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EXHIBIT 10.51
TCI WIRELESS HOLDINGS, INC.
STOCK APPRECIATION RIGHTS
THIS AGREEMENT ("AGREEMENT") is made as of the 1st day of
December, 1996, by and among TCI WIRELESS HOLDINGS, INC., a Delaware
corporation (the "COMPANY"), _____________________ ("GRANTEE") and, for
purposes of paragraphs 1(b), 14 and 15 only, TCI TELEPHONY SERVICES, INC., a
Delaware corporation ("TCITS), and, for purposes of paragraphs 5, 14 and 15
only, TELE-COMMUNICATIONS, INC., a Delaware corporation ("TCI").
On the date hereof, the Company and TCITS are Subsidiaries of
TCI and the Company is a Subsidiary of TCITS. Pursuant to that certain
agreement, dated as of December 1, 1996, among Grantee, TCITS and TCI (the
"TCITS SAR AGREEMENT"), TCITS had granted to Grantee stock appreciation rights
with respect to TCITS's common stock (the "TCITS SARS"). The Board of
Directors of the Company ("COMPANY BOARD"), the Board of Directors of TCITS,
and the Board of Directors of TCI have each determined that it is in the best
interests of the Company, TCITS and TCI to grant Grantee the stock appreciation
rights set forth herein, in substitution for and in cancellation of the TCITS
SARs, in order to provide Grantee with additional remuneration for services
rendered to the Company and its predecessors, to encourage Grantee to remain in
the employ of TCI and/or one or more of its Subsidiaries, including the
Company, and to provide additional incentive to Grantee by increasing Grantee's
proprietary interest in the continued success and progress of the Company.
Capitalized terms used herein and not otherwise defined are defined in
paragraph 17 below.
Accordingly, the Company, Grantee, and, for purposes of
paragraphs 1(b), 14 and 15 only, TCITS and, for purposes of paragraphs 5, 14
and 15 only, TCI hereby agree as follows:
1. GRANT OF STOCK APPRECIATION RIGHTS; TERM. (a) The Company
hereby grants to Grantee stock appreciation rights ("SARS") with respect to ten
(10) (the "TOTAL NUMBER OF SARS") shares of Company Common Stock on the terms
and subject to the conditions set forth herein. The Total Number of SARs and
the Strike Price are subject to adjustment pursuant to paragraph 9 below.
Subject to paragraph 2, the SARs shall be exercisable in whole at any time and
in part from time to time during the period commencing on the date hereof and
expiring at 5:00 p.m., Denver, Colorado time ("CLOSE OF BUSINESS") on the tenth
anniversary of the Determination Date, or such earlier date as the SARs may be
terminated pursuant to paragraph 6 or paragraph 9(c) (the "TERM").
(b) The grant of the SARs hereunder, together with the
grant of the stock appreciation rights by TCI Teleport Holdings, Inc. ("TCI
TELEPORT"), shall be deemed to be in substitution for and replacement of the
TCITS SARs (which in turn replaced an option to purchase
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shares of common stock of TCITS, the parent corporation of the Company and TCI
Teleport). The parties acknowledge and agree that such prior grants of the
TCITS SARs and stock option are hereby terminated and shall cease to be of any
further force and effect.
2. CONDITIONS OF EXERCISE; VESTING. Except as otherwise provided
in the last sentence of this paragraph 2 or in paragraph 9(c), the SARs shall
not be exercisable until the first anniversary of the Determination Date, and,
from the first anniversary of the Determination Date to the fifth anniversary
of the Determination Date, the SARs shall vest and become exercisable in
accordance with the following schedule:
Anniversary of Percentage of Total Number
Determination Date of SARs Exercisable
------------------ --------------------------
1st 20%
2nd 40%
3rd 60%
4th 80%
5th 100%
Notwithstanding the foregoing, all then unexercised SARs (the
"REMAINING SARS") shall become exercisable if during the Term (i) Grantee's
employment with the TCI Group shall terminate by reason of (x) termination by
the TCI Group without Cause, (y) termination by Grantee for Good Reason or (z)
Disability, (ii) Grantee's employment shall terminate pursuant to provisions of
a written employment agreement, if any, between Grantee and the applicable
member(s) of the TCI Group which expressly permits Grantee to terminate such
employment upon the occurrence of specified events (other than the giving of
notice and passage of time) or (iii) Grantee dies while employed by the TCI
Group. A change of employment is not a termination of employment within the
meaning of this paragraph 2, provided that, after giving effect to such change,
Grantee is an employee of, or becomes or continues to be a consultant to, any
member of the TCI Group.
3. EXERCISE OF SARS; SUBSEQUENT RESCISSION. (a) The SARs granted
hereunder may be exercised by delivery to the Company of a written notice (the
"EXERCISE NOTICE") specifying the whole number of SARs being exercised. The
date upon which such notice is validly given to the Company shall be deemed to
be the date of exercise of the SARs specified therein (the "EXERCISE DATE").
Upon the valid exercise of SARs (which exercise is not subsequently rescinded
as provided herein), Grantee shall be entitled to receive from the Company,
with respect to each SAR then being exercised, the excess of (i) the Per Share
Value of a share of Company Common Stock as of the Exercise Date over (ii) the
Strike Price applicable as of such Exercise Date (such excess, the "CASH
VALUE").
