or omitted to disclose any fact, to any
Governmental Body, or taken or failed to take any action, which
misstatements or omissions, actions or failures to act, individually or
in the aggregate, subject or would subject any Company Permits referred
to in Section 5.4 to revocation or failure to renew, except where such
revocation or failure to renew, individually or in the aggregate, does
not and would not have a Material Adverse Effect on the Company or on
the TCI Group.
(c) Except (i) as and to the extent disclosed or reserved
against on the balance sheet of the Company as of December 31, 1997
included in the Company SEC Reports, or (ii) as incurred after the date
thereof in the ordinary course of business consistent with prior
practice and not prohibited by this Agreement, the Company does not
have any liabilities or obligations of any nature, absolute, accrued,
contingent or otherwise and whether due or to become due, that,
individually or in the aggregate, have or would have a Material Adverse
Effect on the Company or on the TCI Group.
5.13. Absence of Certain Changes or Events. During the period
since December 31, 1997, except as disclosed in the Company SEC Reports
filed prior to the date hereof, (a) the business of the Company and its
Subsidiaries has been conducted only in the ordinary course, consistent
with past practice, except for the execution and delivery of this
Agreement and the
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consummation of the transactions contemplated hereby, and except as
otherwise expressly permitted or required by this Agreement, (b)
neither the Company nor any of its Subsidiaries has taken any action or
omitted to take any action, or entered into any contract, agreement,
commitment or arrangement to take any action or omit to take any
action, which, if taken or omitted after the date hereof, would violate
Section 7.1, and (c) there has not been, and, to the best knowledge of
the Company, nothing has occurred that would have, a Material Adverse
Effect on the Company or on the TCI Group.
5.14. Affiliated Transactions and Certain Other Agreements.
Set forth in Section 5.14 of the Company Disclosure Statement is an
accurate and complete listing, as of the date hereof, of (a) all
contracts, leases, agreements or understandings, whether written or
oral, to which the Company or any of its Subsidiaries is a party or is
otherwise bound which contain any restriction or limitation on the
ability of the Company or any of its Affiliates (other than the
Stockholders and their non-Company Affiliates) to engage in any
business anywhere in the world, other than any such contracts, leases,
agreements or understandings the loss or breach of which, individually
or in the aggregate, does not and would not have a Material Adverse
Effect on the Company or on the TCI Group, and (b) all contracts,
leases, agreements or understandings, whether written or oral, giving
any Person the right to require the Company to register Shares or to
participate in any registration of Shares. The Company has previously
provided or made available to Parent true and complete copies of each
of the foregoing agreements. Except as disclosed in the Company SEC
Reports, there are no relationships or transactions of a type required
to be disclosed in the Company SEC Reports pursuant to Item 404 of
Regulation S-K promulgated under the Securities Act.
5.15. Brokers and Finders. Except for the fees and expenses
payable to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, which
fees and expenses are reflected in its agreements with the Company,
copies of which have been furnished to Parent, the Company has not
employed any investment banker, broker, finder, consultant or
intermediary in connection with the transactions contemplated by this
Agreement which would be entitled to any investment banking, brokerage,
finder's or similar fee or commission in connection with this Agreement
or the transactions contemplated hereby.
5.16. Registration Statement. None of the information
supplied or to be supplied by the Company in writing for inclusion or
incorporation by reference in the Registration Statement will at the
time it becomes effective, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. If
at any time
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prior to the Effective Time any event with respect to the Company, its
officers and directors or any of its Subsidiaries shall occur which is
required to be described in an amendment of, or a supplement to the
Registration Statement, the Company shall notify Parent thereof by
reference to this Section 5.16 and such event shall be so described.
Any such amendment or supplement shall be promptly filed with the SEC
and, as and to the extent required by law, disseminated to the
stockholders of the Company, and such amendment or supplement shall
comply in all material respects with all provisions of the Securities
Act.
5.17. Separation of Assets and Liabilities. (a) Each of the
combined balance sheets (including the related notes) of each of the
TCI Group, the Liberty Media Group and the TCI Ventures Group included
in the Company SEC Reports presents fairly, respectively, in all
material respects, the combined financial position of each of the TCI
Group, the Liberty Media Group and the TCI Ventures Group as of the
respective dates thereof, and the other related statements (including
the related notes) included in the Company SEC Reports present fairly,
respectively, in all material respects, the results of operations and
the changes in financial position of each of the TCI Group, the Liberty
Media Group and the TCI Ventures Group for the respective periods or as
of the respective dates set forth therein, all in conformity with
generally accepted accounting principles consistently applied during
the periods involved, except as otherwise noted therein and subject, in
the case of the unaudited interim financial statements, to normal
year-end adjustments. Except (i) as and to the extent disclosed or
reserved against on the balance sheet of the TCI Group, the Liberty
Media Group or the TCI Ventures Group as of December 31, 1997 included
in the Company SEC Reports, or (ii) as incurred after the date thereof
in the ordinary course of business consistent with prior practice and
not prohibited by this Agreement, none of the TCI Group, the Liberty
Media Group or the TCI Ventures Group has any liabilities or
obligations of any nature, absolute, accrued, contingent or otherwise
and whether due or to become due, that, individually or in the
aggregate, have or would have a Material Adverse Effect on the Company
or on the TCI Group.
(b) Set forth in Section 5.17(b) of the Company Disclosure
Statement is an accurate and complete listing, as of the date hereof,
of all contracts, leases, agreements or understandings, whether written
or oral, that are material to TCI Group taken as a whole, with or on
behalf of any Liberty Media Member or TCI Ventures Member to which any
TCI Group Member is a party or is otherwise bound, or by which any of
their respective properties or assets is subject or bound, other than
contracts or agreements between any Liberty Media Member or TCI
Ventures Member, on the one hand, and any TCI Group Member, on the
other hand, entered into in the ordinary course of business
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and having terms and conditions that are no less favorable to TCI Group
than those available to unaffiliated third parties generally. Section
5.17(b) of the Company Disclosure Statement also sets forth a summary
as of March 31, 1998 and the date hereof of the material debt and
equity interests of any TCI Group Member, Liberty Media Member or TCI
Ventures Member in any member of any other Group.
(c) (i) Except as set forth in Section 5.17(c)(i) of the
Company Disclosure Statement, all of the material properties and assets
(tangible, intangible or otherwise) and obligations and liabilities of
any nature, absolute, accrued, contingent or otherwise and whether due
or to become due, that are reflected on the financial statements
referred to in Section 5.17(a) relate to the respective business and
operations of the TCI Group, the Liberty Media Group and the TCI
Ventures Group (as such businesses and operations are described in Note
1 to the Company's consolidated audited financial statements for the
year ended December 31, 1997) (respectively, the "TCI Group Business,"
the "Liberty Media Business," and the "TCI Ventures Business").
(ii) As of the Effective Time, except as set forth in Section
5.17(c)(ii) of the Company Disclosure Statement or as otherwise
expressly permitted or required pursuant to this Agreement, and
assuming that the Restructuring has occurred, (A) TCI Ventures LLC,
directly or through its Subsidiaries, will own all of the material
properties and assets (tangible, intangible or otherwise) of the
Company or any of its Subsidiaries primarily relating to the Liberty
Media Business or the TCI Ventures Business, and will have primary
liability for, or will have assumed, all material obligations and
liabilities of any nature, absolute, accrued, contingent or otherwise
and whether due or to become due, primarily relating to the Liberty
Media Business or the TCI Ventures Business, and (B) the Company and
its Subsidiaries, other than TCI Ventures LLC and its Subsidiaries,
will own all of the material properties and assets (tangible,
intangible or otherwise) of the Company or any of its Subsidiaries
primarily relating to the TCI Group Business, and will have primary
liability for, or will have assumed, all material obligations and
liabilities of any nature, absolute, accrued, contingent or otherwise
and whether due or to become due, primarily relating to the TCI Group
Business; provided that the shares of TCG (or the Parent Common Shares
into which they may be exchanged) will be held by TCI Ventures LLC but
will be attributed to the TCI Group.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub each represents and warrants to the
Company that, except as set forth in the Parent Disclosure Statement
(each section of which qualifies the correspondingly numbered
representation and warranty or covenant as specified therein):
6.1. Organization, Etc. of Parent. Parent is a corporation
duly organized, validly existing and in good standing under the laws of
the State of New York and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now conducted and proposed by Parent to be conducted.
Parent is duly qualified and in good standing in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary and where
the failure to be so qualified or in good standing has or would have,
individually or in the aggregate, a Material Adverse Effect on Parent.
6.2. Subsidiaries. Each Subsidiary of Parent (a) is a
corporation or other legal entity duly organized, validly existing and
(if applicable) in good standing under the laws of the jurisdiction of
its organization and has all requisite corporate, partnership or
similar power and authority to own its properties and conduct its
business and operations as currently conducted, except where the
failure to be duly organized, validly existing and in good standing or
to have such power and authority does not and would not have,
individually or in the aggregate, a Material Adverse Effect on Parent,
and (b) is duly qualified and in good standing in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except
where the failure to be so qualified or in good standing does not and
would not have, individually or in the aggregate, a Material Adverse
Effect on Parent.
6.3. Agreement. Each of Parent and Merger Sub has all
necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement and the consummation
of the transactions contemplated hereby have been approved by the
respective Boards of Directors of Parent and Merger Sub and by Parent
as the sole stockholder of Merger Sub, and have been duly authorized by
all other necessary corporate action on the part of Parent or Merger
Sub, except for the approval of the Parent's stockholders contemplated
by Section 7.3. This Agreement has been duly executed and delivered by
a duly authorized officer of Parent and of Merger Sub and (assuming the
due execution and delivery of this
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Agreement by the Company) constitutes a valid and binding agreement of
Parent and Merger Sub, enforceable against Parent and Merger Sub in
accordance with its terms.
6.4. Permits; Compliance. Each of Parent and its Subsidiaries
is in possession of all Permits from appropriate Governmental Bodies
(including the FCC) necessary for Parent or any of its Subsidiaries to
own, lease and operate its properties or to carry on their respective
businesses as they are now being conducted (the "Parent Permits"), and
all such Parent Permits are valid, and in full force and effect, except
where the failure to have, or the suspension or cancellation of, any of
the Parent Permits does not and would not, individually or in the
aggregate, (a) have a Material Adverse Effect on Parent or (b) prevent
or materially delay the consummation of the Merger. No suspension or
cancellation of any of the Parent Permits is pending or, to the
knowledge of Parent, threatened, except where the failure to have, or
the suspension or cancellation of, any of the Parent Permits does not
and would not, individually or in the aggregate, (x) have a Material
Adverse Effect on Parent or (y) prevent or materially delay the
consummation of the Merger. Neither Parent nor any of its Subsidiaries
is in conflict with, or in default or violation of, (i) any Law
applicable to Parent or any of its Subsidiaries or by which any
property, asset or operation of Parent or any of its Subsidiaries is
bound or affected or (ii) any Parent Permits, except for such
conflicts, defaults or violations that do not and would not,
individually or in the aggregate, (A) have a Material Adverse Effect on
Parent or (B) prevent or materially delay the consummation of the
Merger.
