EXHIBIT 10.2
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INTER-GROUP AGREEMENT
between and among
AT&T CORP.,
on the one hand,
and
LIBERTY MEDIA CORPORATION,
LIBERTY MEDIA GROUP LLC
and each Covered Entity listed on the
signature pages hereof,
on the other hand,
dated as of March 9, 1999
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INTER-GROUP AGREEMENT
Agreement dated as of March 9, 1999 between AT&T Corp., a New York
corporation ("AT&T"), for itself and on behalf of the members of the Common
Stock Group, on the one hand, and Liberty Media Corporation, a Delaware
corporation, Liberty Media Group LLC, a Delaware limited liability company, and,
for so long as such Covered Entity remains a Covered Entity under the applicable
provisions of the AT&T Charter Amendment, each Covered Entity listed on the
signature pages hereof (collectively, the "Liberty Media Parties"), for
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themselves and on behalf of the other members of the Liberty Media Group, on the
other hand. Capitalized terms used herein without definition have the meanings
ascribed to such terms in the Merger Agreement (as hereinafter defined).
WHEREAS, AT&T, Italy Merger Corp. ("Merger Sub") and TCI are parties
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to an Agreement and Plan of Restructuring and Merger originally dated as of June
23, 1998 (the "Merger Agreement") pursuant to which, among other things, subject
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to the terms and conditions contained in the Merger Agreement, and concurrent
with the execution hereof, Merger Sub shall be merged with and into TCI with TCI
surviving as a wholly owned subsidiary of AT&T (the "Merger");
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WHEREAS, AT&T and the Liberty Media Parties desire to establish in
this Agreement certain terms and conditions concerning the responsibilities and
obligations of each Group to the other as well as certain additional provisions
concerning the Group's relationship with each other.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, AT&T and the Liberty Media Parties hereby agree as follows:
ARTICLE I
RELATIONSHIP BETWEEN COMMON STOCK GROUP AND LIBERTY MEDIA GROUP
SECTION 1.1. Reciprocal Obligations; Corporate Opportunities. Neither
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the Common Stock Group, on the one hand, nor the Liberty Media Group, on the
other hand, shall have any duty, responsibility or obligation (legal or
otherwise) (and none of the directors or officers of AT&T or the Common Stock
Group, on the one hand, or of LMC or the Liberty Media Group, on the other hand,
shall have any duty, responsibility or obligation) (legal or otherwise) (i) to
communicate, present, make available or offer any business or other corporate
opportunity to the other Group (including, without limitation, any business or
other corporate opportunity which (x) such other Group may be financially able
to undertake, (y) is in such other Group's line of business, or (z) is of
practical advantage to more than one Group), and the Group which receives any
such business or corporate opportunity may pursue such opportunity for its sole
benefit, (ii) to provide financial support to the other Group (or any member
thereof), or (iii) otherwise to assist the other Group, except in each case as
may be expressly set forth in this Agreement or any other agreement between one
or more members of the Common Stock Group, on the one hand, and one or more
members of the Liberty Media Group, on the other hand (this Agreement and such
other agreements being referred to individually as an Intercompany Agreement
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and collectively as the Intercompany Agreements). Without limiting the
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generality of the foregoing, (x) any person who is serving on the Board of
Directors of LMC or on the Board of Directors of any Covered Entity at the
request of AT&T shall have no duty to communicate, present, make available or
offer to LMC or the Liberty Media Group any business or other corporate
opportunities obtained or presented to such person in such person's capacity as
an officer, director or employee of AT&T or a member of the Common Stock Group
and (y) any officer, director or employee of LMC or any member of the Liberty
Media Group serving on the AT&T Board of Directors (or the Board of Directors of
any other member of the Common Stock Group) shall have no duty to communicate,
present, make available or offer to AT&T or the Common Stock Group any business
or other corporate opportunities obtained or presented to such person in such
persons capacity as an officer, director or employee of LMC or a member of the
Liberty Media Group.
SECTION 1.2. Rights to Intellectual Property and Other Rights. Without
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limiting the generality of Section 1.1, neither the Common Stock Group nor the
Liberty Media Group shall have any rights to any Intellectual Property of the
other Group, except as expressly set forth in the Intercompany Agreements or as
set forth in the following sentence. For purposes of clarification, to the
extent a member of one Group is a party to any Intellectual Property agreement
or arrangement that, as of immediately prior to the Merger, also confers rights
to Intellectual Property on one or more members of the other Group, such members
of the other Group shall continue to have such rights to Intellectual Property
after the Merger (on the same terms and conditions, including any related
obligations), in accordance with the provisions of such agreement or
arrangement.
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SECTION 1.3. Indebtedness. (a) Neither the Common Stock Group nor
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the Liberty Media Group shall incur any indebtedness for borrowed money or
guarantee any indebtedness of any other Person or incur any other Liability
(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 the Intercompany Agreements, no member of the Common Stock Group or
the Liberty Media Group shall enter into any agreement, or incur any other
Liability, that binds or purports to bind or impose any Liabilities on any
member of the other Group. For purposes of this Agreement, the attribution to
the Liberty Media Group of any indebtedness, guarantee, obligation or other
Liability incurred, created or permitted to exist by AT&T or a member of the
Common Stock Group shall, absent a Liberty Approval (as defined below),
constitute the incurrence of an obligation imposing a Liability on the Liberty
Media Group in violation of the covenant of the Common Stock Group contained in
the first sentence of this Section 1.3(a).
(b) Neither LMC nor any member of the Liberty Media Group will incur
any debt (other than in connection with the refinancing of existing debt without
any increase in the then accrued principal amount thereof) (a "Liberty Debt
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Incurrence") that would cause the total debt of the Liberty Media Group at any
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time to be in excess of 25% of the total market capitalization of the AT&T
Liberty Tracking Shares (the "Liberty Media Group Debt Limit"), if such excess
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debt would adversely affect the credit rating of AT&T (after giving effect to
the Merger). Prior to any Liberty Debt Incurrence which would cause the total
debt of the Liberty Media Group to exceed the Liberty Media Group Debt Limit,
LMC shall notify AT&T in writing of the proposed Liberty Debt Incurrence (the
"Liberty Debt Notice"), which Liberty Debt Notice shall include a summary of the
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principal terms of such proposed Liberty Debt Incurrence. LMC shall thereafter
consult with AT&T regarding the proposed Liberty Debt Incurrence and any
expected adverse effect thereof on AT&T's credit rating. At the written request
of AT&T, which request shall be made no later than 5 business days after receipt
by AT&T of the applicable Liberty Debt Notice, LMC and AT&T shall consult with
two nationally recognized credit rating agencies (each, a "Credit Rating
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Agency"), with one of such Credit Rating Agencies to be selected by each of LMC
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and AT&T, to determine whether such incremental Liberty Debt Incurrence in
excess of the Liberty Debt Limit would adversely affect the credit rating of
AT&T. If both such Credit Rating Agencies determine that the incremental
Liberty Debt Incurrence in
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excess of the Liberty Debt Limit would not adversely affect AT&T's credit
rating, then notwithstanding the first sentence of this paragraph (b), the
Liberty Media Group shall be permitted to effect such Liberty Debt Incurrence.
