-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rf48r3U+MnGTVBrCO/+QKF26s9yIZJb7Ei3uRCf7FxHIlXh8yh1+1fmzGR5fwmPB rfhYqUtZEoyeFNza1yXFOA== 0000950123-01-505867.txt : 20010822 0000950123-01-505867.hdr.sgml : 20010822 ACCESSION NUMBER: 0000950123-01-505867 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20010821 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY MEDIA CORP /DE/ CENTRAL INDEX KEY: 0001082114 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 841288730 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-58457 FILM NUMBER: 1720022 BUSINESS ADDRESS: STREET 1: 9197 SOUTH PEORIA STREET CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 7208755400 MAIL ADDRESS: STREET 1: 9197 SOUTH PEORIA STREET CITY: ENGLEWOOD STATE: CO ZIP: 80112 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MALONE JOHN C CENTRAL INDEX KEY: 0000937797 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: LIBERTY MEDIA CORP STREET 2: 12300 LIBERTY BLVD CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 7208755400 MAIL ADDRESS: STREET 1: LIBERTY MEDIA CORP STREET 2: 12300 LIBERTY BLVD CITY: ENGLEWOOD STATE: CO ZIP: 80112 SC 13D 1 y52743sc13d.txt SCHEDULE 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D LIBERTY MEDIA CORPORATION (NAME OF ISSUER) (1) Series A Common Stock, par value $0.01 per share (2) Series B Common Stock, par value $0.01 per share (Title of Class of Securities) (1) Series A Common Stock: 530718105 (2) Series B Common Stock: 530718204 (CUSIP Numbers) Dr. John C. Malone c/o Liberty Media Corporation 12300 Liberty Boulevard Englewood, Colorado 80112 (720) 875-5400 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 10, 2001 (Date of Events which Require Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box / / Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act"), or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 10 2 CUSIP NO. 530718105 (Series A Common Stock) CUSIP NO. 530718204 (Series B Common Stock) NAMES OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) DR. JOHN C. MALONE 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S. NUMBER OF SHARES 7 SOLE VOTING POWER BENEFICIALLY OWNED BY SERIES A: 10,718,990 (1, 2) EACH REPORTING PERSON SERIES B: 198,586,444 (1, 3, 4) 8 SHARED VOTING POWER 0 9 SOLE DISPOSITIVE POWER SERIES A: 10,718,990 (1, 2) SERIES B: 103,004,112 (1, 3, 4) 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON SERIES A: 10,718,990 (1, 2) SERIES B: 198,586,444 (1, 3, 4) 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) SERIES A: LESS THAN 1% (2, 5, 6) SERIES B: 93.7% (3, 5, 6) 14 TYPE OF REPORTING PERSON IN Page 2 of 10 3 (1) Includes 50,904 shares of Series A Common Stock and 3,409,436 shares of Series B Common Stock held by Dr. Malone's wife, Mrs. Leslie Malone, as to which shares Dr. Malone has disclaimed beneficial ownership. (2) Includes 735,079 shares of Series A Common Stock held by the Liberty Media 401(k) savings plan for the benefit of Dr. Malone. Does not include shares of Series A Common Stock issuable upon conversion of shares of Series B Common Stock owned by Dr. Malone or his spouse; however, if such shares of Series A Common Stock issuable upon conversion of shares of Series B Common Stock were included, the Reporting Person would have sole voting power of 209,305,434 shares of Series A Common Stock, sole dispositive power of 113,723,102 shares of Series A Common Stock and aggregate beneficial ownership of 209,305,434 shares of Series A Common Stock, and the percent of Series A Common Stock, as a class, represented by the Reporting Person's beneficial ownership would be 8.1%, in each case subject to the relevant footnotes set forth herein. (3) Includes 95,895,582 shares owned by the Magness Group as to which Dr. Malone is entitled to exercise voting rights if the holders of such shares and Dr. Malone do not agree upon the voting of such shares, but Dr. Malone does not have the power to dispose of such shares. Such shares are not included in (9) above. (4) Shares of Series B Common Stock owned by Dr. Malone and his wife are subject to the Malone Call Agreement and the Stockholders' Agreement. See Item 6. (5) Based upon the following number of shares outstanding as of June 30, 2001: (1) 2,375,782,004 shares of the Series A Common Stock and (2) 212,045,288 shares of the Series B Common Stock, in each case assuming that the Redemption (defined herein) occurred on that date and that no outstanding stock options or warrants are exercised. (6) Each share of Series B Common Stock is convertible, at the option of the holder, into one share of Series A Common Stock. Each share of Series A Common Stock is entitled to one vote, whereas each share of Series B Common Stock is entitled to ten votes. Accordingly, Dr. Malone may be deemed to beneficially own voting equity securities representing approximately 44.2% of