6.5. Opinions of Parent's Financial Advisors. The Board of
Directors of Parent has received the opinions, dated as of the date of
this Agreement, of ▇▇▇▇▇▇▇ Sachs & Co. and Credit Suisse First Boston
Corporation to the effect that, as of such date, the Exchange Ratios,
collectively, are fair to Parent from a financial point of view.
6.6. Capital Stock. As of the date hereof, the authorized
capital stock of Parent consists of (a) 6,000,000,000 Parent Common
Shares and (ii) 100,000,000 shares of preferred stock, $1.00 par value
per share. All of the outstanding shares of capital stock of Parent are
duly authorized, validly issued, fully paid and nonassessable, and no
class of capital stock of Parent is entitled to preemptive rights. As
of the close of business on April 30, 1998, 1,624,198,000 Parent Common
Shares and no shares of Parent preferred stock were issued and
outstanding. Except as disclosed in the Parent SEC Reports, all
outstanding shares of capital stock of the Significant Subsidiaries (as
defined for purposes of Regulation S-X under the Exchange Act) of
Parent are owned by Parent or a direct or indirect Wholly Owned
Subsidiary of Parent, free and clear of all liens, charges,
encumbrances, claims and options
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of any nature. As of the close of business on April 30, 1998, there
were outstanding options to acquire no more than 69,000,000 Parent
Common Shares.
6.7. Parent Shares. The Parent Common Shares and the Parent
Liberty Tracking Shares to be issued pursuant to Article IV will, when
issued, be duly authorized, validly issued, fully paid and
nonassessable and no stockholder of Parent will have any preemptive
right of subscription or purchase in respect thereof. The Parent Common
Shares and the Parent Liberty Tracking Shares to be issued in the
Merger will, when issued, be registered under the Securities Act and
the Exchange Act and registered or exempt from registration under any
applicable state securities laws.
6.8. Litigation. Except as disclosed in the Parent SEC
Reports filed prior to the date hereof, there are, as of the date
hereof, no actions, suits, investigations or proceedings (adjudicatory,
rulemaking or otherwise) pending or, to the knowledge of Parent,
threatened against Parent or any of its Subsidiaries or any Benefit
Plans of Parent or any of its Subsidiaries, or any property of Parent
or any such Subsidiary (including Intellectual Property), in any court
or before any arbitrator of any kind or in or before or by any
Governmental Body, except actions, suits, investigations or proceedings
or which, individually or in the aggregate, would not, if adversely
determined, (a) have a Material Adverse Effect on Parent or (b) prevent
or materially delay the consummation of the Merger.
6.9. Compliance with Other Instruments, Etc. Neither Parent
nor any Subsidiary of Parent is in violation of any term of (a) its
charter, by-laws or other organizational documents, or (b) any
agreement or instrument related to indebtedness for borrowed money or
any other agreement to which it is a party or by which it is bound, the
consequences of which violation, whether individually or in the
aggregate, do or would (i) have a Material Adverse Effect on Parent or
(ii) prevent or materially delay the consummation of the Merger.
Assuming the approval of Parent's stockholders as contemplated by
Section 7.3, the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not
result in any violation of or conflict with, or constitute a default
under, the charter, bylaws or other organizational documents of Parent
(or any of its Subsidiaries). Except as set forth in Section 6.9 of the
Parent Disclosure Statement, the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
hereby will not result in any violation of or conflict with, constitute
a default under, require any consent, waiver or notice under any term
of, or result in the reduction or loss of any benefit or the creation
or acceleration of any obligation
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under, any agreement, note, bond, mortgage, indenture, contract, lease,
Permit or other obligation or any instrument to which Parent or any of
its Subsidiaries is a party or by which any of the assets or properties
of Parent or any of its Subsidiaries is bound or any instrument or Law,
or result in the creation of (or impose any obligation on Parent or any
of its Subsidiaries to create) any mortgage, lien, charge, security
interest or other encumbrance upon any of the properties or assets of
Parent or any of its Subsidiaries pursuant to any such term, except
where any of the foregoing, individually or in the aggregate, does not
and would not (i) have a Material Adverse Effect on Parent or (ii)
prevent or materially delay the consummation of the Merger.
6.10. Taxes. (a) Parent and its Subsidiaries have filed all
income Tax Returns and all material other United States federal, state,
county, local and foreign Tax Returns required to be filed by them.
Parent and its Subsidiaries have paid all material Taxes due, other
than Taxes appropriate reserves for which have been made in Parent's
financial statements (and, to the extent material, such reserves have
been accurately described in the Parent SEC Reports). There are no
material assessments or adjustments that have been asserted in writing
against Parent or its Subsidiaries for any period for which Parent has
not made appropriate reserves in Parent's financial statements included
in Parent SEC Reports.
(b) There are no material claims or assessments pending
against Parent or any of its Subsidiaries for any alleged deficiency in
any Tax, and Parent has not been notified in writing of any proposed
material Tax claims or assessments against Parent or any of its
Subsidiaries (other than, in each case, claims or assessments for which
adequate reserves in Parent financial statements have been established
or which are being contested in good faith or are immaterial in
amount).
(c) There are no liens for Taxes on the assets of Parent or
any of its Subsidiaries, except for statutory liens for current Taxes
not yet due and payable (and except for liens which do not and would
not, individually or in the aggregate, have a Material Adverse Effect
on Parent).
6.11. Intellectual Property. Parent and its Subsidiaries own,
have the defensible right to use, or are indemnified for or otherwise
protected from any material risk for using the Intellectual Property
used in their respective businesses, except where the failure to own,
have the right to use or be indemnified for or protected from any
material risk of using such Intellectual Property, individually or in
the aggregate, does not and would not have a Material Adverse Effect on
Parent.
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6.12. Reports and Financial Statements. (a) Parent has filed
all Reports on Form 10-K, Form 10-Q and Form 8-K, registration
statements and proxy statements required to be filed with the SEC since
January 1, 1996 (collectively, the "Parent SEC Reports"). Parent has
previously furnished or made available to the Company true and complete
copies of all Parent SEC Reports filed prior to the date hereof. None
of the Parent SEC Reports, as of their respective dates, contained any
untrue statement of material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the balance sheets (including the related notes)
included in the Parent SEC Reports presents fairly, in all material
respects, the consolidated financial position of Parent and its
Subsidiaries as of the respective dates thereof, and the other related
statements (including the related notes) included in the Parent SEC
Reports present fairly, in all material respects, the results of
operations and the changes in financial position of Parent and its
Subsidiaries for the respective periods or as of the respective dates
set forth therein, all in conformity with generally accepted accounting
principles consistently applied during the periods involved, except as
otherwise noted therein and subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments. All of
the Parent SEC Reports, as of their respective dates, complied as to
form in all material respects with the requirements of the Exchange
Act, the Securities Act and the applicable rules and regulations
thereunder.
(b) Parent and its Subsidiaries have not made any
misstatements of fact, or omitted to disclose any fact, to any
Governmental Body, or taken or failed to take any action, which
misstatements or omissions, actions or failures to act, individually or
in the aggregate, subject or would subject any Parent Permits referred
to in Section 6.4 to revocation or failure to renew, except where such
revocation or failure to renew, individually or in the aggregate, does
not and would not have a Material Adverse Effect on Parent.
(c) Except (i) as and to the extent disclosed or reserved
against on the balance sheet of Parent as of December 31, 1997 included
in the Parent SEC Reports, or (ii) as incurred after the date thereof
in the ordinary course of business consistent with prior practice and
not prohibited by this Agreement, Parent does not have any liabilities
or obligations of any nature, absolute, accrued, contingent or
otherwise and whether due or to become due, that, individually or in
the aggregate, have or would have a Material Adverse Effect on Parent.
(d) During the period since December 31, 1997, except as
disclosed in the Parent SEC Reports filed prior to the
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date hereof, there has not been, and, to the best knowledge of Parent,
nothing has occurred that would have, a Material Adverse Effect on
Parent.
6.13. Brokers and Finders. Except for the fees and expenses
payable to Credit Suisse First Boston Corporation and ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Co., which fees and expenses will be paid by Parent, Parent has not
employed any investment banker, broker, finder, consultant or
intermediary in connection with the transactions contemplated by this
Agreement which would be entitled to any investment banking, brokerage,
finder's or similar fee or commission in connection with this Agreement
or the transactions contemplated hereby.
6.14. Registration Statement. None of the information to be
supplied by Parent or Merger Sub in writing for inclusion or
incorporation by reference in the Registration Statement will at the
time it becomes effective, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. If
at any time prior to the Effective Time any event with respect to
Parent, its officers and directors or any of its Subsidiaries shall
occur which is required to be described in an amendment of, or a
supplement to the Registration Statement, Parent shall notify the
Company thereof by reference to this Section 6.14 and such event shall
be so described. Any such amendment or supplement shall be promptly
filed with the SEC and, as and to the extent required by law,
disseminated to the stockholders of the Company, and such amendment or
supplement shall comply in all material respects with all provisions of
the Securities Act. The Registration Statement will comply (with
respect to Parent and Merger Sub and information provided in writing
therefor by Parent or Merger Sub) as to form in all material respects
with the provisions of the Securities Act.
6.15. Ownership of Merger Sub; No Prior Activities;
Assets of Merger Sub.
(a) Merger Sub was formed by Parent solely for the purpose of
engaging in the transactions contemplated hereby.
(b) As of the date hereof and the Effective Time, the capital
stock of Merger Sub is and will be owned 100% by Parent directly.
Further, there are not as of the date hereof and there will not be at
the Effective Time any outstanding or authorized options, warrants,
calls, rights, commitments or any other agreements of any character to
or by which Merger Sub is a party or may be bound requiring it to
issue, transfer, sell, purchase, redeem or acquire any shares of
capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire,
any shares of capital stock of Merger Sub.
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(c) As of the date hereof and immediately prior to the
Effective Time, except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions
contemplated hereby and by the Voting Agreement, Merger Sub has not and
will not have incurred, directly or indirectly through any Subsidiary
or Affiliate, any obligations or liabilities or engaged in any business
or activities of any type or kind whatsoever or entered into any
agreements or arrangements with any Person.