If one or more of the Credit Rating Agencies determines that the incremental
Liberty Debt Incurrence in excess of the Liberty Debt Limit would adversely
affect AT&T's credit rating, then the Liberty Media Group shall not effect such
Liberty Debt Incurrence. In the event that a Liberty Debt Notice describes a
maximum amount of indebtedness that may be incurred under any revolving credit,
multiple drawdown or similar facility and the Credit Rating Agencies (at the
request of LMC), in making their determination as to whether the Liberty Debt
Incurrence in excess of the Liberty Debt Notice would adversely affect AT&T's
credit rating, assume that the maximum amount of indebtedness will be incurred
thereunder, then any subsequent incurrence of indebtedness under such facility
up to such limit shall be deemed not to constitute a Liberty Debt Incurrence for
purposes of this Agreement.
SECTION 1.4. Liabilities; Allocation of Certain Expenses;
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Indemnification.
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(a) (i) The Liberty Media Group, on the one hand, and the Common
Stock Group, on the other hand, shall be responsible for all Liabilities arising
from such Groups operations and businesses, including, without limitation, (A)
all Liabilities to such Groups officers and employees (including all
Liabilities relating to deferred compensation obligations and, subject to clause
(ii) below, Stock Incentives (as defined below) held by such officers and
employees), (B) all Liabilities relating to or arising from actions taken by
such Groups officers and employees (provided, that with respect to any officer
or employee who prior to the Effective Date (1) was an officer or employee of
both the Liberty Media Group and the TCI Group, (2) was an officer or employee
of one Group, but following the Effective Time is an officer or employee of the
other Group, or (3) was an officer or employee of TCI but exercised authority
over both the Liberty Media Group and the TCI Group, the liability of a Group
for such persons actions shall be determined based upon the capacity in which
such person was acting at the time of such action), 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, in each case, whether
arising before, on or after the Closing Date. Without limiting the generality
of this Section 1.4, the Liberty Media Group shall be responsible for any
Liabilities relating to (A) any and all transfers of assets between the Liberty
Media Group and the TCI Ventures Group, (B) the exchange of TCI Ventures
Tracking Shares for Liberty Media Tracking Shares (or, if
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applicable, the relative Liberty Media Exchange Ratios and TCI Ventures Exchange
Ratios), as contemplated by the Merger Agreement and (C) the amended and
restated Certificate of Incorporation and By-Laws of LMC and any Covered Entity,
the terms of the operating agreement of Liberty Media Group LLC and any
agreements between Liberty Media Group LLC and any member of the Liberty Media
Group.
(ii) Each Group shall be responsible for all payments required to be
made, or consideration required to be delivered, in connection with the exercise
or settlement of any stock options or other equity-linked incentives, including
stock appreciation rights, phantom stock rights and similar equity-linked
instruments (collectively, "Stock Incentives"), (i) by any person who is an
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officer, employee or consultant of such Group at the time of such exercise or
settlement, and (ii) by any person who is no longer an officer, employee or
consultant of either Group at the time of such exercise or settlement but who
was an officer, employee or consultant of such Group on the date of such
person's last employment by either Group. Notwithstanding the foregoing, AT&T
shall be responsible for the issuance and delivery to the transfer agent of any
Parent Common Shares or AT&T Liberty Tracking Shares that become deliverable in
connection with the exercise or settlement of any such Stock Incentive. In
connection with the exercise or settlement of any Stock Incentive by any person
who is (or last was) an officer, employee or consultant of the Common Stock
Group or the Liberty Media Group that results in the delivery of Other Group
Shares in accordance with the terms of the applicable Stock Incentive (and any
elections made by the applicable officer, employee or consultant in connection
with such exercise or settlement), the Group of which such person is (or last
was) an officer, employee or consultant shall pay in cash to the other Group
promptly following any such exercise or settlement (and the issuance and
delivery of the applicable Other Group Shares) an amount in cash equal to the
difference between (i) the value of the Other Group Shares delivered to such
person in connection with such exercise or settlement, with the value of any
such shares determined in accordance with the terms of such Stock Incentive (or
if the procedure for such determination is not specified in such instrument or
is otherwise not determinable in accordance therewith, by reference to the last
reported trade for such shares on the principal exchange on which such shares
are listed for trading on the date of such exercise or settlement (or if such
date is not a trading day, the next trading day thereafter)) and (ii) the
exercise price paid, or other consideration delivered (including shares
theretofore held by such person), by such person upon such exercise or
settlement (other
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than the deemed proceeds retained by the Common Stock Group or the Liberty Media
Group as the case may be, in connection with a cashless exercise or the like
effected without the delivery of shares theretofore held by such person).
(b) Notwithstanding anything to the contrary in this Section 1.4,
the Common Stock Group shall 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 and the transactions contemplated
thereby. For purposes of clarification, such fees and expenses will be paid by
TCI or one or more of its subsidiaries that are members of the Common Stock
Group (and will be attributed to the Common Stock Group).
(c) (i) AT&T and each member of the Common Stock Group shall
jointly and severally indemnify and hold harmless LMC and each member of the
Liberty Media Group from and against, and pay and reimburse the Liberty Media
Group for, any and all Liabilities (including liabilities for reasonable
attorneys fees and expenses) for which the Common Stock Group is responsible
pursuant to this Section 1.4.
(ii) LMC and each member of the Liberty Media Group shall
jointly and severally indemnify and hold harmless AT&T and each member of the
Common Stock Group from and against, and pay and reimburse the Common Stock
Group for, any and all Liabilities (including liabilities for reasonable
attorneys fees and expenses) for which the Liberty Media Group is responsible
pursuant to this Section 1.4.
(iii) Except with respect to claims for indemnification with
respect to which there exists a good faith dispute, the indemnifying party shall
satisfy its obligations hereunder within 30 days of receipt of the indemnified
party's notice of a claim under this Section 1.4 setting forth in reasonable
detail the indemnified party's basis for making such claim and for calculating
the amount to which it claims to be entitled under this Section 1.4.
(d) The Liberty Media Group shall be entitled to elect to use a
different independent accounting firm in connection with the annual audits of
the Liberty Media Group than the firm used by the Common Stock Group; provided,
that such independent accounting firm shall be reasonably satisfactory to AT&T.
The Common Stock Group acknowledges that KPMG Peat Marwick is satisfactory to
AT&T.
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SECTION 1.5. Allocation of Overhead Expenses. AT&T shall not, and
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shall not permit any member of the Common Stock Group to, allocate or charge any
general corporate overhead expenses to the Liberty Media Group except (i) to the
extent that the Liberty Media Group receives specific services pursuant to
services agreements or similar arrangements between the Common Stock Group and
the Liberty Media Group and (ii) that the Common Stock Group shall be entitled
to charge the Liberty Media Group an allocable share of the fees and expenses of
AT&T's independent accountants incurred in connection with AT&T's annual audits
(unless the Liberty Media Group elects to use a different independent accounting
firm in connection with the annual audits of the Liberty Media Group than the
firm used by the Common Stock Group, in which case the Common Stock Group shall
be responsible for all of the fees and expenses of AT&T's independent
accountants and the Liberty Media Group shall be responsible for all of the fees
and expenses of such different independent accounting firm used by the Liberty
Media Group).
SECTION 1.6. LMC Stock and AT&T Liberty Tracking Stock Issuances and
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Repurchases. (a) LMC shall have the right to authorize, issue, offer and sell
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additional shares of its common stock and shall have the right to authorize,
issue and sell shares of one or more series of its preferred stock (including
any securities which are convertible into or exercisable or exchangeable for,
common stock or preferred stock) in any such case, only if, after giving effect
to such issuance or sale (and any conversion, exercise or exchange thereof),
Liberty Media Corporation would remain a Qualifying Subsidiary and a member of
the affiliated group of which AT&T is the common parent as described in Section
1504(a)(2) of the Code (as amended from time to time). Subject to the
foregoing, AT&T agrees to vote or cause to be voted all capital stock of LMC
beneficially owned by it and its Subsidiaries in favor of any proposed amendment
to LMC's restated certificate of incorporation approved by a majority of LMC's
directors that increases the number of shares of capital stock of LMC and/or
changes the par value thereof (or otherwise effects a recapitalization of LMC in
connection with any proposed transaction including the authorization, issuance,
offering and/or sale of additional shares of LMC capital stock pursuant to this
subsection (a)).