the voting power with respect to a general election of directors of the Issuer. See Item 5. Page 3 of 10 4 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D STATEMENT OF DR. JOHN C. MALONE PURSUANT TO SECTION 13(d) OF THE SECURITIES EXCHANGE ACT OF 1934 IN RESPECT OF LIBERTY MEDIA CORPORATION COMMISSION FILE NO. 0-20421 ITEM 1. SECURITY AND ISSUER. Dr. John C. Malone is filing this Statement on Schedule 13D (the "Statement") with respect to the following series of common stock of Liberty Media Corporation, a Delaware corporation (the "Issuer"), beneficially owned by Dr. Malone: (a) Series A Common Stock, par value $.01 per share (the "Series A Common Stock"); and (b) Series B Common Stock, par value $.01 per share (the "Series B Common Stock," and together with the Series A Common Stock, the "Common Stock"). The Issuer's executive offices are located at 12300 Liberty Boulevard, Englewood, Colorado 80112. Dr. Malone is filing this Statement to report his acquisition of beneficial ownership, on August 10, 2001, of shares of Series A Common Stock and Series B Common Stock in connection with the redemption (the "Redemption") by AT&T Corp. ("AT&T") of all of its outstanding shares of Class A Liberty Media Group common stock, par value $1.00 per share (the "Class A Liberty Media Group Common Stock"), and Class B Liberty Media Group common stock, par value $1.00 per share (the "Class B Liberty Media Group Common Stock" and together with the Class A Liberty Media Group Common Stock, the "Liberty Media Group Common Stock"). Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), this Statement also relates to the shares of Series A Common Stock issuable upon conversion of shares of Series B Common Stock. At the option of the holder, each share of Page 4 of 10 5 Series B Common Stock is convertible into one share of Series A Common Stock. The shares of Series A Common Stock are not convertible into shares of Series B Common Stock. ITEM 2. IDENTITY AND BACKGROUND. The reporting person is Dr. John C. Malone, whose business address is 12300 Liberty Boulevard, Englewood, Colorado 80112. Dr. Malone is the Chairman of the Board of the Issuer. During the last five years, Dr. Malone has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), and has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Dr. Malone is a citizen of the United States of America. ITEM 3. SOURCE AND AMOUNT OF FUNDS. Dr. Malone acquired beneficial ownership of the shares of Common Stock reported on this Statement pursuant to the Redemption. In the Redemption, each share of Class A Liberty Media Group Common Stock and Class B Liberty Media Group Common Stock beneficially owned by Dr. Malone, at the Effective Time, was redeemed in exchange for one share of Series A Common Stock and Series B Common Stock, respectively. ITEM 4. PURPOSE OF TRANSACTION. Dr. Malone is the Chairman of the Board of the Issuer. In addition, Dr. Malone owns and has the power to vote shares of Common Stock representing approximately 44.2% of the combined voting power of the Series A Common Stock and Series B Common Stock. This Statement is being filed with respect to Dr. Malone's beneficial ownership of Series A Common Stock and Series B Common Stock. Because the holders of Series B Common Stock are entitled to cast ten votes per share while holders of Series A Common Stock are entitled to cast one vote per share, Dr. Malone's beneficial ownership of Common Stock constitutes approximately 44.2% of the voting power of the Common Stock. Dr. Malone's ability to dispose of the Series B Common Stock beneficially owned by him is subject to certain limitations set forth in the Malone Call Agreement and the Stockholders' Agreement (each as defined in Item 6 below). Dr. Malone does not have any present plans or proposals which relate to or would result in: (i) any acquisition by any person of additional securities of the Issuer, or any disposition of securities of the Issuer; (ii) any extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (iii) any sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (iv) any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (v) any material change in the present capitalization or dividend policy of the Issuer; (vi) any other Page 5 of 10 6 material change in the Issuer's business or corporate structure; (vii) any change in the Issuer's charter, bylaws or other instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; (viii) any delisting from a national securities exchange or any loss of authorization for quotation in an inter-dealer quotation system of a registered national securities association of a class of securities of the Issuer; (ix) any termination of registration pursuant to Section 12(g)(4) of the Exchange Act of a class of equity securities of the Issuer; or (x) any action similar to any of those enumerated above. In