(b) Grantee shall have the right to rescind an exercise
of SARs prior to the Close of Business on the fifteenth (15th) day following
the Exercise Date in the event that (i) Grantee has elected to determine the
Per Share Value through negotiation with the Company, (ii) Grantee and the
Company have not agreed upon a Per Share Value by such date and (iii) Grantee
has not made
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a subsequent election to require that the Per Share Value be determined by
appraisal pursuant to paragraph 10(c) hereof. In addition, an exercise of SARs
shall be deemed rescinded under the circumstances set forth in paragraph 10(b)
hereof. In the event of any rescission of an exercise of SARs pursuant to this
paragraph 3(b), Grantee shall not be permitted to again exercise SARs for a
period of thirty (30) days following the date of such rescission.
(c) In the event Grantee elects to rescind his exercise
of SARs, such exercise shall be deemed rescinded ab initio and the future
exercisability and vesting of those SARs whose exercise has been rescinded
shall not be affected by such exercise and subsequent rescission, except as
provided in the last sentence of paragraph 3(b) above.
4. WITHHOLDING FOR TAXES. It shall be a condition precedent to
any exercise of a SAR that Grantee make provision acceptable to the Company for
the payment or withholding of any and all federal, state and local taxes
required to be withheld by the Company to satisfy the tax liability associated
with such exercise, as determined by the Company Board.
5. DELIVERY BY THE COMPANY. (a) Subject to the withholding
referred to in paragraph 4, the Company shall deliver or cause to be delivered
to Grantee the Cash Value of the SARs then being exercised, with such amount
being paid, at the Company's election, in (i) cash, (ii) provided that the
Company is then a Public Company and that the Company Common Stock is then
listed or traded on NASDAQ or a national securities exchange and is actively
traded, shares of Company Common Stock, (iii) shares of Tele-Communications,
Inc. Series A TCI Group Common Stock, $1.00 par value per share, or any
successor class or series of TCI's common stock, or if any class or series of
TCI's common stock is hereafter created that is intended to track the separate
performance of specified assets or businesses of TCI that include assets and
businesses of the Company, shares of such class or series (and if more than one
series of such "tracking stock" is created with different voting rights, the
series with the lower voting rights), provided that shares of the same class
and series of securities being so delivered are then listed or traded on NASDAQ
or a national securities exchange and are actively traded (collectively, the
"TCI STOCK"), or (iv) any combination of cash, Company Common Stock and TCI
Stock as the Company may elect. It shall be a condition to the Company's right
to deliver shares of Company Common Stock or TCI Stock in satisfaction of its
obligations hereunder that such shares have been registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), on Form S-8 (or
other available form) and if Grantee's sale of such shares in the public market
would be restricted (other than as to manner of sale) pursuant to Rule 144
under the Securities Act, then a resale prospectus shall be prepared by the
Company or TCI, as the case may be, and provided to Grantee for his use in
selling such shares. If the Company elects to pay all or any portion of the
Cash Value in shares of Company Common Stock or TCI Stock, said shares shall be
valued for such purpose at the most recent Closing Price thereof preceding the
date of delivery of such shares to Grantee. The payment of the Cash Value (in
cash or by delivery of Company Common Stock or TCI Stock) shall be made (i) if
the Company is a Public Company, on the 10th day following the Exercise Date
and (ii) if the Company is not a Public Company, on the 10th day following
either (x) the date Grantee and the Company mutually agree as to the Agreed Per
Share Value or (y) the receipt by Grantee and the Company of notice
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pursuant to paragraph 10(c) of the final determination of the Appraised Per
Share Value (or on such other date as the parties may agree).
(b) TCI hereby covenants and undertakes to cause the
Company to comply with its covenants, agreements and obligations hereunder to
the same extent as if such covenants, agreements and obligations were binding
upon TCI; provided, that TCI's obligations hereunder shall terminate (to the
extent not fixed and accrued) at such time as the Company ceases to be a
Subsidiary of TCI.
6. EARLY TERMINATION OF SARS. Unless otherwise determined by the
Company Board in its sole discretion, the SARs shall terminate, prior to the
expiration of the ten-year period provided for in paragraph 1, as follows:
(a) If Grantee's employment with the TCI Group terminates
other than (i) by Grantee with Good Reason, (ii) by reason of
Grantee's death or Disability, (iii) with the written consent of the
applicable member(s) of the TCI Group, (iv) without such consent if
such termination is pursuant to provisions of a written employment
agreement, if any, between Grantee and the applicable member(s) of the
TCI Group which expressly permits Grantee to terminate such employment
upon the occurrence of specified events (other than the giving of
notice and passage of time), or (v) by the TCI Group with or without
Cause, then the SARs shall terminate at the Close of Business on the
first business day following the expiration of the 90-day period
beginning on the date of termination of Grantee's employment;
(b) If Grantee dies while employed by the TCI Group, or
prior to the expiration of a relevant period of time during which the
SARs remain exercisable as provided in this paragraph 6, the SARs
shall terminate at the Close of Business on the first business day
following the expiration of the one-year period beginning on the date
of death;
(c) If Grantee's employment with the TCI Group terminates
by reason of Disability, then the SARs shall terminate at the Close of
Business on the first business day following the expiration of the
one-year period beginning on the date of termination of Grantee's
employment;
(d) If Grantee's employment with the TCI Group is
terminated by the TCI Group for Cause, then the SARs shall terminate
immediately upon such termination of Grantee's employment; and
(e) If Grantee terminates his employment with the TCI
Group (i) with Good Reason, (ii) with the written consent of the
applicable member(s) of the TCI Group or (iii) pursuant to provisions
of a written employment agreement, if any, between Grantee and the
applicable member(s) of the TCI Group which expressly permits Grantee
to terminate such employment upon the occurrence of specified events
(other than the giving of notice and
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passage of time), or if the TCI Group terminates Grantee's employment
with the TCI Group without Cause, then the Term shall not terminate
prior to the end of the ten-year period provided for in paragraph 1,
except as otherwise provided for in paragraph 6(b) or 9(c).