(b) Subject to Section 1.11(a), AT&T shall contribute to LMC the net
proceeds of (i) any issuance of AT&T Liberty Tracking Shares or other securities
of AT&T or any other Person either (A) controlled by
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AT&T or (B) on behalf of AT&T which other securities, in either case, are
convertible into, or exercisable or exchangeable for, shares of AT&T Liberty
Tracking Shares (including upon the exercise or settlement of any Stock
Incentive), including any amounts payable by the holder thereof upon the
conversion, exercise or exchange of such securities (collectively, "Convertible
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Securities"), and (ii) any sale of AT&T Liberty Tracking Shares or Convertible
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Securities that were acquired by a member of the Common Stock Group or the
Liberty Media Group using cash or assets attributed to the Liberty Media Group
or in exchange for AT&T Liberty Tracking Shares or Convertible Securities that
are attributable to the Liberty Media Group. Following the occurrence of a
Triggering Event, such contribution shall be made through a contribution to LMC,
which in turn shall contribute such net proceeds to Liberty Media Group LLC. In
connection with any such transaction involving the issuance or sale of
additional AT&T Liberty Tracking Shares or Convertible Securities, LMC shall be
entitled to select counsel, investment bankers or other financial advisors and
other professional service firms to represent the issuer in connection with any
such issuance or sale, provided that such professional service firms shall be
reasonably satisfactory to AT&T. AT&T acknowledges that for purposes of this
paragraph Xxxxx & Xxxxx, L.L.P. is satisfactory to AT&T.
(c) AT&T, for and on behalf of each member of the Common Stock Group
(including TCI), agrees and acknowledges that (i) the rights and obligations of
the Company under the Call Agreements and the Stockholders Agreement have
been assigned to LMC and (ii) neither TCI nor any member of the Common Stock
Group has any further rights or obligations under the Call Agreements or the
Stockholders Agreement.
(d) AT&T will contribute to capital of TCI from time to time such
number of Class A AT&T Liberty Tracking Shares as may be necessary for TCI to
contribute such shares to Tele-Communications International, Inc. ("TINTA"), for
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delivery upon conversion of the currently outstanding 4 1/2% Convertible
Subordinated Debentures due 2006 of TINTA, in accordance with the agreement
dated as of November 19, 1998, between TINTA and TCI (as if references in such
agreement to LMG Series A Stock were references to Class A AT&T Liberty Tracking
Shares). In addition, AT&T shall use its reasonable efforts to list such Class
A AT&T Liberty Tracking Shares on the NYSE.
SECTION 1.7. Asset Transfers. (a) To the extent not already
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accomplished pursuant to Section 2.1(d) of the Merger Agreement, following the
Effective Time the Liberty Media Group and the Common Stock
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Group shall 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(c)(ii) of the Merger
Agreement (as if the references therein to TCI Ventures LLC referred to LMC and
the Covered Entities) to be true and correct in all material respects (including
to complete the transactions described in Schedule 2.1(a) of the Merger
Agreement and the letter agreement regarding TCI Wireless Holdings, Inc., dated
as of February 11, 1999, among AT&T, TCI and LMC (the "Letter Agreement")). To
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the extent any matter specifically addressed in Schedule 2.1(a) of the Merger
Agreement or the Letter Agreement is inconsistent with such Section 5.17(c)(ii)
of the Merger Agreement, Schedule 2.1(a) of the Merger Agreement and/or the
Letter Agreement shall control. In furtherance of the foregoing, any contract
right or other similar right that is part of any asset that is attributed to a
particular Group in accordance with this Section 1.7 and the representation and
warranty in Section 5.17(c)(ii) of the Merger Agreement shall be the right of
the Group to which such related asset is so attributed.
(b) Each of the Liberty Media Parties represents and warrants to AT&T
that, as of the Effective Time, none of the Covered Entities will own, directly
or indirectly, any asset attributable to the Common Stock Group, and to the
extent not true and correct at the Effective Time, LMC and the Liberty Media
Group shall make such transfers of assets, and assumptions and liabilities, if
any, or take any other actions as are necessary to cause the representations and
warranties set forth in this paragraph (b) to be true and correct as promptly as
practicable following the Effective Time. To the extent any matter specifically
addressed in Schedule 2.1(a) of the Merger Agreement or the Letter Agreement is
inconsistent with this Section 1.7(b), Schedule 2.1(a) of the Merger Agreement
and/or the Letter Agreement shall control.
SECTION 1.8. Appraisal Rights. In the event that the holders of any
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TCI Preferred Stock or TCIC Preferred Stock are entitled to and validly exercise
appraisal rights under the DGCL, (a) the Liberty Media Group shall be entitled
to control, and shall be responsible for, all matters relating to the exercise
of appraisal rights with respect to shares of Series C Liberty Media Group
Preferred Stock and Series H Preferred Stock, and (b) the Common Stock Group
shall be entitled to control, and shall be responsible for, all matters relating
to the exercise of appraisal rights with respect to shares of Series C-TCI Group
Preferred Stock, Series G Preferred Stock and TCIC Preferred Stock.
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SECTION 1.9. Certain Redemptions of AT&T Liberty Tracking Shares.
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(a) If AT&T redeems the outstanding AT&T Liberty Tracking Shares pursuant to
paragraph 5(a) of Part B of Article Third of the AT&T Charter Amendment, then
prior to such redemption (i) the certificate of incorporation and bylaws or
other organizational or constituent instruments (collectively, the "LMC
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Charters") of each applicable Liberty Media Group Subsidiary (as defined in the
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AT&T Charter Amendment) shall be amended and/or restated (A) so that the LMC
Charters contain provisions relating to the election of directors (including
without limitation provisions relating to the term and removal of directors) and
each other matter which could reasonably be expected to impair the ability of a
third party to seek control of such entity which are equivalent to, but no more
restrictive than, those contained in the certificate of incorporation and by-
laws of TCI in effect as of June 23, 1998, (B) to increase the authorized number
of shares of common stock of such Liberty Media Group Subsidiary to at least a
sufficient number to permit such redemption or dividend on a share-for-share
basis (or a reasonable fraction thereof), and (C) if and to the extent
practicable, to reclassify the existing common stock of such Liberty Media Group
Subsidiary into shares of two separate classes or series with relative voting
rights and related differences in designation, conversion, redemption and share
distribution provisions equivalent to but not greater than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Class A AT&T Liberty Tracking Shares and the
Class B AT&T Liberty Tracking Shares (with the holders of the Class B AT&T
Liberty Tracking Shares receiving the class or series having the higher relative
voting rights) (which reclassification in the case of LMC and any Covered
Entity, would be of its Class A Common Stock into the series with the lower
relative voting rights and unless otherwise approved and recommended by the
board of directors of such entity, of the Class B and Class C Common Stock into
the series with the higher relative voting rights), (ii) no Triggering Event
shall thereafter occur, and (iii) in the event that a Triggering Event has
occurred, Liberty Media Group LLC shall be automatically dissolved immediately
prior to such redemption. Prior to such redemption, the applicable Liberty
Media Group Subsidiary may propose the forms of such LMC Charters, which LMC
Charters shall contain the provisions set forth in this Section 1.9(a), and may
contain such additional provisions as may be proposed by the applicable Liberty
Media Group Subsidiary (which shall be subject to AT&T's reasonable approval).