(d) Parent will take all action necessary to ensure that
Merger Sub at no time prior to the Effective Time owns any material
assets other than an amount of cash necessary to incorporate Merger Sub
and to pay the expenses of the Merger attributable to Merger Sub if the
Merger is consummated.
6.16. Ownership of Company Stock. Neither Parent nor any
Subsidiary of Parent (excluding any employee benefit plan, or related
trust, of Parent or its Subsidiaries) owns or, to the knowledge of
Parent, has owned within the last two years, any shares of the capital
stock of the Company. Between the date of this Agreement and the
Effective Time, neither Parent nor any Subsidiary of Parent (excluding
any employee benefit plan, or related trust, of Parent or its
Subsidiaries) will purchase or otherwise acquire any shares of the
capital stock of the Company (except pursuant to the terms of this
Agreement).
ARTICLE VII
ADDITIONAL COVENANTS AND AGREEMENTS
7.1. Conduct of Business of the Company. Except as set forth
in Section 7.1 of the Company Disclosure Statement, as expressly
permitted by this Agreement (any transaction permitted by Schedule 7.18
or pursuant to the Restructuring being deemed expressly permitted), as
described in the Company's Capital Spending Plan, dated June 2, 1998,
previously delivered by the Company to Parent (the "Capital Spending
Plan"), as required by any change in applicable Law, or as otherwise
agreed by Parent in writing, during the period from the date of this
Agreement to the Effective Time, (i) the Company will, and will cause
each of the TCI Group Members to, conduct the TCI Group Business in the
ordinary course of business consistent with past practice, and (ii) to
the extent consistent with the foregoing, the Company will, and will
cause each of the TCI Group Members to, seek to preserve intact its
current business organizations, keep available the service of its
current officers and employees, and preserve its relationships with
customers, suppliers and others having business dealings with it, in
each case with respect to the TCI
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Group Business, with the objective that the goodwill and ongoing
businesses of the TCI Group shall be unimpaired at the Effective Time.
Without limiting the generality of the foregoing, from and including
the date hereof to the Effective Time, the Company will not, and will
not permit any of the TCI Group Members to, without the prior written
consent of Parent (except to the extent set forth in Section 7.1 of the
Company Disclosure Statement):
(a) except for (i) TCI Group Shares issued upon exercise of
options or other rights outstanding as of the date hereof under
Employee Plans or Benefit Arrangements in accordance with the
terms thereof, (ii) TCI Group Shares issued in connection with the
conversion of convertible or exchangeable securities of the
Company or its Subsidiaries outstanding as of the date hereof in
accordance with the terms of such securities, (iii) shares of TCI
Group Class A Stock issued upon conversion of shares of TCI Group
Class B Stock outstanding on the date hereof or issued pursuant to
convertible securities to acquire TCI Group Class B Stock
outstanding on the date hereof, in accordance with the terms of
the Company Charter as in effect on the date hereof, (iv) with
respect to Liberty Media Tracking Shares or TCI Ventures Tracking
Shares to the extent permitted pursuant to Section 7.18, (v)
options to purchase, restricted stock awards of, or other
compensation payable in shares of, TCI Group Class A Stock, up to
an aggregate of 3,000,000 shares of TCI Group Class A Stock, and
(vi) issuance of up to 14,511,570 shares of TCI Group Class B
Stock which ▇▇▇▇ ▇. ▇▇▇▇▇▇ and certain members of the ▇▇▇▇▇▇▇
family have the right to acquire from the Company, upon exercise
of such right in accordance with the terms thereof, issue,
deliver, sell, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, sale, disposition or pledge or
other encumbrance of (A) any additional shares of its capital
stock of any class (including the Shares), or any securities or
rights convertible into, exchangeable for, or evidencing the right
to subscribe for any shares of its capital stock, or any rights,
warrants, options, calls, commitments or any other agreements of
any character to purchase or acquire any shares of its capital
stock or any securities or rights convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of its
capital stock, or (B) any other securities in respect of, in lieu
of, or in substitution for, Shares outstanding on the date hereof;
(b) except with respect to Liberty Media Tracking Shares or
TCI Ventures Tracking Shares to the extent permitted pursuant to
Section 7.18, redeem, purchase or
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otherwise acquire, or propose to redeem, purchase or otherwise
acquire, any of its outstanding securities (including the Shares),
other than pursuant to existing agreements requiring the Company
to repurchase or acquire any shares of its capital stock (provided
that such repurchase or acquisition is in accordance with the
terms of such agreement as in effect on the date hereof);
(c) except for conversions of shares of TCI Group Class B
Stock outstanding on the date hereof into shares of TCI Group
Class A Stock, in accordance with the terms of the Company Charter
as in effect on the date hereof, split, combine, subdivide or
reclassify any shares of its capital stock or declare, set aside
for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any shares of
its capital stock or otherwise make any payments to stockholders
in their capacity as such (other than dividends or distributions
paid by any Wholly Owned Subsidiary of the Company to the Company
or another Wholly Owned Subsidiary within the same Group);
(d) (i) grant any increases in the compensation of any of its
directors, officers or employees, except in the ordinary course of
business consistent with past practice, (ii) pay or award or agree
to pay or award any pension, retirement allowance, or other
nonequity incentive awards, or other employee benefit, not
required by any of the Employee Plans or Benefit Arrangements to
any current or former director, officer or employees, whether past
or present, or to any other Person, except for payments or awards
that are in the ordinary course of business, consistent with past
practice, and that are not material, (iii) pay or award or agree
to pay or award any stock option or equity incentive awards,
except to the extent permitted by Section 7.1(a)(v) and except for
options to purchase or awards of Liberty Media Shares or TCI
Ventures Shares (subject to the limitations of Section 7.18), (iv)
enter into any new or amend any existing employment agreement with
any director, officer or employee, except for employment
agreements with new employees entered into in the ordinary course
of business consistent with past practice and except for
amendments in the ordinary course of business, consistent with
past practice, that do not materially increase benefits or
payments, (v) enter into any new or amend any existing severance
agreement with any current or former director, officer or
employee, except for agreements or amendments in the ordinary
course of business, consistent with past practice, that do not
provide for material benefits, or (vi) become obligated under any
new Employee Plan or Benefit Arrangement, which was not in
existence on the date hereof, or amend or exercise discretion
pursuant to any such Employee Plan or
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Benefit Arrangement in existence on the date hereof, except for
any such amendment or exercise of discretion in the ordinary
course of business, consistent with past practice, that does not
provide for material benefits; provided, however, that the
foregoing shall not be applicable to any such payment or increase,
or any such agreement, so long as the associated costs and
expenses related thereto are attributed to the Liberty/Ventures
Group; and provided, further, that the Company is expressly
authorized to enter into tax protection agreements in the form set
forth in Schedule 7.12(e) with those employees listed on Schedule
7.12(e);
(e) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any TCI
Group Member not constituting an inactive Subsidiary (other than
the Merger or as provided in Section 2.1(b), and other than (i)
with respect to TCI Group Member such of the foregoing as do not
change the beneficial ownership interest of the Company in such
TCI Group Member and (ii) with respect to the Company, any such
merger, consolidation, restructuring, recapitalization or other
reorganization that is used to effect an acquisition permitted
pursuant to Section 7.1(f) and which does not result in a change
of control of the Company or change the Shares into a different
number or kind of securities);
(f) make any acquisition, by means of merger, consolidation
or otherwise (other than any acquisition by any Liberty Media
Member or any TCI Ventures Member to the extent permitted under
Section 7.18), of (i) any direct or indirect ownership interest in
or assets comprising any business enterprise or operation or (ii)
except in the ordinary course and consistent with past practice,
any other assets; provided, however, that the Company may make
such acquisitions for cash in an amount not to exceed $10 million
in the case of any single acquisition or $50 million for all such
acquisitions in the aggregate during any 12-month period; provided
further that such acquisitions do not and would not prevent or
materially delay the consummation of the Merger; and provided
further that the foregoing shall not prevent the Company from
exploring on a preliminary basis and conducting diligence
investigations (including having discussions with any potential
acquisition target) with respect to any potential acquisition that
would require Parent's consent hereunder, for the purpose of
determining the desirability of such potential acquisition and
developing the basis on which to seek Parent's consent, so long as
the Company does not submit any formal proposal or indication of
interest with respect to such an acquisition to such acquisition
target, or make any binding commitments with
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respect to such potential acquisition, without obtaining Parent's
consent; and provided further that in the event the Company is
offered an opportunity under which it is required either to
acquire or dispose of certain of its cable television system and
related assets or related investments prior to the Effective Time
and the taking of such action requires Parent's consent hereunder,
Parent will not withhold its consent unreasonably;
(g) (i) dispose of any controlling interest in any material
business enterprise or operation of the TCI Group, (ii) make any
other disposition of any other direct or indirect ownership
interest in or assets comprising a material business enterprise or
operation of the TCI Group (except for the replacement or upgrade
of assets, or disposition of unnecessary assets, in the ordinary
course and consistent with past practice), or (iii) except in the
ordinary course and consistent with past practice, dispose of any
other assets of the TCI Group;
(h) adopt any amendments to the Company Charter or the
By-Laws of the Company or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the
corporate structure or ownership of any TCI Group Member not
constituting an inactive Subsidiary of the Company;
(i) incur any indebtedness for borrowed money or guarantee
any indebtedness of any other Person or make any loans, advances
or capital contributions to, or investments in, any other Person
(other than to the Company or any Wholly Owned Subsidiary of the
Company), except that (A) the Company may incur additional
indebtedness after the date hereof, under existing credit
facilities (or any renewals thereof), resulting in aggregate net
proceeds to the Company from such additional indebtedness not
exceeding $50 million, (B) the Company may refinance outstanding
indebtedness (including indebtedness incurred pursuant to this
Section 7.1), without increase in the amount thereof, so long as
the terms thereof are no less favorable to the Company and the
maturity thereof is no more than one year or such debt is
prepayable without penalty, and (C) any Subsidiary of the Company
that is not a member of the TCI Group shall be permitted to do any
of the foregoing to the extent permitted pursuant to Section 7.18;
(j) engage in the conduct of any business other than the
Company's existing businesses (except that the Liberty Media Group
and the TCI Ventures Group may engage in other businesses to the
extent permitted pursuant to Section 7.18);
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(k) enter into any agreement or exercise any discretion
providing for acceleration of payment or performance as a result
of a change of control of the Company or its Subsidiaries;
provided that this paragraph (k) shall not restrict the Company's
right to respond or take action in response to any such
acceleration so long as such action is permitted under this
Section 7.1;
(l) enter into any contracts, arrangements or understandings
requiring in the aggregate the purchase of equipment, materials,
supplies or services in excess of $50 million (or, with respect to
the Liberty Media Group and the TCI Ventures Group, as permitted
pursuant to Section 7.18), other than any such contracts,
arrangements or understandings providing for capital spending of
the Company or the TCI Group Members in accordance with the
Capital Spending Plan;
(m) enter into or amend or waive any right under any
agreement with any Affiliates of the Company (other than its
Subsidiaries) or with any Stockholder or any Affiliate of any
Stockholder (other than as set forth in the Voting Agreement),
other than any of the foregoing as may be done in the ordinary
course of business and that is not material, individually or in
the aggregate, to TCI Group;
(n) settle or compromise any material litigation with respect
to TCI Group or waive, release or assign any material rights or
claims with respect to TCI Group, except in the ordinary course of
business consistent with past practice;
(o) take any action (other than the Merger and as specified
in Section 4) that would result in a change in any of the
following: (i) the Number of Shares Issuable with Respect to the
Liberty Media Group Inter-Group Interest, (ii) the Adjusted
Liberty Media Group Outstanding Interest Fraction, (iii) the
Liberty Media Group Outstanding Interest Fraction, (iv) the Number
of Shares Issuable with Respect to the TCI Ventures Group
InterGroup Interest, (v) the Adjusted TCI Ventures Group
Outstanding Interest Fraction, (vi) the TCI Ventures Group
Outstanding Interest Fraction, (vii) the Committed Acquisition
Shares (other than a reduction thereof) and (viii) the TCI
Ventures Group Preferred Interest;
(p) except as expressly contemplated by the Restructuring or
except as expressly permitted by Section 7.17, (i) engage in or
allow any direct or indirect transfer of any material properties
or assets or obligations or liabilities between any of the TCI
Group Members, on the one hand, and any Liberty Media Member or
TCI Ventures Member, on the other hand, or (ii) engage in any
other transaction
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involving any TCI Group Member, on the one hand, and any
Liberty Media Member or TCI Ventures Member, on the other
hand;
(q) authorize, recommend or propose (other than to Parent),
or announce an intention to do any of the foregoing, or enter into
any contract, agreement, commitment or arrangement to do any of
the foregoing.