In any event in which the SARs remain exercisable for a period of time
following the date of termination of Grantee's employment as provided above,
the SARs may be exercised during such period of time only to the extent they
were exercisable as provided in paragraph 2 or paragraph 9(c) on such date of
termination of Grantee's employment. A change of employment is not a
termination of employment within the meaning of this paragraph 6, provided
that, after giving effect to such change, Grantee is an employee of, or becomes
or continues to be a consultant to, any member of the TCI Group. Anything
contained herein to the contrary notwithstanding, the SARs shall in any event
terminate upon the expiration of the ten-year period provided for in paragraph
1, if not theretofore terminated.
7. NONTRANSFERABILITY OF SARS. During Grantee's lifetime, the
SARs are not and shall not be transferable (voluntarily or involuntarily) other
than pursuant to a Domestic Relations Order and, except as otherwise required
pursuant to a Domestic Relations Order, the SARs shall be exercisable only by
Grantee or Grantee's court appointed legal representative. Grantee may
designate a beneficiary or beneficiaries to whom the SARs shall pass upon
Grantee's death and may change such designation from time to time by filing a
written designation of beneficiary or beneficiaries with the Company on the
form annexed hereto as Exhibit A or such other form as may be prescribed by the
Company Board, provided that no such designation shall be effective unless so
filed prior to the death of Grantee. If no such designation is made or if the
designated beneficiary does not survive Grantee's death, the SARs shall pass by
will or the laws of descent and distribution. Following Grantee's death, the
SARs, if otherwise exercisable, may be exercised by the person to whom the SARs
pass according to the foregoing, and such person shall be deemed to be Grantee
for purposes of any applicable provisions of this Agreement.
8. NO SHAREHOLDER RIGHTS; NO GUARANTEE OF EMPLOYMENT; UNSECURED
OBLIGATION. (a) Grantee shall not be deemed for any purpose to be, or to have
any of the rights of, a stockholder of the Company by virtue of this Agreement
or the grant of the SARs. The existence of this Agreement or the SARs shall not
affect in any way the right or power of the Company or its stockholders to
accomplish any corporate act.
(b) Nothing contained in this Agreement, and no action by
the Company or the Company Board with respect hereto, shall confer or be
construed to confer on Grantee any right to continue in the employ of the TCI
Group or any member thereof or interfere in any way with the right of TCI, the
Company or any employing member of the TCI Group to terminate Grantee's
employment at any time, with or without Cause, except as otherwise expressly
provided in any written employment agreement between the applicable member(s)
of the TCI Group and Grantee.
(c) The amount of cash payable at any time by the Company
upon the valid exercise of SARs granted hereunder shall not in any way be
reserved or held in trust by the Company
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or TCI. Grantee shall not have any rights against the Company in respect of
payments of such amount of cash other than the rights of an unsecured general
creditor of the Company. The amount of cash payable upon the valid exercise of
SARs hereunder shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge, and shall not in any
manner be liable or subject to the debts, contracts, liabilities, engagements
or torts of Grantee or of any designated beneficiary or personal
representative.
9. ADJUSTMENTS; ACCELERATION; AUTOMATIC EXERCISE. (a) If, after
December 31, 1996, the Company (i) pays a dividend or makes a distribution on
the Company Common Stock in shares of Company Common Stock; (ii) subdivides the
outstanding shares of Company Common Stock into a greater number of shares or
(iii) combines the outstanding shares of Company Common Stock into a smaller
number of shares, then the number of Remaining SARs and the Strike Price in
effect immediately prior to the opening of business on the record date for such
dividend or distribution or the effective date of such subdivision or
combination will be adjusted proportionately so that, after giving effect to
such adjustment, the number of SARs under this Agreement (the "ADJUSTED NUMBER
OF SARS") will be equal to the number of shares of Company Common Stock that
would be owned immediately after such dividend, distribution, subdivision or
combination by a stockholder that held immediately prior to the applicable
record date or effective date for such event a number of shares of Company
Common Stock equal to the number of shares of Company Common Stock to which
the Remaining SARs related immediately prior to such record date or effective
date. The aggregate number of shares of Company Common Stock to which the SARs
will relate after giving effect to such adjustment will be equal to the
Adjusted Number of SARs. Adjustments to the Strike Price shall be made on a
per SAR basis so that the aggregate Strike Price of all SARs under this
Agreement following such adjustment is unchanged. The adjustment contemplated
by the first sentence of this paragraph 9(a) shall be made successively
whenever any event listed above shall occur. For a dividend or distribution,
the adjustment shall become effective immediately after the record date for the
dividend or distribution. For a subdivision or combination, the adjustment
shall become effective immediately after the effective date of the subdivision
or combination.
