EXHIBIT 2.07
CERTAIN TERMS OF INTER-GROUP RELATIONSHIP
1. The AT&T Common Stock Group, on the one hand, and the New Liberty Media
Group, on the other hand, will have no obligations or responsibilities to one
another to provide financial support, to offer corporate opportunities or
otherwise to assist one another, except as set forth in any intercompany
agreements between one or more members of the New Liberty Media Group and one
or more members of the AT&T Common Stock Group (the "Intercompany Agreements").
As used herein, prior to the Effective Time, the term "AT&T Common Stock Group"
shall be deemed to mean the TCI Group and the term "New Liberty Media Group"
shall be deemed to mean the Liberty/Ventures Group. Without limiting the
generality of the foregoing, neither the AT&T Common Stock Group nor the New
Liberty Media Group will have any rights to any trade names, trademarks,
service marks or other intellectual property rights of the other Group, except
as expressly set forth in any Intercompany Agreement entered into in accordance
with the terms of the Merger Agreement (including the schedules and exhibits
thereto). Prior to the Effective Time, the New Liberty Media Group and the AT&T
Common Stock Group will not enter into any Intercompany Agreement that is
prohibited pursuant to the terms of the Merger Agreement.
2. Neither the New Liberty Media Group nor the AT&T Common Stock Group will
incur any debt or other obligation (including any preferred equity obligation)
that has or purports to have recourse to any member, or to the assets of any
member, of the other Group. Except for Intercompany Agreements, no member of
the New Liberty Media Group or the AT&T Common Stock Group will enter into any
agreement, or incur any other liability or obligation, that binds or purports
to bind or impose any liabilities or obligation on any member of the other
Group. AT&T will not create, authorize or issue any preferred stock of AT&T
attributed to the New Liberty Media Group without the consent of the New
Liberty Media Group.
3. In addition to the foregoing, the New Liberty Media Group will not incur
any debt (other than the refinancing of debt without any increase in the amount
thereof) that would cause the total indebtedness of the New Liberty Media Group
at any time to be in excess of 25% of the total market capitalization of the
New Liberty Media Group Tracking Shares, if such excess debt would adversely
affect the credit rating of AT&T (or with respect to any such excess debt
incurred prior to the Effective Time, would adversely affect the credit rating
of AT&T after giving effect to the Merger). Prior to incurring any debt such
that its total debt would be in excess of such amount, the New Liberty Media
Group will consult with AT&T and, if requested by AT&T, with one or more
nationally recognized credit rating agencies, to determine if such debt would
adversely affect the credit rating of AT&T.
4. The New Liberty Media Group, on the one hand, and the AT&T Common Stock
Group, on the other hand, will be responsible for all claims, obligations,
liabilities and costs arising from such Group's operations and businesses,
including without limitation, (a) all obligations to such Group's employees,
(b) all liabilities relating to actions taken by such Group's officers and
employees, and (c) all liabilities relating to information publicly disclosed
by such Group or information provided by such Group for inclusion in any such
public disclosure, whether arising before, on or after the Closing Date.
Without limiting the generality of the foregoing, the New Liberty Media Group
will be responsible for any claims relating to (i) the transfer of assets
between the New Liberty Media Group and the TCI Ventures Group, (ii) the
exchange of TCI Ventures Tracking Shares for Liberty Media Tracking Shares (or,
if applicable, the relative Liberty Media Exchange Ratios and TCI Ventures
Exchange Ratios), and (iii) the amended and restated certificate of
incorporation and bylaws of Liberty Media Corporation, the Liberty Media Group
LLC and any agreements between the Liberty Media Group LLC and any member of
the New Liberty Media Group. The TCI Group will be responsible for TCI's legal,
financial advisory and accounting fees and printing expenses, in each case
incurred in connection with the Merger Agreement and the Merger. Each of the
New Liberty Media Group and the AT&T Common Stock Group will indemnify the
other Group, and hold the other Group, harmless against all claims,
liabilities, losses and expenses, including attorneys' fees, allocated to the
indemnifying Group pursuant to the foregoing.
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5. The AT&T Common Stock Group will not allocate general overhead expenses to
the New Liberty Media Group except to the extent that the New Liberty Media
Group receives specific services pursuant to services agreements or similar
arrangements between the AT&T Common Stock Group and the New Liberty Media
Group and except for an allocable share of AT&T's annual audits. The AT&T
Common Stock Group and the New Liberty Media Group will cooperate with each
other with respect to common functions such as tax reporting and financial
reporting. The New Liberty Media Group will use the independent accountants
used by the AT&T Common Stock Group.
6. Liberty Media Corporation may issue additional shares of common stock and
may authorize and issue shares of one or more series of preferred stock, in any
such case only if, after giving effect to such issuance, Liberty Media
Corporation would remain a Qualifying Subsidiary (as defined in the AT&T
Charter Amendment). The proceeds of any issuance of New Liberty Media Group
Tracking Shares shall be contributed to Liberty Media Corporation.
7. Following the Effective Time, to the extent not already accomplished
pursuant to Section 2.1(d) of the Merger Agreement, the New Liberty Media Group
and the AT&T Common Stock Group will continue to make such transfers of assets
and businesses, and assumptions of liabilities, if any, as may be necessary in
order to cause the representations and warranties set forth in Section 5.17 of
the Merger Agreement to be true and correct in all material respects.