7.2. Other Transactions. (a) The Company shall not, nor shall
it permit any of its Subsidiaries to, nor shall it authorize or permit
any officer, director or employee or any investment banker, attorney,
accountant, agent or other advisor or representative of the Company or
any of its respective Subsidiaries to, (i) solicit, initiate or
knowingly encourage the submission of any Takeover Proposal, (ii) enter
into any agreement with respect to a Takeover Proposal or (iii)
participate in any discussions or negotiations regarding, or furnish to
any Person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover
Proposal; provided, however, that to the extent required by the
fiduciary obligations of the Board of Directors of the Company, as
determined in good faith by a majority of the members thereof (after
receipt of advice from ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, outside legal counsel
to the Board of Directors), the Company may, in response to unsolicited
requests therefor, participate in discussions or negotiations with, or
furnish information pursuant to a confidentiality agreement no less
favorable to such party than the Confidentiality Agreement to, any
Person who indicates a willingness to make a Superior Proposal. For all
purposes of this Agreement, "Takeover Proposal" means any proposal for
a merger, consolidation, share exchange, business combination or other
similar transaction involving the Company or any of its Significant
Subsidiaries or any proposal or offer to acquire, directly or
indirectly, an equity interest in, any voting securities of, or a
substantial portion of the assets of, the Company or any of its
Significant Subsidiaries, other than the transactions contemplated by
this Agreement and other than any transaction involving solely Liberty
Media Members or TCI Ventures Members which would not prevent or
materially delay consummation of the Merger. The Company immediately
shall cease and cause to be terminated all existing discussions or
negotiations with any Persons conducted heretofore with respect to, or
that could reasonably be expected to lead to, any Takeover Proposal. As
used herein, a "Significant Subsidiary" means any Subsidiary that would
constitute a "significant subsidiary" within the meaning of Rule 1-02
of Regulation S-X of the SEC.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Parent, the approval
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or recommendation by the Board of Directors of the Company or any such
committee of this Agreement or the Merger or (ii) approve or recommend,
or propose to approve or recommend, any Takeover Proposal.
Notwithstanding the foregoing, (A) the Board of Directors of the
Company or any committee thereof, to the extent required by its
fiduciary obligations, as determined in good faith by a majority of the
members thereof (after receipt of advice from ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
Finger, outside legal counsel to the Board of Directors), may approve
or recommend a Superior Proposal (and, in connection therewith,
withdraw or modify its approval or recommendation of this Agreement or
the Merger) and (B) nothing contained in this Agreement shall prevent
the Board of Directors of Parent or the Company from complying with
Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with
regard to a Takeover Proposal. For all purposes of this Agreement,
"Superior Proposal" means a bona fide written proposal made by a third
party to acquire the Company pursuant to a tender or exchange offer, a
merger, a share exchange, a sale of all or substantially all its assets
or otherwise on terms which a majority of the members of the Board of
Directors of the Company determines in good faith (taking into account
the advice of independent financial advisors) to be more favorable to
the Company and its stockholders than the Merger (and any revised
proposal made by Parent) and for which financing, to the extent
required, is then fully committed or reasonably determined to be
available by the Board of Directors of the Company.
7.3. Stockholder Approval. (a) Parent and the Company each
shall call its respective Stockholders Meeting to be held as promptly
as practicable for the purpose of voting upon, in the case of Parent,
the Parent Charter Amendment and the issuance of Parent Common Shares
and Parent Liberty Tracking Shares in connection with the Merger and,
in the case of the Company, this Agreement and the transactions
contemplated hereby. Except as otherwise required by the fiduciary
duties of its Board of Directors (as determined in good faith by such
Board following the receipt of advice of its outside legal counsel to
such effect), (i)(A) the Company will, through the Board of Directors
(based on the recommendation of its Special Committee), recommend to
its stockholders the approval and adoption of this Agreement and the
Merger, and (B) Parent will, through its Board of Directors, recommend
to its stockholders the approval of the Parent Charter Amendment and
the approval of the issuance of the Parent Common Shares and Parent
Liberty Tracking Shares in connection with the Merger, and (ii) each of
the Company and Parent will use their respective best efforts to obtain
the foregoing approval of their respective stockholders. Parent and the
Company shall coordinate and cooperate with respect to the timing of
the Stockholders Meetings and shall use their respective reasonable
best efforts to hold the Stockholders Meeting on the same day as soon
as practicable
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after the date on which the Registration Statement becomes ef-
fective.
(b) Notwithstanding the provisions of Section 7.3(a), after
the adoption of this Agreement by the stockholders of the Company,
without the affirmative approval, by vote or written consent, of the
holders of Shares representing a majority of the votes that may be cast
by the holders of all then outstanding Shares, the Company will not (i)
enter into any amendment to this Agreement that would alter or change
any of the terms and conditions of this Agreement if such alteration or
change would adversely affect the holders of Shares, or (ii) waive any
condition set forth in Section 8.1 or Section 8.3 if such waiver would
materially adversely affect the holders of Shares.
(c) Parent, as the sole stockholder of Merger Sub, hereby
consents to the adoption of this Agreement by Merger Sub and agrees
that such consent shall be treated for all purposes as a vote duly
adopted at a meeting of the stockholders of Merger Sub held for this
purpose.
7.4. Registration Statement and Proxy Statement. (a) As
promptly as practicable after the date of this Agreement, Parent and
the Company shall prepare and file with the SEC a preliminary joint
proxy statement in form and substance reasonably satisfactory to each
of Parent and the Company and Parent shall prepare and file with the
SEC a registration statement on Form S-4 (the "Registration
Statement"), in which the joint proxy statement will be included as
part of a prospectus, in connection with the registration under the
Securities Act of the Parent Common Shares and Parent Liberty Tracking
Shares issuable upon conversion of the Shares (and any securities
convertible into or exchangeable for Shares) and the other transactions
contemplated hereby. Each of Parent and the Company shall use its
reasonable best efforts to respond to any comments of the SEC, to have
the Registration Statement to be declared effective as promptly as
practicable after such filing and to cause the Proxy Statement approved
by the SEC to be mailed to the Company's stockholders at the earliest
practicable time. The Company and Parent will notify the other party
promptly of the receipt of any comments from the SEC or its staff and
of any request by the SEC or its staff or any other governmental
officials for amendments or supplements to the Registration Statement,
the Proxy Statement or any other filing or for additional information,
and will supply the other with copies of all correspondence between it
and any of its representatives, on the one hand, and the SEC, or its
staff or any other governmental officials, on the other hand, with
respect to the Registration Statement, the Proxy Statement, the
Restructuring, the Merger or any other filing relating thereto. The
Proxy Statement, the Registration Statement and such other filings
shall comply in all material respects with all
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applicable requirements of law. Whenever any event occurs which is
required to be set forth in an amendment or supplement to the Proxy
Statement, the Registration Statement or any other filing, Parent or
the Company, as the case may be, shall promptly inform the other party
of such occurrence and cooperate in filing with the SEC or its staff or
any other government officials, and/or mailing to stockholders of the
Company, such amendment or supplement. The Company and Parent each
shall promptly provide the other (or its counsel) copies of all filings
made by it with any Governmental Body in connection with this Agreement
and the transactions contemplated hereby. Each party hereto agrees to
cooperate reasonably with each other party in connection with the
preparation and filing of the Registration Statement, including
providing information to the other party with respect to itself as may
be reasonably required in connection therewith.
(b) The Proxy Statement shall include the recommendation of
the Board of Directors of the Company in favor of approval and adoption
of this Agreement and the Merger except to the extent the Board of
Directors of the Company shall have withdrawn or modified its approval
or recommendation of this Agreement or the Merger as permitted by
Section 7.2(b) or 7.3(a), and the recommendation of the Board of
Directors of Parent in favor of approval of the issuance of Parent
Shares in the Merger and the Parent Charter Amendment, except to the
extent the Board of Directors of Parent shall have withdrawn or
modified its approval or recommendation of the issuance of Parent
Shares in the Merger or the Parent Charter Amendment as permitted by
Section 7.3(a). The Company shall use its reasonable best effort to
cause the Proxy Statement to be mailed to its stockholders, and Parent
shall use its reasonable best efforts to cause the Proxy Statement to
be mailed to its stockholders, in each case as promptly as practicable
after the Registration Statement becomes effective.