(b) The SARs shall also be subject to adjustment
(including, without limitation, as to the number of shares of Company Common
Stock to which the SARs in the aggregate relate and the Strike Price) in the
sole discretion of the Company Board and in such manner as the Company Board
may deem equitable and appropriate in connection with the occurrence of any of
the following events after December 31, 1996 that affects the Company Common
Stock such that an adjustment would be required in order to preserve the
benefits or potential benefits intended to be made available under this
Agreement: any dividend or distribution on the Company Common Stock in shares
of the Company's capital stock (other than Company Common Stock); any
reclassification of the Company Common Stock into shares of the Company's
capital stock (other than a reclassification by way of an Approved
Transaction); any extraordinary cash dividend; any distribution of any rights,
warrants or options to holders of Company Common Stock; any distribution of any
assets or debt securities (other than cash dividends or distributions that are
not extraordinary cash dividends); any recapitalization, reorganization, split
up or spin off; and any merger, consolidation or binding share exchange that
reclassifies or changes the outstanding
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Company Common Stock or other similar corporate event (other than those which
constitute Approved Transactions). Notwithstanding the foregoing, in the event
of any reclassification or recapitalization of the Company Common Stock into
two or more classes or series of common stock with different voting rights
(however the same may be effected), the SARs shall relate to the shares of the
class or series of common stock of the Company with the fewest number of votes
per share. Adjustments to the Strike Price shall be made on a per SAR basis so
that the aggregate Strike Price of all SARs under this Agreement following such
adjustment is unchanged.
(c) The Company Board may at any time in its sole
discretion determine that the SARs become exercisable in full, without regard
to paragraph 2, whether immediately, upon the occurrence of specified events,
or otherwise. Without limiting the generality of the foregoing, in the event
of any Board Change, Control Purchase or Approved Transaction that occurs with
respect to TCI following December 31, 1996 and prior to the earlier of such
time as the Company ceases to be a Subsidiary of TCI or such time as the
Company becomes a Public Company, the SARs shall become exercisable in full,
without regard to paragraph 2, effective upon the Board Change or Control
Purchase or immediately prior to consummation of the Approved Transaction, as
applicable (or at such earlier time as the Company Board in its sole discretion
may determine); provided, however, that to the extent not theretofore exercised
the SARs shall terminate upon the first to occur of the consummation of the
Approved Transaction or the expiration or early termination of the Term. In
the event that (i) at any time after December 31, 1996 while the Company is a
Subsidiary of TCI, an Approved Transaction occurs with respect to the Company
after giving effect to which the Company will cease to be a Subsidiary of TCI
or (ii) an Approved Transaction, Board Change or Control Purchase occurs with
respect to the Company at a time following December 31, 1996 that the Company
is no longer a Subsidiary of TCI, then, in any such case, the SARs shall become
exercisable in full, without regard to paragraph 2, effective upon the Board
Change or Control Purchase or immediately prior to consummation of the Approved
Transaction, as applicable (or at such earlier time as the Company Board in its
sole discretion may determine); provided, however, that to the extent not
theretofore exercised the SARs shall terminate upon the first to occur of the
consummation of the Approved Transaction or the expiration or early termination
of the Term. Notwithstanding the foregoing, the Company Board may, in its
discretion, determine that the SARs will not become exercisable on an
accelerated basis in connection with an Approved Transaction and/or will not
terminate if not exercised prior to consummation of the Approved Transaction,
if the Company Board or the surviving or acquiring corporation, as the case may
be, shall have taken or made effective provision for the taking of such action
as in the opinion of the Company Board is equitable and appropriate to
substitute new stock appreciation rights for the SARs evidenced by this
Agreement or to assume this Agreement and the SARs evidenced hereby and in
order to make such new or assumed stock appreciation rights, as nearly as may
be practicable, equivalent to the SARs evidenced by this Agreement as then in
effect (but before giving effect to any acceleration of the exercisability
hereof unless otherwise determined by the Company Board), taking into account,
to the extent applicable, the kind and amount of securities, cash or other
assets into or for which the Company Common Stock may be changed, converted or
exchanged in connection with the Approved Transaction.
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(d) All actions taken by the Company Board with respect
to the SARs pursuant to this paragraph 9 shall be consistent with any actions
taken by the Company Board with respect to the Other SARs.
(e) Immediately prior to the termination of the SARs as
provided in paragraph 6 above (other than pursuant to paragraph 6(d)), this
paragraph 9, or the expiration of the Term, all Remaining SARs shall be deemed
to have been exercised by Grantee and Grantee shall be deemed to have taken all
actions required by paragraph 3(a) for a valid exercise of SARs.