AT&T will vote or cause to be voted its direct or indirect equity interest in
each applicable Liberty
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Media Group Subsidiary in favor of the LMC Charters described in the previous
sentence. Neither the Liberty Media Group nor the Common Stock Group shall
permit any of the LMC Charters to include any provision that would be
inconsistent with this Section 1.9(a). The parties shall enter into such
agreements and other arrangements (or add provisions to constituent instruments)
as are necessary to give effect to this Section 1.9(a).
(b) If AT&T pays a mandatory dividend on, or redeems all or a portion
of, the AT&T Liberty Tracking Shares pursuant to paragraph 5(b) of Part B of
Article Third of the AT&T Charter Amendment in shares of the outstanding capital
stock of a Person that at the time of such dividend or other redemption was a
direct or indirect Subsidiary of AT&T, then prior to such redemption or dividend
the certificate of incorporation or other organizational instruments of each
such Subsidiary of AT&T the ("Sub Charters") shall be amended and/or restated
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(A) so that such instruments contain provisions relating to the election of
directors (including without limitation provisions relating to the term and
removal of directors) and each other matter which could reasonably be expected
to impair the ability of a third party to seek control of such entity which are
equivalent to, but no more restrictive than, those contained in the certificate
of incorporation and by-laws of TCI in effect as of June 23, 1998, (B) to
increase the authorized number of shares of common stock of such Subsidiary to
at least a sufficient number to permit such redemption or dividend on a share-
for-share basis (or a reasonable fraction thereof), and (C) if and to the extent
practicable, to reclassify the existing common stock of such Subsidiary into
shares of two separate classes or series with relative voting rights and related
differences in designation, conversion, redemption and share distribution
provisions equivalent to but not greater than the corresponding differences in
voting rights, designation, conversion, redemption and share distribution
provisions between the Class A AT&T Liberty Tracking Shares and the Class B AT&T
Liberty Tracking Shares (with the holders of the Class B AT&T Liberty Tracking
Shares receiving the class or series having the higher relative voting rights).
Prior to such redemption, LMC may propose the forms of such Sub Charters, which
Sub Charters shall contain the provisions set forth in this Section 1.9(b), and
may contain such additional provisions as may be proposed by LMC (which shall be
subject to AT&T's reasonable approval). AT&T will vote or cause to be voted its
direct or indirect equity interest in each applicable Liberty Media Group
Subsidiary in favor of the Sub Charters described in the previous sentence.
Neither the Liberty Media Group nor the Common Stock Group shall permit any of
the Sub Charters to include any provision that would be
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inconsistent with this Section 1.9(b). The parties shall enter into such
agreements and other arrangements (or add provisions to constituent instruments)
as are necessary to give effect to this Section 1.9(b).
(c) In the event of any redemption of any AT&T Liberty Tracking Shares
in exchange for any shares of any class of capital stock of any Subsidiary or
Subsidiaries of AT&T that is or are members of the Liberty Media Group (each, a
Liberty Co), including without limitation, any such redemption pursuant to
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paragraph 5(a) of Part B of Article Third of the AT&T Charter Amendment, then
prior to any such redemption, the 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
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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 (or upon request of the applicable issuer of such Convertible Notes in
connection with any such conversion, to deliver such consideration to the
applicable issuer for delivery to such converting holder(s)). With reference to
a redemption pursuant to paragraph 5(a) of Part B of Article Third 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 shall be borne 40% by the Liberty Media Group
and 60% by the Common Stock Group.
SECTION 1.10. AT&T SEC Filings; Financial Statements; Cooperation.
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(a) For so long as any AT&T Liberty Tracking Shares are outstanding, AT&T shall
include in its filings with the SEC under the Exchange Act (or amendments
thereto), combined financial statements of the Liberty Media Group provided by
LMC. The combined financial statements of the Liberty Media Group shall reflect
the combined financial position, results of operations and cash flows of the
businesses attributed to the Liberty Media Group, and in the case of annual
financial statements, shall be audited. If so requested by LMC, AT&T shall
include, together with the copies of its annual report to stockholders that are
mailed to holders of AT&T Liberty Tracking Shares, such separate materials
containing the following information as LMC may timely provide to AT&T for
inclusion therein: (i) the combined
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financial statements referred to in the preceding sentence and (ii) other
narrative and statistical information relating to the Liberty Media Group.
Alternatively, if so requested by LMC, AT&T will reasonably cooperate with LMC
in forwarding such materials provided to AT&T by LMC to the holders of the AT&T
Liberty Tracking Shares. In either case, all incremental expenses associated
therewith shall be borne solely by the Liberty Media Group.
(b) AT&T shall, and shall cause the members of the Common Stock Group
to, cooperate with the Liberty Media Group, and LMC shall, and shall cause the
members of the Liberty Media Group to, cooperate with the Common Stock Group,
with respect to common functions such as financial reporting, tax reporting and
governmental and regulatory filings.
(c) Upon the request of LMC, AT&T shall cooperate with LMC in
establishing and maintaining for the benefit of the officers and employees of
the Liberty Media Group, at the Liberty Media Group's sole cost and expense,
employee stock purchase, stock option and 401(k) plans, as well as such other
customary employee benefit and incentive plans as LMC may reasonably request;
provided, that the trustees, administrators or other managers of any such plan
established solely for the benefit of all or a portion of the officers and
employees of the Liberty Media Group shall be persons designated by LMC.
SECTION 1.11. Restricted Actions of the Common Stock Group. (a)
--------------------------------------------
AT&T shall not, and shall not permit any member of the Common Stock Group to,
directly or indirectly, (i) Transfer (other than Transfers pursuant to a
redemption of the AT&T Liberty Tracking Shares in accordance with paragraph 5 of
Part B of Article Third of the AT&T Charter Amendment), (ii) incur any
indebtedness secured by or pledge or xxxxx x xxxx, security interest or other
encumbrance on, or (iii) create any derivative instrument whose value is based
on, any equity interest, direct or indirect, of AT&T in LMC, Liberty Media Group
LLC, or any Covered Entity; provided, however, that the foregoing shall not
-------- -------
apply to (A) any of the foregoing approved (x) by a Required Majority of the
members of the Board of Directors of LMC or the applicable Covered Entity prior
to the occurrence of a Triggering Event, or (y) by Liberty Management after the
occurrence of a Triggering Event ((x) or (y), as applicable, a Liberty
-------
Approval) (but in either such case only to the extent the net proceeds of such
--------
Transfer, incurrence or creation are contributed to LMC or, following the
occurrence of a Triggering Event, Liberty Media Group LLC), (B) any issuance or
sale by AT&T of any of its own securities (other than (x) indebtedness secured
by any equity interest,
13
direct or indirect, of AT&T in LMC or Liberty Media Group LLC or any Covered
Entity, (y) any security which is convertible into or exercisable or
exchangeable for, or any derivative instrument whose value is based on, any
equity interest, direct or indirect, of AT&T in LMC or Liberty Media Group LLC
or any Covered Entity or (z) any issuance or sale of AT&T Liberty Tracking
Shares (or any security convertible into or exercisable or exchangeable for,
AT&T Liberty Tracking Shares) in which the proceeds of such issuance and sale
are not contributed to the Liberty Media Group), or (C) 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 Liberty Media Group that it held immediately prior to
such transaction (other than as a result of any action by LMC or any other
Person included in the Liberty Media Group).