determining his future course of action with respect to the securities of the Issuer, Dr. Malone will take into consideration various factors, including, but not limited to, his financial position, the Issuer's business and prospects, other developments concerning the Issuer, other business opportunities available to Dr. Malone, and general economic and stock market conditions, including, but not limited to, the market price of the Common Stock. Notwithstanding anything contained herein, Dr. Malone reserves the right, depending on other relevant factors, to acquire additional shares of Common Stock in open market or privately negotiated transactions or pursuant to the exercise of stock options or under other compensatory stock plans of the Issuer, to dispose of all or a portion of his holdings of shares of the Issuer or to change his intentions with respect to any or all of the matters referred to in this Item. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) Dr. Malone beneficially owns (without giving effect to the conversion of Series B Common Stock shares into Series A Common Stock shares) (i) 10,718,990 shares of Series A Common Stock (including 50,904 shares held by his wife as to which he disclaims beneficial ownership), which represent less than 1% of the outstanding shares of Series A Common Stock; and (ii) 198,586,444 shares of Series B Common Stock (which amount includes Dr. Malone's right to direct the voting of 95,895,582 shares owned by the Magness Group and 3,409,436 shares held by his spouse as to which he has disclaimed beneficial ownership), which represent approximately 93.7% of the outstanding shares of Series B Common Stock. The foregoing percentage interests are based on (1) 2,375,782,004 shares of the Series A Common Stock and (2) 212,045,288 shares of the Series B Common Stock, in each case outstanding as of June 30, 2001, and assuming that the Redemption occurred on that date and that no outstanding stock options or warrants are exercised. Accordingly, Dr. Malone may be deemed to beneficially own voting equity securities representing approximately 44.2% of the voting power with respect to a general election of directors of the Issuer. See Items 4 and 6. (b) Dr. Malone, and, to his knowledge, his spouse each have the sole power to vote, or to direct the voting of, their respective shares of Common Stock. Subject to the Malone Call Agreement described in Item 6, Dr. Malone and, to his knowledge, his spouse each have the sole power to dispose of, or to direct the disposition of, their respective shares, of Series B Common Stock. Dr. Malone has the power to direct the voting of the 95,895,582 shares of Series B Common Stock owned by the Magness Group pursuant to the terms of the Stockholders Agreement, but he does not have the power to dispose of such shares. (c) Neither Dr. Malone nor, to his knowledge, his spouse, has executed any transactions in respect of Series A Common Stock or Series B Common Stock within the last sixty days, except as reported herein. Page 6 of 10 7 (d) Except as described in Item 6, there is no person that has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Series A Common Stock or Series B Common Stock beneficially owned by Dr. Malone, or to his knowledge, his spouse. (e) Not Applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The Issuer, Dr. Malone and Leslie Malone, his spouse (collectively, the "Malone Group"), and the Estate of Bob Magness, the Estate of Betsy Magness, and Gary and Kim Magness (individually and in certain representative capacities) (collectively the "Magness Group") are parties to a certain Stockholders' Agreement, dated as of February 9, 1998, as amended (the "Stockholders' Agreement"), which provides, among other things, for: (a) a representative of the Malone Group and a representative of the Magness Group to consult with each other on all matters to be brought to a vote of the Issuer's stockholders; provided, however, that if a mutual agreement on how to vote cannot be reached, Dr. Malone will vote all shares of Series B Common Stock owned by the Magness Group pursuant to an irrevocable proxy; (b) the Magness Group to participate, at its option, on a proportionate basis with Dr. Malone in any acquisition of Series B Common Stock except for certain specified acquisition opportunities; (c) a tag-along right in favor of the Magness Group with respect to any sale by the Malone Group of shares of Series B Common Stock, subject to certain exceptions such as transfers to related parties; and (d) a drag-along right in favor of Dr. Malone exercisable in connection with the sale of all or substantially all of the Series B Common Stock beneficially owned by Dr. Malone. The foregoing description of the Stockholders' Agreement is qualified in its entirety by reference to the Stockholders' Agreement, which is an exhibit