10. RESTRICTIONS IMPOSED BY LAW; AGREED PER SHARE VALUE; APPRAISAL
PROCEDURES. (a) Grantee acknowledges that neither the SARs nor the interests
evidenced thereby have been registered under the Securities Act and that
neither the SARs nor the interests evidenced thereby may be transferred in the
absence of such registration or the availability of an exemption therefrom
under the Securities Act or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder. Neither the Company nor any other
person shall have any obligation to register the SARs or the interests
evidenced thereby or any transfer of the SARs or the interests evidenced
thereby under the Securities Act, the Exchange Act or any other state or
federal securities law.
(b) If the Company is not a Public Company as of the
Exercise Date, Grantee and the Company shall seek to negotiate a mutually
acceptable Per Share Value, provided that, subject to the last sentence of
paragraph 10(c), Grantee shall have the right, exercisable by written notice
given to the Company at any time prior to the first to occur of (i) agreement
on the Per Share Value having been reached by Grantee and the Company and (ii)
the Close of Business on the fifteenth (15th) day following the Exercise Date,
to require that the Per Share Value be determined by appraisal as provided
herein. If by the Close of Business on such fifteenth (15th) day Grantee and
the Company have not agreed upon the Per Share Value and Grantee has not given
notice requiring an appraisal, Grantee shall be deemed to have rescinded the
exercise of SARs pursuant to paragraph 3 hereof. Unless Grantee has elected an
appraisal, the Company and Grantee each agrees to conduct the negotiation with
respect to the Per Share Value in good faith and to use its or his commercially
reasonable efforts to agree upon the Agreed Per Share Value. The parties
acknowledge and agree that in connection with such negotiations the parties
shall give due consideration to the determination of the Fair Market Value of
the Company (as set forth in the definition thereof) and the number of shares
of Company Common Stock outstanding (based upon the principles set forth in
paragraph 10(c) hereof).
(c) In the event Grantee elects to require that the Per
Share Value be determined by appraisal, Grantee shall specify, in the Exercise
Notice or the subsequent written notice to the Company electing appraisal, the
identity of the Appraiser selected by Grantee to make the determination of the
Fair Market Value of the Company (the "FIRST APPRAISER"). Within three (3)
business days following receipt of such notice, the Company shall notify
Grantee in writing as to the identity of the Appraiser selected by the Company
(the "SECOND APPRAISER"). The First Appraiser
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and the Second Appraiser shall each submit its determination of the Fair Market
Value of the Company to Grantee and the Company within thirty (30) days of the
date of selection of the Second Appraiser. If the respective determinations of
the Fair Market Value of the Company by such Appraisers vary by less than 10%
of the higher determination, then the Fair Market Value of the Company shall be
the average of the two determinations. If such determinations vary by 10% or
more of the higher determination, the two Appraisers shall promptly designate a
third Appraiser (the "THIRD APPRAISER"). Neither Grantee nor the Company shall
provide, and the First Appraiser and Second Appraiser shall be instructed not
to provide, any information to the Third Appraiser as to the determination of
the First Appraiser and Second Appraiser or otherwise influence such Third
Appraiser's determination. The Third Appraiser shall submit its determination
of the Fair Market Value of the Company to Grantee and the Company within
fifteen (15) days of the date of its selection. The Fair Market Value of the
Company shall be equal to the average of the two closest of the three
determinations, provided that, if the difference between the highest and middle
determinations is no more than 105% and no less than 95% of the difference
between the middle and lowest determinations, the Fair Market Value of the
Company shall be equal to the middle determination. Following the
determination of the Fair Market Value of the Company, the Appraisers whose
determinations were used in the calculation of the Fair Market Value of the
Company shall determine the number of shares of Company Common Stock
outstanding together with any further appropriate adjustments to the Fair
Market Value of the Company resulting from such determination. The number of
shares of Company Common Stock outstanding shall mean a number, as determined
by such Appraisers as of the applicable date, equal to the sum of the number of
shares of Company Common Stock outstanding and the number of shares of Company
Common Stock issuable upon the conversion, exercise or exchange of those
convertible securities the holders of which would derive an economic benefit
from the conversion, exercise of exchange of such convertible securities which
exceeds the economic benefits of not converting, exercising or exchanging such
convertible securities. The Appraisers shall then calculate the value per
share of Company Common Stock (the "APPRAISED PER SHARE VALUE"), which shall be
the quotient obtained by dividing the Fair Market Value of the Company by the
number of shares of Company Common Stock outstanding or deemed outstanding;
provided, that if such Appraisers do not agree on the number of shares of
Company Common Stock outstanding, each Appraiser whose determination of the
Fair Market Value of the Company is being used in the calculation of the
Appraised Per Share Value shall determine the Appraised Per Share Value based
upon its determination of the Fair Market Value of the Company and the number
of shares of Company Common Stock outstanding, and the Appraised Per Share
Value shall be the average of the quotients so obtained on the basis of the
respective determinations of such firms. The Appraisers shall jointly notify
the Company and Grantee in writing of their final determination of the
Appraised Per Share Value of the Company Common Stock within five (5) days
after the determination of the Fair Market Value of the Company. Grantee and
the Company shall each pay the fees and expenses of his or its own Appraiser
and one-half of the fees and expenses of the Third Appraiser, if any. Grantee
acknowledges and agrees that he shall not be entitled to require an appraisal
pursuant to this Agreement more than once in any 12 month period.