7.5. Reasonable Efforts. (a) Subject to Section 7.5(c), the
Company and Parent shall, and shall use all reasonable efforts to cause
their respective Subsidiaries, as applicable, to: (i) promptly make all
filings and seek to obtain all Authorizations required under all
applicable Laws with respect to the Merger and the other transactions
contemplated hereby and will reasonably consult and cooperate with each
other with respect thereto; (ii) not take any action (including
effecting or agreeing to effect or announcing an intention or proposal
to effect, any acquisition, business combination or other transaction
except as set forth in the Parent Disclosure Statement or the Company
Disclosure Statement, as the case may be) which would impair the
ability of the parties to consummate the Merger (regardless of whether
such action would otherwise be permitted or not prohibited hereunder);
and (iii) use all reasonable efforts to promptly (x) take, or cause to
be taken, all other actions and (y) do, or cause to be done, all other
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things reasonably necessary, proper or appropriate to satisfy the
conditions set forth in Article VIII (unless waived) and to consummate
and make effective the transactions contemplated by this Agreement on
the terms and conditions set forth herein (including seeking to remove
promptly any injunction or other legal barrier that may prevent such
consummation). Each party shall promptly notify the other party of any
communication to that party from any Governmental Body in connection
with any required filing with, or approval or review by, such
Governmental Body in connection with the Merger and permit the other
party to review in advance any proposed communication to any
Governmental Body in such connection to the extent permitted by
applicable law. Notwithstanding the foregoing, in connection with any
filing or submission required or action to be taken by either the
Company or Parent or any of their respective Subsidiaries to effect the
Merger and to consummate the other transactions contemplated hereby,
(A) neither the Company nor any of its Subsidiaries shall, without
Parent's prior written consent, commit to any divestiture or hold
separate or similar transaction with respect to any asset or business
of TCI Group, and each of the Company and the TCI Group Members shall
commit to, and shall use reasonable efforts to effect, such thereof
(which commitments may, at the Company's option, be conditioned upon
and effective as of the Effective Time) as Parent shall reasonably
request, and (B) neither Parent nor any of its Subsidiaries shall be
required to divest or hold separate or otherwise take (or refrain from
taking) or commit to take (or refrain from taking) any action that
limits its freedom of action with respect to, or its ability to retain,
the Company or any of its Subsidiaries or any material portion of the
assets of the Company and its Subsidiaries, or any of the business,
product lines or assets of Parent or any of its Subsidiaries, if any of
the foregoing, individually or in the aggregate, would have a Material
Adverse Effect on the Company or on the TCI Group (or an effect on
Parent and its Subsidiaries that, were such effect applied to the
Company and its Subsidiaries, would constitute a Material Adverse
Effect on the Company or on the TCI Group).
(b) In addition to the foregoing, the Company agrees that, in
connection with obtaining any Authorization required in connection with
the Merger and the transactions contemplated hereby, the Company will
and will cause its Subsidiaries (i) to commit to the divestiture by the
Company and its Subsidiaries of their entire interest in the Spectrum
PCS Investment, and (ii) following stockholder approval of the Parent
Charter Amendment and the issuance of Parent Shares in the Merger, (x)
to place such interest in a trust or other arrangement acceptable to
the applicable Governmental Bodies pending such divestiture, and (y)
otherwise to comply with such requirements in connection with such
divestiture as may be imposed by the applicable Governmental Bodies.
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(c) Nothing in this Agreement shall prevent or restrict
Parent and its Subsidiaries from engaging in any merger, acquisition,
business combination or other transaction (whether or not Parent is the
surviving corporation); provided that such merger, acquisition,
business combination or other transaction would not (i) prevent, or
delay beyond September 30, 1999, the ability of Parent to consummate
the Merger or (ii) cause the Merger to fail to qualify as a tax-free
reorganization; and provided, further, that the parties will not delay
the Closing in order to obtain any Authorizations to close another
subsequently announced transaction, or until such other Authorizations
are obtained.
7.6. Access to Information. Subject to currently existing
contractual and legal restrictions applicable to the Company (which the
Company represents and warrants are not material with respect to TCI
Group), and upon reasonable notice, the Company shall (and shall cause
each TCI Group Member to) afford to officers, employees, counsel,
accountants and other authorized representatives of Parent ("Parent
Representatives") reasonable access, during normal business hours
throughout the period prior to the Effective Time, to its properties,
books and records (including, subject to execution of appropriate
access letters, the work papers of independent accountants), such
access not to unreasonably interfere with the Company's business or
operations, and, during such period, shall (and shall cause each of the
TCI Group Members to) furnish promptly to such Parent Representatives
all information concerning its business, properties and personnel as
may reasonably be requested, provided that no investigation pursuant to
this Section 7.6 shall affect or be deemed to modify any of the
respective representations or warranties made by the Company. Subject
to currently existing contractual and legal restrictions applicable to
Parent (which Parent represents and warrants are not material), and
upon reasonable notice, Parent shall (and shall cause its Significant
Subsidiaries to) furnish to to officers, employees, counsel,
accountants and other authorized representatives of the Company
("Company Representatives") such information concerning its business,
properties and personnel as may reasonably be requested, provided that
no investigation pursuant to this Section 7.6 shall affect or be deemed
to modify any of the respective representations or warranties made by
Parent. Each of Parent and the Company agrees that it will not, and
will cause the Parent Representatives or Company Representatives, as
the case may be, not to, use any information obtained pursuant to this
Section 7.6 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. All information obtained
pursuant to this Section 7.6 shall be subject to the Confidentiality
Agreement, which shall remain in full force and effect until
consummation of the Merger or, if the Merger is not consummated, for
the period specified therein; provided, however, that neither Parent
nor the Company shall be precluded
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from making any disclosure which it deems required by law in connection
with the Merger. All requests for access to the Company and the TCI
Group Members pursuant to this Section 7.6 shall be made through the
representatives of the Company named in Section 7.6 of the Company
Disclosure Statement, and all requests for information to Parent and
its Significant Subsidiaries pursuant to this Section 7.6 shall be made
through the representatives of Parent named in Section 7.6 of the
Parent Disclosure Statement.
7.7. Indemnification of Directors and Officers. (a) From and
after the Effective Time, Parent and the Surviving Corporation shall
jointly and severally indemnify, defend and hold harmless the present
and former officers, directors and employees of the Company and any of
its Subsidiaries, and any Person who is or was serving at the request
of the Company as an officer, director or employee or agent of another
Person, against all losses, expenses, claims, damages or liabilities
arising out of actions or omissions occurring on or prior to the
Effective Time (including the transactions contemplated by this
Agreement) to the fullest extent permitted under applicable Law (and
shall also, subject to Section 7.7(b), advance expenses as incurred to
the fullest extent permitted under applicable Law, provided that the
Person to whom expenses are advanced provides an undertaking to repay
such advances if it is ultimately determined that such Person is not
entitled to indemnification); provided, however, that such
indemnification shall be provided only to the extent any directors' and
officers' liability insurance policy of the Company or its Subsidiaries
does not provide coverage and actual payment thereunder with respect to
the matters that would otherwise be subject to indemnification
hereunder (it being understood that Parent or the Surviving Corporation
shall, subject to Section 7.7(b), advance expenses on a current basis
as provided in this paragraph (a) notwithstanding such insurance
coverage to the extent that payments thereunder have not yet been made,
in which case Parent or the Surviving Corporation, as the case may be,
shall be entitled to repayment of such advances from the proceeds of
such insurance coverage); and provided, further, that (subject to
Parent not causing the Surviving Corporation to divest the assets of
the Parent Liberty Group) Parent's indemnification obligation will not
apply to any losses, expenses, claims, damages or liabilities arising
out of actions or omissions, whether occurring on, prior to or
following the Effective Time, that relate to the Liberty Media Group or
the TCI Ventures Group (including with respect to the Liberty Media
Exchange Ratios or, if applicable, the TCI Ventures Exchange Ratios,
the Restructuring insofar as it relates to the Liberty Media Group and
the TCI Ventures Group, disclosures with respect to the Liberty Media
Group or the TCI Ventures Group, or any other decisions with respect to
the Liberty Media Group or the TCI Ventures Group); provided that the
foregoing shall not be deemed to affect the obligations of the
Surviving
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Corporation hereunder. Parent and Merger Sub agree that all rights to
indemnification, including provisions relating to advances of expenses
incurred in defense of any action, suit or proceeding, whether civil,
criminal, administrative or investigative (each, a "Claim"), existing
in favor of the present or former directors, officers, employees,
fiduciaries and agents of the Company or any of its Subsidiaries, and
any Person who is or was serving at the request of the Company as an
officer, director or employee or agent of another Person (collectively,
the "Indemnified Parties") as provided in the Company Charter or
By-Laws or pursuant to other agreements, or certificates of
incorporation or by-laws or similar documents of any of the Company's
Subsidiaries, as in effect as of the date hereof, with respect to
matters occurring through the Effective Time, shall survive the Merger
and shall continue in full force and effect for a period of not less
than six years from the Effective Time; provided, however, that all
rights to indemnification in respect of any Claim asserted, made or
commenced within such period shall continue until the final disposition
of such Claim. The Surviving Corporation shall maintain in effect for
not less than six years after the Effective Time the current policies
of directors' and officers' liability insurance maintained by the
Company and the Company's Subsidiaries with respect to matters
occurring prior to the Effective Time; provided, however, that (i) the
Surviving Corporation may substitute therefor policies of at least the
same coverage containing terms and conditions which are no less
advantageous to the Indemnified Parties with an insurance company or
companies, the claims paying ability of which is substantially
equivalent to the claims paying ability of the insurance company or
companies providing such insurance coverage for directors and officers
of Parent and (ii) the Surviving Corporation shall not be required to
pay an annual premium for such insurance in excess of three times the
last annual premium paid prior to the date hereof, but in such case
shall purchase as much coverage as possible for such amount.
(b) In the event that any Claim relating hereto or to the
transactions contemplated by this Agreement is commenced, before the
Effective Time, the parties hereto agree to cooperate and use their
respective reasonable efforts to vigorously defend against and respond
thereto. Any Indemnified Party wishing to claim indemnification under
paragraph (a) of Section 7.7, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Parent
thereof, whereupon Parent or the Surviving Corporation shall have the
right, from and after the Effective Time, to assume and control the
defense thereof, and upon such assumption, the Surviving Corporation
shall not be liable to such Indemnified Parties for any legal expenses
of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof.
Notwithstanding the foregoing, if counsel for the Indemnified Parties
advises that
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there are issues which raise conflicts of interest between Parent or
the Surviving Corporation and the Indemnified Parties, the Indemnified
Parties may retain separate counsel and the Surviving Corporation will
pay all reasonable fees and expenses of such counsel; provided that the
Surviving Corporation will not be obligated pursuant to this sentence
to pay for more than one firm of counsel for all Indemnified Parties in
any jurisdiction. The Surviving Corporation shall not be liable for any
settlement effected without its prior written consent.