8. In the event that the holders of any Company Preferred Stock validly
exercise appraisal rights under the DGCL, the New Liberty Media Group shall be
entitled to control all matters relating to, and shall be responsible for,
Series C-Liberty Media Group Preferred Stock and Series H Preferred Stock and
the TCI Group shall be entitled to control all matters relating to, and shall
be responsible for, Series C-TCI Group Preferred Stock and Series G Preferred
Stock.
9. In the event that AT&T redeems the outstanding New Liberty Media Group
Tracking Shares pursuant to Section 5(a) of the AT&T Charter Amendment, (a) the
provisions of the certificate of incorporation and by-laws or other
organizational or constituent instruments of Liberty Media Corporation (or any
other member of the New Liberty Media Group) will no longer contain any
provisions relating to the election of directors (including without limitation
provisions relating to the term and removal of directors) or relating to any
other matter which could reasonably be expected to impair the ability of a
third party to seek control of such entity that are more restrictive than any
provision contained in the certificate of incorporation and by-laws of the
Company as of the date hereof, (b) no "Triggering Event" (as defined in the
Contribution Agreement) shall thereafter occur, and (c) in the event that a
Triggering Event has occurred, the Liberty Media Group LLC will be
automatically dissolved. The New Liberty Media Group will not permit any of the
organizational or constituent instruments or agreements of any such entities to
include any provision that would be inconsistent with the foregoing. The
parties will enter into such agreements and other arrangements (or add
provisions to constituent instruments) as is necessary to give effect to the
foregoing.
10. In the event of any redemption of any shares of New Liberty Media Group
Tracking Shares in exchange for any shares of any class of capital stock of any
subsidiary or subsidiaries of AT&T (each, a "Liberty Co"), including without
limitation, any such redemption pursuant to Section 5(a) of the AT&T Charter
Amendment, then prior to any such transaction, the New Liberty Media Group
shall take such action as is necessary to cause each such Liberty Co to enter
into an agreement providing that in the event that any holder of any of the
convertible notes referred to in Note 9(c) of TCI's consolidated audited
financial statements for the year ended December 31, 1997 (the "Convertible
Notes"), convert all or part of such Convertible Notes, each such Liberty Co
shall deliver any consideration required to be paid in respect of its capital
stock in accordance with the terms of the Convertible Notes to the holders of
the Convertible Notes upon conversion thereof. With reference to a redemption
pursuant to paragraph 5(a) of the AT&T Charter Amendment, if there is any
direct or indirect tax liability to AT&T or any other obligor of the
Convertible Notes arising from the performance by any such Liberty Co of its
obligations in connection with the preceding sentence and this sentence, such
tax liability will be borne 40% by the New Liberty Media Group and 60% by AT&T.
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11. The New Liberty Media Group will have the sole and exclusive and
irrevocable power to direct the disposition of the Sprint PCS Investment, and
following any such disposition, shall have the sole rights to direct the
application of the proceeds of such disposition; provided that the rights of
the New Liberty Media Group under this paragraph will be subject to any
obligations incurred pursuant to Section 7.5(b) of the Merger Agreement, and
the New Liberty Media Group shall assume all of TCI's obligations thereunder
and under any commitments, undertakings or arrangements made by TCI pursuant
thereto.
12. Parent will prepare and include in its filing with the Securities and
Exchange Commission under the Exchange Act combined financial statements of the
New Liberty Media Group (for so long as the New Liberty Media Group Tracking
Shares are outstanding). The combined financial statements of the New Liberty
Media Group will reflect the combined financial position, results of operations
and cash flows of the businesses attributed to the New Liberty Media Group, and
in the case of annual financial statements shall be audited.
13. AT&T will not, and will not permit any member of the AT&T Common Stock
Group to, directly or indirectly, (a) sell, transfer, dispose of or otherwise
convey (whether by merger, consolidation, sale or contribution of assets or
stock, or otherwise, (b) issue any indebtedness secured by or pledge or xxxxx x
xxxx, security interest or other encumbrance on, or (c) create any derivative
instrument whose value is based on, any equity interest, direct or indirect, of
AT&T in Liberty Media Corporation or the Liberty Media Group LLC; provided,
however, that the foregoing shall not apply to (i) any of the foregoing
approved (x) by a majority of the members of the Board of Directors of Liberty
Media Corporation prior to the occurrence of a Triggering Event (as defined in
the Contribution Agreement) or (y) by Liberty Management LLC, after the
occurrence of a Triggering Event, (ii) any issuance or sale by AT&T of any of
its own securities (other than indebtedness secured by any equity interest,
direct or indirect, of AT&T in Liberty Media Corporation or the Liberty Media
Group LLC and other than any derivative instrument whose value is based on any
equity interest direct or indirect of AT&T in Liberty Media Corporation or the
Liberty Media Group LLC), or (iii) any merger, consolidation, exchange of
shares or other business combination transaction involving AT&T in which AT&T
(or its successors) continues immediately following such transaction to hold
the same interest in the business, assets and liabilities comprising the New
Liberty Media Group that it held immediately prior to such transaction (other
than as a result of any action by Liberty Media Corporation or any other Person
included in the New Liberty Media Group).
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