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11. NOTICE. Unless the Company or TCI, as applicable, notifies
Grantee in writing of a change of address, any notice or other communication to
the Applicable Person with respect to this Agreement shall be in writing and
shall be delivered personally or sent by first class mail, postage prepaid and
addressed as follows:
If to the Company:
TCI Wireless Holdings, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
If to TCI:
Tele-Communications, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Any notice or other communication by the Company or TCI to Grantee with respect
to this Agreement shall be in writing and shall be delivered personally, or
shall be sent by first class mail, postage prepaid, to Grantee's address as
listed in the records of TCI on the date hereof, unless the Company has
received written notification from Grantee of a change of address. Except as
otherwise specifically provided herein, all notices and other communications
hereunder, including without limitation any Exercise Notice, shall be effective
when actually received.
12. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
13. CONSTRUCTION. References in this Agreement to "this
Agreement" and the words "herein," "hereof," "hereunder" and similar terms
refer to this Agreement, including all Exhibits, as a whole, unless the context
otherwise requires. The headings of the paragraphs of this Agreement have been
included for convenience of reference only, are not to be considered a part
hereof and shall not modify or restrict any of the terms or provisions hereof.
All decisions of the Company Board upon questions regarding this Agreement
shall be conclusive.
14. DUPLICATE ORIGINALS. The Company, TCI, TCITS and Grantee may
sign any number of copies of this Agreement. Each signed copy shall be an
original, but all of them together represent the same agreement.
15. ENTIRE AGREEMENT. This Agreement is in satisfaction of and in
lieu of all prior discussions and agreements, oral or written, between or among
TCI, TCITS, the Company and Grantee, or any of them, with respect to the
subject matter hereof. Each of TCI, TCITS, the
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Company and Grantee hereby declares and represents that no promise or agreement
not herein expressed has been made and that this Agreement contains the entire
agreement between and among the parties hereto with respect to the SARs and
supersedes and makes null and void any prior agreements between or among TCI,
TCITS, the Company and Grantee, or any of them, regarding the SARs, including,
without limitation, the TCITS SAR Agreement.
16. AMENDMENT. This Agreement may be amended, modified or
supplemented by the Company, without the consent of the Grantee, (i) to cure
any ambiguity or to correct or supplement any provision herein which may be
defective or inconsistent with any other provision herein or (ii) to make such
other changes as the Company, upon advice of counsel, determines are necessary
or advisable because of the adoption or promulgation of, or change in or of the
interpretation of, any law or governmental rule or regulation, including,
without limitation, any applicable federal or state securities laws. Except as
provided above, this Agreement may be amended, modified or supplemented only by
written agreement of the parties hereto.
17. DEFINITIONS. As used in this Agreement, the following terms
have the corresponding meanings:
"AGREED PER SHARE VALUE" means the fair market value of a
share of Company Common Stock as of the Exercise Date, as agreed by Grantee and
the Company pursuant to paragraph 10(b) hereof.
"APPLICABLE PERSON" means TCI or the Company, as applicable.
"APPRAISER" means, as of any date of selection, an investment
banking firm of national reputation that is not affiliated with TCI, the
Company or Grantee.
"APPROVED TRANSACTION", when used with respect to TCI or the
Company, as applicable, means any transaction in which the Relevant Board (or,
if approval of the Relevant Board is not required as a matter of law, the
stockholders of the Applicable Person) shall approve (i) any consolidation or
merger of the Applicable Person, or binding share exchange, pursuant to which
shares of common stock of the Applicable Person would be changed or converted
into or exchanged for cash, securities or other property, other than any such
transaction in which the common stockholders of the Applicable Person
immediately prior to such transaction have the same proportionate ownership of
the common stock of, and voting power with respect to, the surviving
corporation immediately after such transaction, (ii) any merger, consolidation
or binding share exchange to which the Applicable Person is a party as a result
of which the persons who are common stockholders of the Applicable Person
immediately prior thereto have less than a majority of the combined voting
power of the outstanding capital stock of the Applicable Person ordinarily (and
apart from the rights accruing under special circumstances) having the right to
vote in the election of directors immediately following such merger,
consolidation or binding share exchange, (iii) the adoption of any plan or
proposal for the liquidation or dissolution of the Applicable Person, or (iv)
any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of
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all, or substantially all, of the assets of the Applicable Person.
Notwithstanding the foregoing, none of such transactions that occur with
respect to the Company while the Company is a Subsidiary of TCI and that are
effected in connection with a spin off of the Company or rights offering of
Company Common Stock to TCI's stockholders or equivalent transaction shall
constitute an Approved Transaction.