(b) For so long as any AT&T Liberty Tracking Shares are outstanding,
AT&T shall not, and shall cause each member of the Common Stock Group not to,
intentionally take any action that AT&T knows would have the effect of
deconsolidating LMC or any Covered Entity from the AT&T consolidated group for
United States federal income tax purposes; provided, however, that the foregoing
shall not apply to (i) a disposition of all or substantially all of the
properties and assets of the Liberty Group pursuant to paragraph 5(b) of Part B
of Article Third of the AT&T Charter Amendment, (ii) any redemption of the
outstanding AT&T Liberty Tracking Shares pursuant to paragraph 5(a) of Part B of
Article Third of the AT&T Charter Amendment, (iii) any deconsolidation of a
Covered Entity which occurs as a result of the consummation of the transactions
contemplated by the Contribution Agreement following the occurrence of a
Triggering Event, or (iv) any such deconsolidation pursuant to a Covered
Disposition approved by the holders of the AT&T Liberty Tracking Shares in
accordance with paragraph 1(b)(ii) of Part B of Article Third of the AT&T
Charter Amendment.
(c) AT&T shall not create, authorize or issue any preferred stock of
AT&T attributable to the Liberty Media Group without a Liberty Approval.
(d) Neither AT&T nor any other member of the Common Stock Group shall
intentionally acquire or agree to acquire, directly or indirectly, by purchase
or otherwise, any beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of any shares
of any
14
class of capital stock of Flextech plc ("Flextech") or any of its subsidiaries
--------
listed on a schedule to be provided to AT&T by LMC, which schedule shall be
updated periodically by LMC, or any direct or indirect rights or options to
acquire (through purchase, exchange, conversion or otherwise) any shares of any
class of capital stock of Flextech or any of such subsidiaries; provided,
however, that nothing herein shall prevent AT&T or any member of the Common
Stock Group from acquiring less than 10 percent by vote and value of any company
which is incorporated in a state of the United States which owns shares of
Flextech. If AT&T or any member of the Common Stock Group inadvertently
acquires, directly or indirectly, any beneficial ownership of any such shares or
any rights or options to acquire such shares, AT&T or such member of the Common
Stock Group shall divest such shares, rights or options within 30 days of such
acquisition. At such time and to the extent that the covenant contained herein
is no longer necessary to prevent adverse tax consequences, the covenant shall
expire and LMC will so notify AT&T. Neither AT&T nor any member of the Common
Stock Group has any beneficial ownership of any shares of any class of capital
stock of Flextech or any of its subsidiaries or any direct or indirect rights or
options to acquire (through purchase, exchange, conversion or otherwise) any
shares of any class of capital stock of Flextech or any of its subsidiaries.
SECTION 1.12. Restricted Actions of the Liberty Media Group. Neither
---------------------------------------------
LMC nor any other member of the Liberty Media Group shall intentionally acquire
or agree to acquire, directly or indirectly, by purchase or otherwise, any
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended) of any shares of any class of
capital stock of British Telecommunications plc, a company organized under the
laws of England and Wales ("BT") or any of its subsidiaries listed on a schedule
--
to be provided to LMC by AT&T, which schedule shall be updated periodically by
AT&T, or any direct or indirect rights or options to acquire (through purchase,
exchange, conversion or otherwise) any shares of any class of capital stock of
BT or any of such subsidiaries; provided, however, that nothing herein shall
prevent LMC or any member of the Liberty Media Group from acquiring (1) any
interest in any subsidiary of BT which is incorporated in a state of the United
States and is not the direct or indirect shareholder of any equity interest in
Thistle BV and (2) less than 10 percent by vote and value of any company which
is incorporated in a state of the United States which owns shares of BT. If LMC
or any member of the Liberty Media Group inadvertently
15
acquires, directly or indirectly, any beneficial ownership of any such shares or
any rights or options to acquire such shares, LMC or such member of the Liberty
Media Group shall divest such shares, rights or options within 30 days of such
acquisition. At such time and to the extent that the covenant contained herein
is no longer necessary to prevent adverse tax consequences, the covenant shall
expire and AT&T will so notify LMC. Neither LMC nor any member of the Liberty
Media Group has any beneficial ownership of any shares of any class of capital
stock of BT or any of its subsidiaries or any direct or indirect rights or
options to acquire (through purchase, exchange, conversion or otherwise) any
shares of any class of capital stock of BT or any of its subsidiaries.
SECTION 1.13 Telewest Communications plc. Effective no later than
---------------------------
the date of closing of the transactions contemplated by the Framework Agreement,
dated as of October 23, 1998, by and among AT&T, VLT Corporation, British
Telecommunications plc, BT (Netherlands) Holdings B.V., and Thistle B.V., a
Besloten Vennotschap organized under the laws of the Netherlands, LMC agrees (i)
to create a committee of the Board of Directors of LMC, in which the Class A
Directors (as such term is defined in the Restated Certificate of Incorporation
of LMC) will not participate; (ii) that the Board of Directors of LMC will
delegate to such committee its authority to discuss and receive information and
take all decisions regarding Telewest Communications plc, a public limited
company incorporated in England and Wales (Telewest), or and of its
Subsidiaries, (iii) that the Board of Directors of LMC will not participate in
any discussions or decisions regarding Telewest or any of its Subsidiaries and
(iv) that the Class A Directors will not accept or receive any information
regarding Telewest or any of its Subsidiaries.
SECTION 1.14 GI Warrants.
-----------
(a) For purposes of this Section 1.14, the following terms shall have
the following meanings:
(i) Digital Terminals shall mean the Terminals, as defined in
-----------------
the Digital Terminal Purchase Agreement.
(ii) Digital Terminal Purchase Agreement shall mean the
-----------------------------------
Digital Terminal Purchase Agreement, dated as of December 16, 1997, by and
between GI and NDTC.
16
(iii) GI shall mean General Instrument Corporation (formerly
--
known as NextLevel Systems, Inc.), or any successor thereto (by merger,
consolidation, sale of all or substantially all of its assets or otherwise) or
affiliate thereof.
(iv) GI Common Stock shall mean the common stock of GI.
---------------
(v) GI Warrant Agreement shall mean the Warrant Issuance
--------------------
Agreement, dated as of December 16, 1997, by and between GI and NDTC.
(vi) NDTC shall mean National Digital Television Center, Inc.
----
(or any successor thereto (by merger, consolidation, sale of all or
substantially all of its assets or otherwise)) and any Approved Purchaser (as
defined in the GI Warrant Agreement) for purposes of determining whether the
obligations of NDTC to purchase the Threshold Numbers of Digital Terminals under
the Digital Terminal Purchase Agreement and the GI Warrant Agreement have been
satisfied.
(vii) Threshold Number shall mean the minimum number of Digital
----------------
Terminals that must be purchased by NDTC by December 31st of each calendar year
for the calendar years 1998, 1999 and 2000, as described in Schedule A to the GI
Warrant Agreement.
(viii) Terminated Warrant shall mean a Warrant that is the
------------------
subject of a Warrant Termination.
(ix) Warrants shall mean the warrants, originally issued to
--------
NDTC pursuant to the GI Warrant Agreement and transferred and assigned to LMC
pursuant to an Assignment and Assumption Agreement, dated as of March 9, 1999,
to purchase up to 21,356,000 shares of GI Common Stock (subject to adjustments
provided for in the GI Warrant Agreement).