(c) This Section 7.7 is intended to benefit the Indemnified
Parties and shall be binding on all successors and assigns of Parent,
Merger Sub and the Surviving Corporation.
7.8. Registration and Listing of Parent Common Shares. (a)
Parent will use all reasonable efforts to register the Parent Common
Shares and Parent Liberty Tracking Shares to be issued pursuant to this
Agreement, and upon exercise of stock options granted to employees of
the Company and its Subsidiaries (or upon conversion of any convertible
or exchangeable securities), under the applicable provisions of the
Securities Act and, if required, under any applicable state securities
laws.
(b) Parent will use all reasonable efforts to cause the
Parent Common Shares and Parent Liberty Tracking Shares to be issued
pursuant to this Agreement and upon exercise of stock options granted
to employees of the Company and its Subsidiaries (or upon conversion of
any convertible or exchangeable securities), to be listed for trading
on the NYSE or, in the case of the Parent Liberty Tracking Shares, at
Parent's option, on the National Market System of NASDAQ.
7.9. Affiliates of Parent and the Company. Concurrently with
the execution of this Agreement, each of the directors of the Company
has executed an agreement to the effect set forth in this Section 7.9.
Prior to the Effective Time, the Company shall deliver to Parent a
letter identifying all other Persons who, to the Company's knowledge,
at the time of the Company Stockholders Meeting or at the Effective
Time, may be deemed to be "affiliates" of the Company for purposes of
Rule 145 under the Securities Act or who may otherwise be deemed to be
Affiliates of the Company (the "Rule 145 Affiliates"). The Company
shall use all reasonable efforts to cause each Person who is identified
as a Rule 145 Affiliate in such list to deliver to Parent on or prior
to the 30th day prior to the Effective Time, a written agreement, in
the form attached hereto as Exhibit B, that such Rule 145 Affiliate
will not sell, pledge, transfer or otherwise dispose of any Parent
Common Shares or Parent Liberty Tracking Shares issued to such Rule 145
Affiliate pursuant to the Merger, except pursuant to an effective
registration statement or in compliance with Rule 145
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under the Securities Act or an exemption from the registration
requirements of the Securities Act.
7.10. Tax Matters. Each of the parties shall use all
reasonable efforts to cause the Merger to constitute a tax-free
"reorganization" under Section 368(a) of the Code. None of the parties
will knowingly take any action, and none of the parties will permit any
of its Subsidiaries or Affiliates knowingly to take any action, that
would cause the Merger to fail to qualify as a tax-free reorganization
under Section 368(a) of the Code. Each of the parties shall use all
reasonable efforts to permit Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ and ▇▇▇▇▇ &
▇▇▇▇▇, L.L.P. to issue their opinions provided in Sections 8.2(d) and
8.3(d), respectively. Each party agrees to report the Merger on all tax
returns and other filings as a tax-free reorganization under Section
368(a) of the Code. Except as otherwise provided herein, without the
prior written consent of Parent or unless the Liberty/Ventures Group
agrees to assume the tax burden thereof, the Company shall not (and
shall not permit any Subsidiary to) take any action that would cause a
material acceleration of income under any "deferred intercompany
transaction" or "intercompany transaction" that is disclosed in Part 2
of Section 5.10(b) of the Company Disclosure Statement.
7.11. New York Real Property Transfer Tax. Any liability
arising out of New York State and/or New York City Real Property
Transfer Taxes, with respect to interests in real property owned,
directly or indirectly, by the Company immediately prior to the Merger,
if applicable and due with respect to the Merger, shall be borne by the
Surviving Corporation and expressly shall not be a liability of the
stockholders of the Company.
7.12. Employee Matters. (a) From and after the Effective
Time, Parent will cause the Surviving Corporation to honor, in
accordance with their terms, the executive, employment and other
agreements and arrangements relating to officers and employees of TCI
Group set forth in Section 7.12(a) of the Company Disclosure Statement
(the "Executive Agreements") and all the Employee Plans and Benefit
Arrangements relating to TCI Group; provided, however, that nothing
herein shall preclude any change in any Executive Agreement, Employee
Plan or Benefit Arrangement effective on a prospective basis that is
permitted pursuant to the terms of the applicable Employee Plan or
Benefit Arrangement. Company performance in respect of any performance
or other programs shall be calculated without taking into account any
expenses or costs directly associated with or arising as a result of
the transactions contemplated by this Agreement or any non-recurring
charges that would not reasonably be expected to have been incurred had
the transactions contemplated by this Agreement not occurred. With
respect to employees of TCI Group, Parent shall assume the obligations
of the Company under the Employee Plans and Benefit Arrangements
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as in effect immediately prior to the Effective Time and will provide
employee benefit plans with aggregate employee benefits to Company
Employees that are no less favorable than the aggregate benefits
provided to them immediately prior to the Effective Time; provided that
Parent at its sole option may provide employee benefits to Company
Employees which, in the aggregate, are no less favorable than those
applicable to similarly situated employees of Parent. With respect to
any plans established by Parent, to the extent a Company Employee
becomes eligible to participate in any such plans, Parent shall grant
to such Company Employee from and after the Effective Time, credit for
all service with the Company and its affiliates and predecessors (and
any other service credited by the Company under similar Employee Plans
and Benefit Arrangements) prior to the Effective Time for eligibility
to participate, benefit accrual and vesting purposes (except that no
such credit shall be required for (i) benefit accrual purposes under
defined benefit pension plans, or the schedule of benefits under
Parent's severance pay and short-term disability plans and programs,
(ii) eligibility to receive post-retirement ancillary benefits
(consisting at this time of medical, dental, death and telephone
concession benefits) or (iii) calculating Parent service for purposes
of "bridging" prior Parent service under Parent benefit plans). To the
extent Parent benefit plans provide medi-cal or dental welfare
benefits, such plans shall waive any pre-existing conditions and
actively at-work exclusions with respect to Company Employees (but only
to the extent such Company Employees were provided coverage under the
Employee Plans and Benefit Arrangements) and shall provide that any
expenses incurred on or before the Effective Time in the applicable
plan year by or on behalf of any Company Employees shall be taken into
account under the Parent benefit plans for the purposes of satisfying
applicable deductible, co-insurance and maximum out-of-pocket
provisions for such Company Employees.
(b) The Company may amend and/or take action with respect to
its 1996 Stock Incentive Plan prior to the Effective Time to provide
that upon a termination of employment by a Company Employee with good
reason or by the Company without cause (in each case as defined in
Schedule 7.12(b) attached hereto) following the Effective Time, that
options, stock appreciation rights or other awards granted under such
plan in 1997 and outstanding as of the Effective Time shall be fully
vested, and in the case of stock options or stock appreciation rights
be immediately exercisable, and will remain outstanding for their full
original term as if the individual had remained employed by the
Company.
(c) Parent agrees to maintain the Company's severance plans
as in effect on the date hereof for a period of two years from the
Effective Time, without adverse amendment, for the benefit of Company
Employees.
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(d) For purposes of this Section 7.12, the term "Company
Employees" shall mean all individuals employed by the TCI Group
(including those on lay-off, disability or leave of absence, paid or
unpaid) immediately prior to the Effective Time.
(e) The Company may enter into excise tax protective
agreements with certain of its employees and consultants (including
non-employee directors) in substantially the form attached as Schedule
7.12(e); provided that the TCI Group shall assume the obligations under
such agreements solely for Company Employees, and the obligations under
such agreements for employees of the Liberty/Ventures Group shall be
assumed by the Liberty/Ventures Group.
7.13. Tax Sharing Agreement. Concurrently with the Closing,
the parties shall enter into an amendment to the Tax Sharing Agreement
consistent with the transactions contemplated by this Agreement, with
respect to taxable periods (or portions thereof) beginning on or after
the Effective Time, on the terms set forth in Exhibit C hereto.
7.14. Other Intercompany Agreements. The TCI Group, the
Liberty Media Group and the TCI Ventures Group will comply with the
principles set forth in Schedule 7.14 with respect to any agreements
between any TCI Group Member, on the one hand, and any Liberty Media
Member or TCI Ventures Member, on the other hand. At the Effective
Time, the Company, on behalf of the TCI Group, and the appropriate
Subsidiary or Subsidiaries of the Company, on behalf of the Parent
Liberty Group, will enter into an agreement having the terms set forth
in Schedule 7.14.
7.15. Parent Board of Directors. At the Effective Time,
Parent will expand the size of its Board of Directors by one and will
appoint ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇ (or, in the event ▇▇. ▇▇▇▇▇▇ is unable to
serve, such other person as may be designated by the Company and
reasonably satisfactory to Parent) to the Parent Board of Directors.
From the Effective Time until the third anniversary thereof, Parent
will nominate ▇▇. ▇▇▇▇▇▇ (or such other person) for reelection to the
Parent Board of Directors at each subsequent annual or special meeting
of the stockholders of Parent at which ▇▇. ▇▇▇▇▇▇'▇ (or such other
person's) term is to expire. Thereafter (and during such period to the
extent ▇▇. ▇▇▇▇▇▇ or such other person is unable to serve as a
director), so long as any Parent Liberty Tracking Shares remain
outstanding, Parent will nominate and recommend the election to the
Parent Board of Directors a person (who may be ▇▇. ▇▇▇▇▇▇) who, in the
Parent Board of Directors' reasonable judgment, by virtue of his or her
background and experience, will understand and reflect issues of
concern to the Parent Liberty Group and the holders of Parent Liberty
Tracking Shares.
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7.16. Parent Charter Amendment, Bylaw Amendment and Policy
Statement. The Board of Directors of Parent has approved the Parent
Charter Amendment in the form attached hereto as Exhibit A which
amendment, subject to the approval of the holders of a majority of the
Parent Common Shares outstanding at the special meeting of stockholders
referred to in Section 7.3 and the filing thereof with the Secretary of
State of New York, will become effective immediately prior to the
Effective Time. The Board of Directors has also approved the amendment
to Parent's bylaws, and the policy statement with respect to Parent
Liberty Tracking Shares, in the form attached hereto as Exhibit D, each
of which will become effective as of the Effective Time.
7.17. Intercompany Transactions. Except as otherwise
expressly provided by the Restructuring, in the event that after the
date hereof and prior to the Effective Time, the Company or any of its
Subsidiaries engages in any action or transaction contemplated by
clause (i) or (ii) of Section 7.1(p), the applicable entities shall
establish a commercially reasonable arms' length intercompany loan or
other non-equity based account to reflect such transactions.