"BOARD CHANGE" means, during any period of two consecutive
years, individuals who at the beginning of such period constituted the entire
Relevant Board cease for any reason to constitute a majority thereof unless the
election, or the nomination for election, of each new director was approved by
a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
"CAUSE" has the meaning ascribed thereto in any employment
agreement between Grantee and the applicable member of the TCI Group, and in
the absence of any such employment agreement shall include, but not be limited
to, insubordination, dishonesty, incompetence, moral turpitude, other
misconduct of any kind or the refusal to perform one's duties and
responsibilities for any reason other than illness or incapacity, or negligence
in the performance of any of one's material duties or responsibilities that
continues after written notice from the Company, as determined in good faith by
the Company Board; provided, however, that if such termination occurs within
twelve (12) months after (i) an Approved Transaction, Control Purchase or Board
Change occurs (x) with respect to TCI following December 31, 1996 and prior to
the earlier of such time as the Company ceases to be a Subsidiary of TCI or
such time as the Company becomes a Public Company or (y) with respect to the
Company at any time following December 31, 1996 that the Company is no longer a
Subsidiary of TCI, or (ii) an Approved Transaction occurs with respect to the
Company at any time after December 31, 1996 and while the Company is a
Subsidiary of TCI and after giving effect to such Approved Transaction the
Company will cease to be a Subsidiary of TCI, then "Cause" shall mean only a
felony conviction for fraud, misappropriation or embezzlement.
"CLOSING PRICE" of a share of any class or series of capital
stock on any day means the last sale price (or, if no last sale is reported,
the average of the high bid and low asked prices) for a share of such class or
series of capital stock on such day (or, if such day is not a trading day, on
the next preceding trading day) as reported on NASDAQ or, if not reported on
NASDAQ, as quoted by the National Quotation Bureau Incorporated, or if such
class or series of capital stock is listed on an exchange, on the principal
exchange on which the shares are listed. If for any day the Closing Price of a
share of such class or series of capital stock is not determinable by any of
the foregoing means, then the Closing Price for such day shall be determined in
good faith by the issuer's Board of Directors on the basis of such quotations
and other considerations as such Board may deems appropriate.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute or statutes thereto. Reference to
any specific Code section shall include any successor section.
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"COMPANY COMMON STOCK" means the Common Stock, $1.00 par value
per share, of the Company.
"CONTROL PURCHASE" means any transaction (or series of related
transactions) in which (i) any person (as such term is defined in Sections
13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other
than the Applicable Person, any Subsidiary of the Applicable Person or any
employee benefit plan sponsored by the Applicable Person or any Subsidiary of
the Applicable Person) shall purchase any common stock of the Applicable Person
(or securities convertible into common stock of the Applicable Person) for
cash, securities or any other consideration pursuant to a tender offer or
exchange offer, without the prior consent of the Relevant Board, or (ii) any
person (as such term is so defined), corporation or other entity (other than
the Applicable Person, any Subsidiary of the Applicable Person, any employee
benefit plan sponsored by the Applicable Person or any Subsidiary of the
Applicable Person, or any Controlling Person (as defined below)) shall become
the "beneficial owner" (as such term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Applicable Person
representing 20% or more of the combined voting power of the then outstanding
securities of the Applicable Person ordinarily (and apart from the rights
accruing under special circumstances) having the right to vote in the election
of directors (calculated as provided in Rule 13d-3(d) under the Exchange Act in
the case of rights to acquire the Applicable Person's securities), other than
in a transaction (or series of related transactions) approved by the Relevant
Board. For purposes of this definition, "Controlling Person" means each of (a)
the Chairman of the Board, the President and each of the directors of the
Applicable Person as of December 31, 1996, (b) the respective family members,
estates and heirs of (i) Xxx Xxxxxxx and (ii) each of the persons referred to
in clause (a) above and any trust or other investment vehicle for the primary
benefit of any of such persons or their respective family members or heirs and
(c) Xxxxxx-Tribune Corporation, a Delaware corporation. As used with respect
to any person, the term "family member" means the spouse, siblings and lineal
descendants of such person.
"DETERMINATION DATE" means February 1, 1996.
"DISABILITY" means the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that (a) can be expected to result in death or (b) has lasted or can
be expected to last for a continuous period of not less than 12 months.
"DOMESTIC RELATIONS ORDER" means a domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute or statutes thereto, and
the rules and regulations promulgated by the Securities and Exchange Commission
thereunder. References to any specific section of the Exchange Act or rule
thereunder shall include any successor section or rule.
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"FAIR MARKET VALUE OF THE COMPANY" means the fair market value
of the Company as a going concern based upon the estimated market
capitalization of the Company as if it were a Public Company and the Company
Common Stock were publicly traded and widely held. In determining the Fair
Market Value of the Company, the Company and Grantee shall, and each Appraiser
shall be instructed to, value the assets held directly or indirectly by the
Company in the following manner (but without duplication): (i) with respect to
any shares of capital stock as to which there is a public trading market, at
the Closing Price of such shares on the Exercise Date, (ii) with respect to any
shares of capital stock which are not publicly traded, based on a widely
distributed public trading market value for such shares and as if such shares
of capital stock were liquid and freely tradeable on a major public trading
market and (iii) with respect to any assets of the Company which are not shares
of capital stock, at the fair market value thereof. In addition, the Company
and Grantee shall, and such Appraisers shall be instructed to, deduct from such
value all indebtedness of the Company (including preferred stock except to the
extent such preferred stock is deemed converted to Company Common Stock in
connection with the calculation of the Per Share Value); provided, however,
that no such deduction shall be made with respect to (i) the Company's
obligations with respect to the Remaining SARs held by Grantee and the Other
SARs or (ii) any indebtedness of the Company incurred in connection with the
Company's satisfaction of its obligations with respect to any prior exercise of
SARs or Other SARs.