(b) (i) If any Warrant terminates prior to vesting or fails
to vest solely because of the failure of the Common Stock Group to purchase the
required amount of advanced set top boxes (a Warrant Termination), and the
-------------------
Liberty Media Group so notifies AT&T in writing, and provides AT&T with
documentation verifying such Warrant Termination (such notification and
documentation, the Warrant Notice), the Common Stock Group shall pay to the
Liberty Media Group an amount in cash equal to $8.25 per share of GI Common
Stock that would have been issuable upon exercise of such Terminated Warrant had
it vested and been exercised in full
17
(such dollar amount to be appropriately adjusted to reflect any adjustment in
the number of shares so issuable) (a Warrant Compensation), such payment to be
--------------------
made in immediately available funds no later than the 10th day following receipt
by AT&T of the Warrant Notice. Nothing herein shall preclude the Common Stock
Group from seeking legal recourse against GI in the event of a Warrant
Termination; provided, however, that if the Common Stock Group receives any
Alternate Consideration, the Liberty Media Group shall have the right, but not
the obligation, to exchange all or a portion of any Warrant Compensation for all
or an allocable portion of any Alternate Consideration received by any member of
the Common Stock Group from GI that directly or indirectly relates to such
Warrant Termination.
(ii) The Common Stock Group agrees to notify promptly the
Liberty Media Group, pursuant to Section 4.1 hereof, of any communication
received from GI by the Common Stock Group regarding a Warrant Termination or an
assertion by GI that a Warrant Termination has occurred.
(iii) The Common Stock Group agrees that before any member
of the Common Stock Group enters into any agreement, arrangement or
understanding, whether verbal or written, with GI relating to the purchase of
any Digital Terminal or like equipment or any other transaction contemplated by
the Digital Terminal Purchase Agreement or the GI Warrant Agreement (other than
the placement of purchase orders pursuant to the terms of the Digital Terminal
Purchase Agreement in effect on the date hereof) which would be reasonably
likely to have an adverse effect on the Warrants (including the vesting or
exercisability thereof), the Common Stock Group will first notify the Liberty
Media Group of the proposed terms of such agreement, arrangement or
understanding by providing a copy thereof or, if such agreement is verbal, a
summary of the terms thereof, to the Liberty Media Group, in each case pursuant
to Section 4.1 hereof. Notwithstanding the foregoing, the Common Stock Group
shall not agree to any amendment or modification to the Digital Terminal
Purchase Agreement or the GI Warrant Agreement, or waive any rights thereunder
(or enter into any agreement, arrangement or understanding relating to a Warrant
Termination or the payment of any Alternate Consideration) without the prior
written consent of LMC, which consent shall not be unreasonably withheld or
delayed.
SECTION 1.15. AT&T Board of Directors. As promptly as practicable
-----------------------
following the Effective Time, AT&T will expand the size of its Board of
Directors by one and will appoint Xx. Xxxx X. Xxxxxx (or, in the
18
event Xx. Xxxxxx is unable to serve, such other person as may be designated by
LMC and reasonably satisfactory to AT&T) to the AT&T Board of Directors. From
the Effective Time until the third anniversary thereof, AT&T will nominate Xx.
Xxxxxx (or such other person) for reelection to the AT&T Board of Directors at
each subsequent annual or special meeting of the stockholders of AT&T at which
Xx. Xxxxxx'x (or such other person's) term is to expire. Thereafter (and during
such period to the extent Xx. Xxxxxx or such other person is unable to serve as
a director), so long as any AT&T Liberty Tracking Shares remain outstanding,
AT&T will nominate and recommend the election to the AT&T Board of Directors a
person (who may be Xx. Xxxxxx) who, in the AT&T Board of Directors' reasonable
judgment, by virtue of his or her background and experience, will understand and
reflect issues of concern to the Liberty Media Group and the holders of AT&T
Liberty Tracking Shares.
SECTION 1.16. Tax Law Change. In the event of any Tax Law Change,
--------------
AT&T covenants and agrees that it will not thereafter issue or sell, or obligate
itself to issue or sell, any additional AT&T Liberty Tracking Shares (including
through the issuance of any additional Convertible Securities); provided that if
such Tax Law Change is applicable to some but not all future issuances or sales
of AT&T Liberty Tracking Shares, the covenants contained in this Section 1.16
shall not apply to issuances or sales to which the Tax Law Change does not
apply. While a proposed Tax Law Change is pending, AT&T covenants and agrees it
will not incur any new obligation to issue or sell any additional AT&T Liberty
Tracking Shares (including through issuance of any additional Convertible
Securities). If at the time of the Tax Law Change, AT&T or any member of the
Common Stock Group has a pre-existing unsatisfied obligation (a "Tracking Stock
--------------
Obligation") to issue AT&T Liberty Tracking Shares (including upon conversion,
----------
exercise or exchange of any Convertible Securities), LMC will have the right to
direct that such Tracking Stock Obligation be satisfied through the payment in
cash of the value of the shares that would otherwise have been issued or the
delivery of AT&T Liberty Tracking Shares acquired by LMC or an agent thereof or
in any other reasonable manner; provided that, if any such Tracking Stock
Obligation is satisfied at LMC's direction other than by the delivery of AT&T
Liberty Tracking Shares in accordance with the terms of such Tracking Stock
Obligation, then if such Tracking Stock Obligation was outstanding at the time
of the Merger or thereafter incurred prior to the Tax Law Change with a Liberty
Approval, LMC shall be solely responsible for and shall indemnify and hold AT&T
and its subsidiaries, and their respective directors and officers,
19
harmless from and against any claims, actions, proceedings, losses or damages
arising as a result of any claim by the obligee that such manner of payment
constitutes a breach or nonperformance of such Tracking Stock Obligation. LMC
shall have the right to direct the defense of any such claim with counsel of its
choosing and shall be solely responsible for the payment of the legal and other
expenses arising therefrom. AT&T further agrees to cooperate with all reasonable
requests of LMC that are intended to mitigate the risks of triggering the
recognition of income upon issuance of AT&T Liberty Tracking Shares or the
amounts payable to obligees in lieu of issuances of AT&T Liberty Tracking
Shares.
In furtherance of LMC's rights pursuant to the foregoing, following
the occurrence of a Tax Law Change, LMC shall have the right, at its expense, to
direct AT&T or the applicable member of the Common Stock Group in the exercise
of its rights under any contract, instrument or agreement containing the
applicable Tracking Stock Obligation or pursuant to which the Tracking Stock
Obligation was incurred, as such rights relate to the AT&T Liberty Tracking
Shares. By way of example and not limitation, if at the time of a Tax Law
Change any UA Notes remain outstanding, LMC shall be entitled, at its expense,
to direct the exercise by AT&T or the applicable members of the Common Stock
Group of its rights under the stock purchase agreement pursuant to which such
notes were issued, as such rights relate to the AT&T Liberty Tracking Shares
issuable upon conversion of such notes, including, without limitation, the right
of first refusal on certain proposed sales of such AT&T Liberty Tracking Shares.