7.18. Certain Inter-Group Relationships. From and including
the date hereof to the Effective Time, the Company will and will cause
its Subsidiaries to comply with the provisions set forth in Schedule
7.18. At the Effective Time, Parent, on behalf of the Common Stock
Group (as defined in Schedule 7.18), the Company, on behalf of TCI
Group, and the appropriate Subsidiary or Subsidiaries of the Company,
on behalf of the Parent Liberty Group, will enter into an agreement
having the terms set forth in Schedule 7.18, which agreement shall be
valid, binding and in full force and effect at the Effective Time.
7.19. Cable Joint Ventures. The Company is currently in the
process of restructuring certain of its cable television system assets
by contributing certain assets to partnerships and other joint
ventures. The Company agrees that as and when reasonably requested by
Parent, the Company will consult with Parent regarding the status of
such restructuring transactions, including the terms and conditions
upon which such joint ventures would assume certain indebtedness
associated with such cable systems.
7.20. Certain Actions by Parent and the Surviving
Corporation. (a) Prior to the Effective Time, neither Parent nor its
Subsidiaries will enter into any exchange offer or similar transaction
in which the holders of Parent Common Shares become entitled to
exchange shares of Parent Common Shares for other securities of Parent
or any Subsidiary of Parent.
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(b) For a period of 15 years following the Effective Time,
neither Parent nor the Surviving Corporation shall directly or
indirectly take any action to redeem or change or modify the terms and
provisions of the preferred stock of Westmarc, Inc. (the "Westmarc
Preferred") or cause the holders of the Westmarc Preferred to become
entitled to rights of appraisal, including, without limitation, by
merger, consolidation, binding share exchange or otherwise, or sell,
transfer or dispose of all or substantially all of the assets of
Westmarc, or take any other action the effect of which is to impair
Westmarc's ability to pay dividends on the Westmarc Preferred in
accordance with its terms.
(c) Prior to the Effective Time, Parent will not issue or
sell any Parent Liberty Tracking Shares, or issue or grant any options,
warrants or other rights to acquire Parent Liberty Tracking Shares or
issue or sell any security which is convertible into or exercisable or
exchangeable for Parent Liberty Tracking Shares.
ARTICLE VIII
CONDITIONS
8.1. Conditions to Each Party's Obligations. The respective
obligations of each party to consummate the transactions contemplated
by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which
may be waived in whole or in part by the party being benefitted
thereby, to the extent permitted by applicable Law:
(a) Stockholder Approval. The Parent Charter Amendment and
Parent's issuance of Parent Shares as contemplated hereby shall
have been duly approved and adopted by the requisite holders of
Parent Common Shares at the Parent Stockholders Meeting, and this
Agreement and the transactions contemplated hereby shall have been
duly approved and adopted by the requisite holders of Shares at
the Company Stockholders Meeting, in each case, in accordance with
applicable Law and the Certificates of Incorporation and By-Laws
of the Parent and the Company, respectively (it being agreed that
the condition set forth in this Section 8.1(a) shall not be waived
by the parties), and the Parent Charter Amendment, and the
amendment to Parent's bylaws and policy statement set forth in
Exhibit D, shall each be in full force and effect;
(b) HSR Act; FCC. Any waiting period applicable to this
Agreement and the transactions contemplated hereby under the HSR
Act shall have expired or early termination thereof shall have
been granted, and the FCC Consent shall
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have been granted, in each case without limitation, restriction or
condition that has or would have a Material Adverse Effect on the
Company or on the TCI Group or on the Liberty/Ventures Group (or
an effect on Parent and its Subsidiaries that, were such effect
applied to the Company and its Subsidiaries, would constitute a
Material Adverse Effect on the Company or on the TCI Group).
(c) No Injunction. There shall not be in effect any judgment,
writ, order, injunction or decree of any court or Governmental
Body of competent jurisdiction, restraining, enjoining or
otherwise preventing consummation of the transactions contemplated
by this Agreement or permitting such consummation only subject to
any condition or restriction that has or would have a Material
Adverse Effect on the Company or on the TCI Group or on the
Liberty/ Ventures Group (or an effect on Parent and its
Subsidiaries that, were such effect applied to the Company and its
Subsidiaries, would constitute a Material Adverse Effect on the
Company or on the TCI Group).
(d) Registration Statement. The Registration Statement shall
have been declared effective and shall be effective at the
Effective Time, and no stop order suspending effectiveness shall
have been issued, no action, suit, proceeding or investigation by
the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, and all necessary approvals under
state securities laws or the Securities Act or Exchange Act
relating to the issuance or trading of the Parent Common Shares or
the Parent Liberty Tracking Shares shall have been received.
(e) Listing of Parent Shares. The Parent Common Shares and
the Parent Liberty Tracking Shares required to be issued hereunder
shall have been approved for listing on the NYSE (or, in the case
of the Parent Liberty Tracking Shares, at Parent's option, on the
National Market System of NASDAQ), subject only to official notice
of issuance.
8.2. Conditions to Obligations of Parent and Merger Sub. The
respective obligations of Parent and Merger Sub to consummate the
transactions contemplated by this Agreement are subject to the
fulfillment at or prior to the Effective Time of each of the following
additional conditions, any or all of which may be waived in whole or
part by Parent to the extent permitted by applicable Law:
(a) Representations and Warranties True. The representations
and warranties of the Company contained herein or otherwise
required to be made after the date hereof in a writing expressly
referred to herein by or on
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behalf of the Company pursuant to this Agreement, to the extent
qualified by materiality or Material Adverse Effect, shall have
been true and, to the extent not qualified by materiality or
Material Adverse Effect, shall have been true in all material
respects, in each case when made and on and as of the Closing Date
as though made on and as of the Closing Date (except for
representations and warranties made as of a specified date, which
need be true, or true in all material respects, as the case may
be, only as of the specified date).
(b) Performance. The Company shall have performed or complied
in all material respects with all agreements and conditions
contained herein required to be performed or complied with by it
prior to or at the time of the Closing.
(c) Compliance Certificate. The Company shall have delivered
to Parent a certificate, dated the date of the Closing, signed by
the President or any Vice President of the Company (but without
personal liability thereto), certifying as to the fulfillment of
the conditions specified in Sections 8.2(a) and 8.2(b).
(d) Tax Opinion. Parent shall have received an opinion of
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, dated the Effective Time, to the
effect that (i) the Merger should be treated for federal income
tax purposes as a reorganization within the meaning of Section
368(a) of the Code; (ii) each of Parent, Merger Sub and the
Company should be a party to the reorganization within the meaning
of Section 368(b) of the Code; (iii) no gain or loss should be
recognized by the Company, Parent or Merger Sub as a result of the
Merger; and (iv) no gain or loss should be recognized by a
stockholder of the Company as a result of the Merger with respect
to the Shares converted solely into Parent Common Shares or Parent
Liberty Tracking Shares. In rendering such opinion, Wachtell,
Lipton, ▇▇▇▇▇ & ▇▇▇▇ may receive and rely upon representations
contained in certificates of the Company, Parent, Merger Sub and
others, in each case in form and substance reasonably acceptable
to Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇.
(e) Other Authorizations. All Authorizations (other than
those specified in Section 8.1(b) hereof) required in connection
with the execution and delivery of this Agreement and the
performance of the obligations hereunder shall have been made or
obtained, without any limitation, restriction or condition that
has or would have a Material Adverse Effect on the Company (or an
effect on Parent and its Subsidiaries that, were such effect
applied to the Company and its Subsidiaries, would constitute a
Material
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Adverse Effect on the Company), except for such Authorizations the
failure of which to have been made or obtained does not and would
not, individually or in the aggregate, have a Material Adverse
Effect on the Company (or an effect on Parent and its Subsidiaries
that, were such effect applied to the Company and its
Subsidiaries, would constitute a Material Adverse Effect on the
Company).
8.3. Conditions to Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated
by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which
may be waived in whole or in part by the Company to the extent
permitted by applicable Law:
(a) Representations and Warranties True. The representations
and warranties of Parent and Merger Sub contained herein or
otherwise required to be made after the date hereof in a writing
expressly referred to herein by or on behalf of Parent and Merger
Sub pursuant to this Agreement, to the extent qualified by
materiality or Material Adverse Effect, shall have been true and,
to the extent not qualified by materiality or Material Adverse
Effect, shall have been true in all material respects, in each
case when made and on and as of the Closing Date as though made on
and as of the Closing Date (except for representations and
warranties made as of a specified date, which need be true, or
true in all material respects, as the case may be, only as of the
specified date).
(b) Performance. Parent shall have performed or complied in
all material respects with all agreements and conditions contained
herein required to be performed or complied with by it prior to or
at the time of the Closing.
(c) Compliance Certificate. Parent shall have delivered to
the Company a certificate, dated the date of the Closing, signed
by the President or any Vice President of Parent (but without
personal liability thereto), certifying as to the fulfillment of
the conditions specified in Sections 8.3(a) and 8.2(b).
(d) Tax Opinion. The Company shall have received an opinion
of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., dated the Effective Time, to the effect
that (i) the Merger should be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a)
of the Code; (ii) each of Parent, Merger Sub and the Company
should be a party to the reorganization within the meaning of
Section 368(b) of the Code; (iii) no gain or loss should be
recognized by the Company as a result of the Merger; and (iv) no
gain or loss should be recognized by a stockholder of the Company
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as a result of the Merger with respect to the Shares converted
solely into Parent Common Shares or Parent Liberty Tracking
Shares. In rendering such opinion, ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P. may
receive and rely upon representations contained in certificates of
Parent and Merger Sub, the Company and others, in each case in
form and substance reasonably acceptable to ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
ARTICLE IX
TERMINATION
9.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, before or after the approval by holders of Shares,
either by the mutual written consent of Parent and the Company, or by
mutual action of their respective Boards of Directors.
9.2. Termination by Either Parent or the Company. This
Agreement may be terminated (upon notice from the terminating party to
the other parties) and the Merger may be abandoned by action of the
Board of Directors of either Parent or the Company if: (a) the Merger
shall not have been consummated by March 31, 1999, provided that the
right to terminate this Agreement under this clause (a) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date, and provided, further, that in
the event that the failure of the Merger to occur on or before March
31, 1999 is the result of (i) a delay attributable to any transaction
permitted pursuant to Section 7.5(c) or (ii) the failure of any of the
conditions set forth in Section 8.1(b), 8.1(c) or 8.2(e) to be
satisfied or waived prior to March 31, 1999, either Parent or the
Company may extend such date to June 30, 1999 and, if such conditions
have not been satisfied or waived by such date, to further extend such
date to September 30, 1999 (so long as the party extending such date
believes in good faith that such conditions are capable of being
satisfied by such date), (b) any court of competent jurisdiction in the
United States or Governmental Body in the United States shall have
issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and
nonappealable, (c) the amendment to the Parent Charter and Parent's
issuance of Parent Common Shares and Parent Liberty Tracking Shares as
contemplated hereby are not duly approved and adopted by the requisite
holders of Parent Common Shares on or prior to March 31, 1999, or (d)
this Agreement and the transactions contemplated hereby are not duly
approved and adopted by the requisite holders of Shares on or prior to
March 31, 1999. In
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addition, this Agreement may be terminated by Parent (upon notice from
Parent to the Company) and the Merger may be abandoned by action of the
Board of Directors of Parent if any of the Stockholders shall have
breached any of their representations, covenants or obligations under
the Voting Agreement in any material respect and such breach shall not
be curable.