"GOOD REASON" means the occurrence of any of the following
prior to any termination of employment by Grantee:
(i) any reduction in Grantee's annual rate of salary
(other than a reduction to which Grantee consents);
(ii) a failure by TCI or the Company to continue in effect
any employee benefit plan in which Grantee was participating, or the
taking of any action by TCI or the Company that would adversely affect
Grantee's participation in, or materially reduce Grantee's benefits
under, any such employee benefit plan, unless such failure or such
taking of any action adversely affects the senior members of the
corporate management of TCI or the Company (as applicable) generally;
(iii) the assignment to Grantee of duties and
responsibilities that are materially more oppressive or onerous than
those attendant to Grantee's position on the date hereof;
(iv) the relocation of the office location assigned to
Grantee by the Company to a location more than 20 miles from Grantee's
current location without Grantee's consent, unless the new location is
within the Denver/Boulder metropolitan area; or
(v) the failure of the Company to obtain, prior to the
time of any reorganization, merger, consolidation, disposition of all
or substantially all of the
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assets of the Company or similar transaction effective after the date
hereof, in which the Company is not the surviving person, the
unconditional assumption in writing or by operation of law of the
Company's obligations to Grantee under this Agreement by each direct
successor to the Company in any such transaction.
"NASDAQ" means The Nasdaq Stock Market.
"OTHER SARS" means the stock appreciation rights relating to
the shares of Company Common Stock granted pursuant to those certain other
Stock Appreciation Rights Agreements dated as of the date hereof among the
Company, TCI and the grantees named therein, respectively.
"PER SHARE VALUE" means (x) if the Company is a Public Company
as of the Exercise Date, the Closing Price of a share of Company Common Stock
as of such date, and (y) if the Company is not a Public Company as of the
Exercise Date, the Agreed Per Share Value or the Appraised Per Share Value, as
applicable, of a share of Company Common Stock as of such date.
"PUBLIC COMPANY" means a person the common equity securities
of which are registered under Section 12(b) or 12(g) of the Exchange Act and
which common equity securities are listed for trading on the New York Stock
Exchange or the NASDAQ National Market.
"RELEVANT BOARD", when used with respect to TCI, means the
Board of Directors of TCI and, when used with respect to the Company, means the
Company Board.
"STRIKE PRICE" means $925,361 per SAR, plus an interest factor
of 6% per annum on such amount from the date hereof to the date of exercise
(calculated on the basis of a 365-day year and actual days elapsed), as such
amount per SAR may be adjusted from time to time pursuant to paragraph 9.
"SUBSIDIARY", when used with respect to TCI or the Company, as
applicable, means any present or future subsidiary (as defined in Section
424(f) of the Code) of the Applicable Person or any business entity in which
the Applicable Person owns, directly or indirectly, 50% or more of the voting,
capital or profits interests. An entity shall be deemed a Subsidiary of the
Applicable Person for purposes of this definition only for such periods as the
requisite ownership or control relationship is maintained.
"TCI GROUP" means TCI and its Subsidiaries, collectively, or
the applicable of TCI or a Subsidiary of TCI, as the context may require. If
the Company ceases to be a Subsidiary of TCI, the Company and its Subsidiaries
shall, notwithstanding the last sentence of the definition of Subsidiary above,
be deemed for purposes of this definition only to continue to be Subsidiaries
of TCI and, accordingly, members of the TCI Group.
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18. RULES BY COMPANY BOARD. The rights of Grantee and
obligations of the Company hereunder shall be subject to such reasonable rules
and regulations as the Company Board may adopt from time to time hereafter.
IN WITNESS WHEREOF, the Company, Grantee and, for purposes of
paragraph 5 only, TCI have caused this Agreement to be duly executed and
delivered as of the date first written above.
ATTEST: TCI WIRELESS HOLDINGS, INC.
By:
------------------------- ---------------------------
Assistant Secretary Name:
Title:
--------------------------------
-------------------
TCI TELEPHONY SERVICES, INC.
By:
---------------------------
Name:
Title:
TELE-COMMUNICATIONS, INC.
By:
---------------------------
Name:
Title:
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Exhibit A to Agreement
dated as of December 1, 1996
TCI WIRELESS HOLDINGS, INC.
STOCK APPRECIATION RIGHTS
DESIGNATION OF BENEFICIARY
I, ___________________________________________ (the "Grantee"), hereby
declare that upon my death __________________________________________ (the
Name
"Beneficiary") of
_____________________________________________________________________________,
Street Address City State Zip Code
who is my ___________________________________________, shall be entitled to the
Relationship to Grantee
stock appreciation rights and all other rights accorded Grantee by the
above-referenced grant agreement (the "Agreement").
It is understood that this Designation of Beneficiary is made pursuant
to the Agreement and is subject to the conditions stated herein, including the
Beneficiary's survival of Grantee's death. If any such condition is not
satisfied, such rights shall devolve according to Grantee's will or the laws of
descent and distribution.
All prior designations of beneficiary under the Agreement are hereby
revoked. This Designation of Beneficiary may only be revoked in writing,
signed by Grantee, and filed with Tele-Communications, Inc. and TCI Wireless
Holdings, Inc., prior to Grantee's death.
------------------- ---------------------------
Date Grantee