If LMC exercises its right to direct that a Tracking Stock Obligation
be satisfied in cash, then LMC shall pay AT&T an amount equal to the amount of
such cash payment or, in the case of Stock Incentives for which the Common Stock
Group is responsible under Section 1.4(a)(ii) hereof, the positive difference,
if any, between (i) the amount of such cash payment and (ii) the amount that
AT&T would have been obligated to pay LMC if such Tracking Stock Obligation had
been satisfied in AT&T Liberty Tracking Shares. With respect to Stock
Incentives for which the Common Stock Group is responsible, if LMC delivers AT&T
Liberty Tracking Shares to the obligee in satisfaction of such Tracking Stock
Obligation (or to AT&T or the applicable Common Stock Group member to deliver in
satisfaction of such Tracking Stock Obligation), AT&T shall pay LMC the
20
amounts that would have been payable to LMC pursuant to Section 1.4(a)(ii) in
the event of the issuance of AT&T Liberty Tracking Shares on exercise or
settlement of such Stock Incentives.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Representations and Warranties of AT&T. AT&T represents
--------------------------------------
and warrants to LMC that (a) AT&T is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder, (b) the execution and delivery of this Agreement by
AT&T and the consummation by AT&T of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of AT&T and
no other corporate proceedings on the part of AT&T are necessary to authorize
this Agreement or any of the transactions contemplated hereby, (c) this
Agreement has been duly executed and delivered by AT&T and constitutes a valid
and binding obligation of AT&T, and, assuming this Agreement constitutes a valid
and binding obligation of LMC and each of the Covered Entities, is enforceable
against AT&T and each member of the Common Stock Group in accordance with its
terms, (d) neither the execution, delivery or performance of this Agreement by
AT&T constitutes a breach or violation of or conflicts with the AT&T Charter or
AT&T's By-Laws or any material agreement to which AT&T is a party, and (e) none
of such material agreements would impair in any material respect the ability of
AT&T to perform its obligations hereunder.
SECTION 2.2. Representations and Warranties of LMC. LMC represents
-------------------------------------
and warrants to AT&T that: (a) (i) LMC is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder, (ii) the execution and delivery of this Agreement by LMC
and the consummation by LMC of the transactions contemplated hereby have been
duly authorized by all necessary action on the part of LMC and no other
proceedings on the part of LMC are necessary to authorize this Agreement or any
of the transactions contemplated hereby, (iii) this Agreement has been duly
executed and delivered by LMC and each Covered Entity and constitutes a valid
and binding obligation of LMC and each Covered Entity, and, assuming this
Agreement constitutes a valid and binding obligation of AT&T, is enforceable
against LMC and each Covered Entity in accordance with its terms,
21
(iv) neither the execution, delivery or performance of this Agreement by LMC
constitutes a breach or violation of or conflicts with its certificate of
incorporation or by-laws or any material agreement to which LMC is a party, and
(v) none of such material agreements would impair in any material respect the
ability of LMC to perform its obligations hereunder.
(b) As of the date hereof and after giving effect to the Merger, the
total indebtedness of the Liberty Media Group is not in excess of the Liberty
Media Group Debt Limit.
ARTICLE III
DEFINITIONS
SECTION 3.1. Certain Defined Terms. For purposes of this Agreement,
---------------------
the following terms shall have the following meanings:
(a) "AT&T" shall have the meaning set forth in the preamble.
-----
(b) "AT&T Charter" shall mean the Certificate of Incorporation of
------------
AT&T, as amended to the date hereof.
(c) "AT&T Charter Amendment" shall mean the proposed amendment to the
----------------------
AT&T Charter attached as Appendix B to TCI's proxy statement, dated as of
January 8, 1999, providing for, among other things, the creation of the Liberty
Media Group and the authorization of the AT&T Liberty Tracking Shares, which
amendment is to become effective immediately prior to the Merger and the
execution of this Agreement.
(d) "AT&T Liberty Tracking Shares" shall mean collectively, the
----------------------------
shares of Class A Liberty Media Group Common Stock, par value $1.00 per share,
of AT&T and the shares of Class B Liberty Media Group Common Stock, par value
$1.00 per share, of AT&T, in each case, having the rights, privileges and
preferences as set forth in the AT&T Charter Amendment.
(e) "BT" shall have the meaning set forth in Section 1.12.
--
(f) "Call Agreements" shall mean collectively the Call Agreements,
---------------
each dated as of February 9, 1998, between TCI, on the one hand, and certain
stockholders of TCI, including Xxxx X. Xxxxxx, holding shares of Company Common
Stock having more than one vote per share, on the other hand.
22
(g) "Capital Stock Committee" means the committee of the Board of
-----------------------
Directors of AT&T established pursuant to the amendment to the bylaws of AT&T
adopted pursuant to Section 7.16 of the Merger Agreement.
(h) "Common Stock Group" shall have the meaning ascribed to such term
------------------
in the AT&T Charter Amendment (including, for purposes of this Agreement for
periods prior to the Merger, the TCI Group).
(i) "Contribution Agreement" means the Contribution Agreement, dated
----------------------
as of March 9, 1999, by and among LMC, Liberty Management, Liberty Media Group
LLC and Liberty Ventures LLC, a Delaware limited liability company.
(j) "Convertible Securities" shall have the meaning set forth in
----------------------
Section 1.6(b).
(k) "Convertible Notes" shall have the meaning set forth in Section
-----------------
1.9(c).
(l) "Covered Entities" shall have the meaning given to such term in
----------------
the AT&T Charter Amendment.
(m) "Credit Rating Agency" shall have the meaning set forth in
--------------------
Section 1.3(b).
(n) "Flextech" shall have the meaning set forth in Section 1.11(d).
--------
(o) "Group" shall mean either the Common Stock Group or the Liberty
-----
Media Group.
(p) "Intercompany Agreements" shall have the meaning set forth in
-----------------------
Section 1.1.
(q) "Letter Agreement" shall have the meaning set forth in Section
----------------
1.7(a).
(r) "Liability" shall mean any debt, loss, liability, claim, fine,
---------
royalty, deficiency, damage, obligation, restriction, limitation, payment, cost
or expense, in each case, whether mature or unmatured, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated or known or unknown.
(s) "Liberty Approval" shall have the meaning set forth in Section
----------------
1.11(a).
(t) "Liberty Media Parties" shall have the meaning set forth in the
---------------------
preamble.
(u) "Liberty Co" shall have the meaning set forth in Section 1.9(c).
----------
(v) "Liberty Debt Incurrence" shall have the meaning set forth in
-----------------------
Section 1.3(b).
(w) "Liberty Debt Notice" shall have the meaning set forth in Section
-------------------
1.3(b).
23
(x) "Liberty Media Group" shall have the meaning ascribed to the term
-------------------
Liberty Media Group in the AT&T Charter Amendment.
(y) "Liberty Media Group Debt Limit" shall have the meaning set forth
------------------------------
in Section 1.3(b).
(z) "Liberty Media Group LLC" shall mean Liberty Media Group LLC, a
-----------------------
Delaware limited liability company.
(aa) "Liberty Management" shall mean Liberty Media Management LLC, a
------------------
Delaware limited liability company.
(bb) "Liberty Media Group Subsidiary" shall have the meaning ascribed
------------------------------
to such term in the AT&T Charter Amendment.
(cc) "LMC" shall mean Liberty Media Corporation, a Delaware
---
corporation (provided that, unless the context otherwise requires, following the
occurrence of a Triggering Event, each reference herein to LMC shall be deemed a
reference to Liberty Media Group LLC).
(dd) "LMC Charters" shall have the meaning set forth in Section
------------
1.9(a).
(ee) "Merger" shall have the meaning set forth in the Recitals.
------
(ff) "Merger Agreement" shall have the meaning set forth in the
----------------
Recitals.
(gg) "Merger Sub" shall have the meaning set forth in the Recitals.
----------
(hh) "Other Group Shares" shall mean (i) in the case of a Stock
------------------
Incentive held by an officer or employee of the Common Stock Group, the AT&T
Liberty Tracking Shares, or (ii) in the case of a Stock Incentive held by an
officer or employee of the Liberty Media Group, the Parent Common Shares.