9.3. Termination by the Company. This Agreement may be
terminated (upon notice to Parent) by the Company and the Merger may be
abandoned by action of the Board of Directors of the Company if (a) the
Board of Directors of Parent shall have withdrawn or modified its
approval or recommendation of the issuance of Parent Shares in the
Merger or the Parent Charter Amendment as permitted by Section 7.3(a)
or (b) Parent or Merger Sub breaches or fails in any material respect
to perform or comply with its covenants and agreements contained herein
or breaches its representations and warranties, in each case that is
not curable, such that the conditions set forth in Sections 8.3(a) and
(b) cannot be satisfied.
9.4. Termination by Parent and Merger Sub. This Agreement may
be terminated (upon notice to the Company) by Parent and Merger Sub,
and the Merger may be abandoned by action of the Board of Directors of
Parent if (a) the Board of Directors of the Company shall have
withdrawn or modified its approval or recommendation of this Agreement
or the Merger as permitted by Section 7.2(b) or 7.3(a) or (b) the
Company breaches or fails in any material respect to perform or comply
with its covenants and agreements contained herein or breaches its
representations and warranties, in each case that is not curable, such
that the conditions set forth in Section 8.2(a) and (b) cannot be
satisfied.
9.5. Effect of Termination and Abandonment. In the event of
termination of this Agreement and abandonment of the Merger pursuant to
this Article IX, no party hereto (or any of its directors or officers)
shall have any liability or further obligation to any other party to
this Agreement, except as provided in Section 7.6 or Section 9.6, and
except that nothing herein will relieve any party from liability for
any breach of this Agreement.
9.6. Payment of Certain Fees. (a) In the event that (i)
Parent announces or effects a merger, acquisition, joint venture,
business combination or other transaction, as contemplated by Section
7.5(c), that involves the acquisition of significant businesses, assets
or properties, (ii) such announcement or transaction is a significant
factor in the failure of any of the conditions set forth in Section
8.1(b), 8.1(c) or 8.2(e) to be satisfied or waived prior to September
30, 1999 (which test will not be met if such announcement or
transaction would not have been a significant factor but for a
transaction or transactions announced by the Company following
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execution of this Agreement), (iii) this Agreement is terminated
pursuant to Section 9.2(a), and (iv) Parent would have been obligated
to consummate the Merger but for the failure of any of the conditions
set forth in Section 8.1(b), 8.1(c) or 8.2(e) to be satisfied or waived
prior to the date of such termination, then promptly following such
termination Parent will pay to the Company the sum of $1.75 billion in
cash.
(b) In the event that this Agreement is terminated pursuant
to Section 9.2(c) or 9.3(a), promptly following such termination Parent
will pay to the Company the sum of $1.75 billion in cash. In the event
that that this Agreement is terminated pursuant to Section 9.2(d) or
9.4(a), promptly following such termination the Company will pay to
Parent the sum of $1.75 billion in cash.
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1. Expenses. Except as set forth in Sections 7.11 and
7.18, each party shall bear its own expenses, including the fees and
expenses of any attorneys, accountants, investment bankers, brokers,
finders or other intermediaries or other Persons engaged by it,
incurred in connection with this Agreement and the transactions
contemplated hereby.
10.2. Notices, Etc. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement
shall be in writing and shall be deemed to have been duly given to any
party when delivered personally (by courier service or otherwise), when
delivered by telecopy and confirmed by return telecopy, or upon receipt
after being mailed by first-class mail, postage prepaid and return
receipt requested in each case to the applicable addresses set forth
below:
If to the Company:
Tele-Communications, Inc.
▇▇▇▇▇▇▇▇ Tower II
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent or Merger Sub:
AT&T, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Vice President-Law
and Corporate Secretary
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as such party shall have designated by notice
so given to each other party.
10.3. Amendments, Waivers, Etc. This Agreement may be
amended, changed, supplemented, waived or otherwise modified only by an
instrument in writing signed by the party (or, in the case of Section
7.7, the Indemnified Party) against whom enforcement is sought;
provided that, after the adoption of this Agreement by the stockholders
of the Company, no such amendment, change, supplement or waiver shall
be made without the further requisite approval of such stockholders if
such amendment, change, supplement or waiver by law requires the
further approval by such stockholders.
10.4. No Assignment. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the parties and
their respective successors and assigns; provided that, except as
otherwise expressly set forth in this Agreement, neither the rights nor
the obligations of any party may be assigned or delegated without the
prior written consent of the other party.
10.5. Entire Agreement. Except as otherwise pro-
vided herein, this Agreement (together with the Confidentiality
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Agreement between Parent and the Company and the other agreements
expressly contemplated hereby) embodies the entire agreement and
understanding between the parties relating to the subject matter hereof
and supersedes all prior agreements and understandings relating to such
subject matter. There are no representations, warranties or covenants
by the parties hereto relating to such subject matter other than those
expressly set forth in this Agreement (including the Company Disclosure
Statement and the Parent Disclosure Statement) and any writings
expressly required hereby.
10.6. Specific Performance. The parties acknowledge that
money damages are not an adequate remedy for violations of this
Agreement and that any party may, in its sole discretion, apply to a
court of competent jurisdiction for specific performance or injunctive
or such other relief as such court may deem just and proper in order to
enforce this Agreement or prevent any violation hereof and, to the
extent permitted by applicable Law, each party waives any objection to
the imposition of such relief.
10.7. Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof
at law or in equity shall be cumulative and not alternative, and the
exercise or beginning of the exercise of any thereof by any party shall
not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
10.8. No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon
compliance by any other party hereto with its obligations hereunder,
and any custom or practice of the parties at variance with the terms
hereof, shall not constitute a waiver by such party of its right to
exercise any such or other right, power or remedy or to demand such
compliance.
10.9. No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of and shall not be enforceable by any
Person or entity who or which is not a party hereto, except for the
indemnification provisions contained in Section 7.7, which provisions
may be enforced by any Indemnified Party referred to therein and except
that the provisions of Section 7.3(b) may be enforced by holders of
Shares. Notwithstanding anything to the contrary contained in this
Agreement, the provisions of Section 7.7 of this Agreement may not be
amended or altered in any manner with respect to any Indemnified Party
without the written consent of such Indemnified Party. No assignment of
this Agreement shall relieve Parent from its obligations to any
Indemnified Party contained in Section 7.7 of this Agreement.
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10.10. Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the United States District Court for the
District of Delaware or the Chancery Court of the State of Delaware in
any action, suit or proceeding arising in connection with this
Agreement, and agrees that any such action, suit or proceeding shall be
brought only in such court (and waives any objection based on forum non
conveniens or any other objection to venue therein); provided, however,
that such consent to jurisdiction is solely for the purpose referred to
in this Section 10.10 and shall not be deemed to be a general
submission to the jurisdiction of said courts or in the State of
Delaware other than for such purpose. Parent, Merger Sub and the
Company hereby waive any right to a trial by jury in connection with
any such action, suit or proceeding.
10.11. Public Announcements. Parent and the Company will
agree upon the timing and content of the initial press release to be
issued describing the transactions contemplated by this Agreement, and
will not make any public announcement thereof prior to reaching such
agreement unless required to do so by applicable Law or regulation. To
the extent reasonably requested by either party, each party will
thereafter consult with and provide reasonable cooperation to the other
in connection with the issuance of further press releases or other
public documents describing the transactions contemplated by this
Agreement.
10.12. Governing Law. This Agreement and all disputes
hereunder shall be governed by and construed and enforced in accordance
with the internal laws of the State of Delaware, without regard to
principles of conflict of laws.
10.13. Name, Captions, Etc. The name assigned this Agreement
and the section captions used herein are for convenience of reference
only and shall not affect the interpretation or construction hereof.
Unless otherwise specified, (a) the terms "hereof", "herein" and
similar terms refer to this Agreement as a whole and (b) references
herein to Articles or Sections refer to articles or sections of this
Agreement. Wherever appearing herein, the word "including" shall be
deemed to be followed by the words "without limitation."
10.14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one instrument.
Each counterpart may consist of a number of copies each signed by less
than all, but together signed by all, the parties hereto.
10.15. Survival of Representations, Warranties, Covenants and
Agreements. The respective representations and warranties of the
parties contained herein or in any certificates or other documents
delivered prior to or at the Closing shall
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survive the execution and delivery of this Agreement, notwithstanding
any investigation made or information obtained by the other parties,
but shall terminate at the Effective Time. The respective covenants and
agreements of the parties contained herein or in any other documents
delivered prior to or at the Closing shall survive the execution and
delivery of this Agreement and shall only terminate in accordance with
their respective terms.
10.16. Severability. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable in a jurisdiction, such
provision shall be modified or deleted, as to the jurisdiction
involved, only to the extent necessary to render the same valid, legal
and enforceable, and the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be affected or
impaired thereby nor shall the validity, legality or enforceability of
such provision be affected thereby in any other jurisdiction.
10.17. Disclosure Statements. The parties acknowledge that
the Company Disclosure Statement and the Parent Disclosure Statement to
this Agreement (i) relate to certain matters concerning the disclosures
required and transactions contemplated by this Agreement, (ii) are
qualified in their entirety by reference to specific provisions of this
Agreement, (iii) are not intended to constitute and shall not be
construed as indicating that such matter is required to be disclosed,
nor shall such disclosure be construed as an admission that such
information is material with respect to the Company or Parent, as the
case may be, except to the extent required by this Agreement, and (iv)
disclosure of the information contained in one section or part of the
Company Disclosure Statement or the Parent Disclosure Statement shall
be deemed as proper disclosure for all sections or parts of the Company
Disclosure Statement or the Parent Disclosure Statement, as the case
may be, only if appropriately cross-referenced or if the relevance
thereof is reasonably apparent from the context in which it appears.
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IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties set forth below.
TELE-COMMUNICATIONS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and CEO
AT&T CORP.
By: /s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chairman and CEO
ITALY MERGER CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President