(ii) "Person" shall mean any individual, partnership, joint venture,
------
corporation, trust, unincorporated organization, government or department or
agency of a government.
(jj) "Qualifying Subsidiary" of a Person shall mean a Subsidiary of
---------------------
such Person in which such Person's ownership and voting interest is sufficient
to satisfy the ownership and voting requirements of the Internal Revenue Code
and the regulations thereunder (each as amended from time to time) for a
distribution of such Person's interest in such Subsidiary to the holders of
Class A Liberty Media Group Common Stock and Class B Liberty Media Group Common
Stock to be tax free to such holders.
24
(kk) "Stockholders Agreement" shall mean the Stockholders Agreement,
----------------------
dated as of February 9, 1998, by and among TCI, Xxxx X. Xxxxxx, and certain
other stockholders of TCI.
(ll) "Stock Incentive" shall have the meaning set forth in Section
---------------
1.4(a)(ii).
(mm) "Sub Charters" shall have the meaning set forth in Section
------------
1.9(b).
(nn) "Subsidiary" shall have the meaning given to such term in the
----------
AT&T Charter Amendment.
(oo) "Tax Law Change" means the enactment into Law of the applicable
--------------
revenue provisions of the President's Fiscal Year 2000 Budget proposal, as
submitted to the Congress on February 21, 1999, or any similar proposal, that
would result in the issuance of a tracking stock causing the issuer or any
member of its consolidated group to recognize income on such issuance, unless
such Law by its terms is inapplicable to future issuances of AT&T Liberty
Tracking Shares.
(pp) "TCI" shall mean Tele-Communications, Inc., a Delaware
---
corporation.
(qq) "TCI Preferred Stock" shall mean preferred stock, par value $.0l
-------------------
per share, of TCI.
(rr) "TCI Preferred Stock" shall mean the Cumulative Exchangeable
-------------------
Preferred Stock, Series A, of TCI Communications, Inc. a Delaware corporation
and formerly a wholly owned subsidiary of TCI.
(ss) "TINTA" shall have the meaning set forth in Section 1.6(d).
-----
(tt) "Tracking Stock Obligation" shall have the meaning set forth in
-------------------------
Section 1.16.
(uu) "Transfer" shall mean, directly or indirectly, to sell, issue,
--------
transfer, dispose, assign, pledge, encumber, hypothecate or otherwise convey,
either voluntarily or involuntarily (whether by merger, consolidation, sale or
issuance or contribution of assets or stock, or otherwise), or to enter into any
contract, option or other arrangement or understanding with respect to the sale,
transfer, disposition, assignment, pledge, encumbrance, hypothecation or other
conveyance (whether by merger, consolidation, sale or issuance or contribution
of assets or stock, or otherwise).
(vv) "Triggering Event" shall have the meaning ascribed to such term
----------------
in the Contribution Agreement.
25
SECTION 3.2 Other Definitional Provisions. The language used in this
-----------------------------
Agreement shall be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction shall be applied against
any party. Any references to any statute or law shall also refer to all rules
and regulations promulgated thereunder, unless the context requires otherwise.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words include, includes, and including
shall be deemed to be followed by the phrase without limitation. The words
hereof, herein and hereunder and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Article and Section references are to this
Agreement unless otherwise specified. The meanings given to terms defined herein
shall be equally applicable to both the singular and plural forms of such terms.
Unless the context shall otherwise require, any references to any agreement or
other instrument or statute or regulation are to it as amended and supplemented
from time to time (and, in the case of a statute or regulation, to any successor
provisions). Any reference in this Agreement to a day or number of days (without
the explicit qualification of business) shall be interpreted as a reference to a
calendar day or number of calendar days. If any action or notice is to be taken
or given on or by a particular calendar day, and such calendar day is not a
business day, then such action or notice shall be deferred until, or may be
taken or given on, the next business day.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Notices. 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 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 AT&T or any member of the Common Stock Group:
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxx Xxxxxx 00000
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Attention: Vice President-Law
and Corporate Secretary
Facsimile: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to LMC or any member of the Liberty Media Group:
Liberty Media Corporation
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
with a copy to:
Xxxxx & Xxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxx X. XxXxxxx, Esq.
Facsimile: (000) 000-0000
or such address as such party shall have designated by notice so given to each
other party.
SECTION 4.2. Amendments; No Waivers. (a) This Agreement shall be
----------------------
amended, changed, supplemented, waived or otherwise modified only by an
instrument in writing signed by each of AT&T and LMC (and following a Triggering
Event, Liberty Media Group LLC).
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 4.3. Successors and Assigns. Neither this Agreement nor any
----------------------
of the rights or obligations under this Agreement shall be assigned, in whole or
in part, by any party without the prior written consent of the other party
hereto; provided, however, that the assignment of its rights and obligations
-------- -------
under this
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Agreement by LMC to Liberty Media Group LLC in connection with the transactions
contemplated by the Contribution Agreement shall not require the consent of
AT&T. Subject to the foregoing, the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 4.4. Governing Law; Consent to Jurisdiction. 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
the principles of conflicts of laws. Each party hereto irrevocably and
unconditionally consents to submit 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 4.4 and shall not be deemed to be a general submission to the
jurisdiction of said courts or of the State of Delaware other than for such
purpose. AT&T and LMC each hereby waive any right to a trial by jury in
connection with any such action, suit or proceeding.
SECTION 4.5. Counterparts; Effectiveness. 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. This
Agreement shall become effective when each party hereto shall have received
counterparts thereof signed by the other party hereto.
SECTION 4.6. Specific Performance. Each of AT&T and LMC acknowledges
--------------------
and agrees that money damages are not an effective 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.
SECTION 4.7. 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
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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.
SECTION 4.8. Termination. This Agreement shall remain in full force
-----------
and effect until such time as no outstanding shares of AT&T Liberty Tracking
Shares are outstanding, at which time this Agreement shall terminate and upon
termination, no party shall have any liability or further obligation to the
other under this Agreement except that the provisions of Sections 1.4 and this
Section 4.8 shall survive the termination of this Agreement; provided, however,
that such termination shall not relieve any party hereto of any liability for
any breach of this Agreement.
SECTION 4.9. 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.
SECTION 4.10. Cooperation. (a) Each of AT&T and LMC covenants and
-----------
agrees with the other to use its reasonable best efforts to cause each member of
the Common Stock Group and each member of the Liberty Media Group, respectively,
to fulfill each of its respective obligations under this Agreement.
(b) Each of AT&T and LMC covenants and agrees with the other to use
its reasonable best efforts to cause each member of the Common Stock Group and
each member of the Liberty Media Group, respectively, to cooperate with the
other Group with respect to all common functions, including without limitation,
tax and financial reporting.
SECTION 4.11. Entire Agreement. Except as otherwise provided herein,
----------------
this Agreement (together with the Merger Agreement, the Intercompany Agreements
and each of the other agreements contemplated by the Merger Agreement or the
Intercompany Agreements) 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 (or the
Merger
29
Agreement, the Intercompany Agreements or each of the other agreements
contemplated by the Merger Agreement or the Intercompany Agreements) and any
writings expressly required hereby.
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
AT&T CORP.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President - Law and Secretary
LIBERTY MEDIA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
LIBERTY MEDIA GROUP LLC
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
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Each of the following Covered Entities hereby executes
this Agreement as a member of the Liberty Media Group
to become a party to this Agreement for so long as it
remains a Covered Entity under the applicable
provisions of the AT&T Charter Amendment:
TCI WIRELESS HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
TCIP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
SILVER SPUR LAND AND CATTLE CO.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
TCI INTERACTIVE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
32