to this Statement and is incorporated by reference herein. The Issuer and the Malone Group are parties to a Call Agreement dated as of February 9, 1998 (the "Malone Call Agreement"), pursuant to which the Malone Group granted to the Issuer a right to acquire all of the shares of "High Vote Stock" as defined in the Malone Call Agreement owned by them upon Dr. Malone's death or a contemplated sale of such High Vote Stock to third parties, in consideration for a payment to the Malone Group of $150,000,000 for such right. When such right is triggered, the Issuer may acquire the Series B Common Stock at a price equal to the market price of the Series A Common Stock, plus a 10% premium or, in the event of a sale, the lesser of such price or the price offered by such third parties. In addition, the Malone Call Agreement provides that, in connection with a sale of shares to a third party resulting in a change in control of the Issuer, the maximum premium the Malone Group may receive for their Series B Common Stock would be the price paid for the Series A Common Stock by said third party, plus a 10% premium. The Malone Call Agreement also prohibits any member of the Malone Group from disposing of their Series B Common Stock, except for certain exempt transfers. If the Issuer exercises its call right, it may also be required to purchase shares of Series B Common Stock from the members of the Magness Group who exercise their "tag-along" rights under the Stockholders' Agreement. This description of the Malone Call Agreement is qualified in its entirety by reference to the Malone Call Agreement and the letter from Tele-Communications, Inc., the former parent corporation of the Issuer, and the Issuer to the Malone Page 7 of 10 8 Group, each of which is an exhibit to this Statement and is incorporated by reference herein. A similar agreement was entered into with the Magness Group. The Reporting Person holds options to purchase 11,198,714 shares of Series A Common Stock or Series B Common Stock. The options vest 30% on February 28, 2002 and 17.5% annually on February 28, 2003, February 28, 2004, February 28, 2005 and February 28, 2006, and expire on February 28, 2011. If the Reporting Person exercises his options for Series A Common Stock, the exercise price is $14.70 per share. If the Reporting Person exercises his options for Series B Common Stock, the exercise price is $15.35 per share. This description of such options is qualified in its entirety by reference to the form of option agreement between the Issuer and the Reporting Person that is an exhibit to this Statement and is incorporated by reference herein. The information set forth in Items 3, 4 and 5 is hereby incorporated by reference herein. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 7(a) Stockholders' Agreement dated as of February 9, 1998, among Liberty Media Corporation (as assignee of Tele-Communications, Inc.), the Malone Group, and the Magness Group (incorporated by reference to Exhibit 7(m) to Dr. Malone's Amendment No. 8 to Schedule 13D filed in respect of Tele-Communications, Inc.). 7(b) Letter Agreement, dated as of March 5, 1999, amending certain terms of the Stockholders' Agreement dated as of February 9, 1998 (incorporated by reference to Exhibit 7(d) to Dr. Malone's Schedule 13D filed in respect of AT&T). 7(c) Call Agreement dated as of February 9, 1998, between Liberty Media Corporation (as assignee of Tele-Communications, Inc.) and the Malone Group (incorporated by reference to Exhibit 7(n) to Dr. Malone's Amendment No. 8 to Schedule 13D filed in respect of Tele-Communications, Inc.). 7(d) Letter, dated as of March 5, 1999, from Tele-Communications, Inc. and Liberty Media Corporation addressed to Dr. Malone and Leslie Malone (incorporated by reference to Exhibit 7(f) to Dr. Malone's Schedule 13D filed in respect of AT&T). 7(e) Form of Option Agreement between Liberty Media Corporation and Dr. Malone. Page 8 of 10 9 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. Dated: August 20, 2001 /s/ John C. Malone ---------------------------------------- Dr. John C. Malone Page 9 of 10 10 EXHIBIT INDEX
Exhibit No. Exhibit - ----------- ------- 7(a) Stockholders' Agreement dated as of February 9, 1998, among Liberty Media Corporation (as assignee of Tele-Communications, Inc.), the Malone Group, and the Magness Group (incorporated by reference to Exhibit 7(m) to Dr. Malone's Amendment No. 8 to Schedule 13D filed in respect of Tele-Communications, Inc.). 7(b) Letter Agreement, dated as of March 5, 1999, amending certain terms of the Stockholders' Agreement dated as of February 9, 1998 (incorporated by reference to Exhibit 7(d) to Dr. Malone's Schedule 13D filed in respect of AT&T). 7(c) Call Agreement dated as of February 9, 1998, between Liberty Media Corporation (as assignee of Tele-Communications, Inc.) and the Malone Group (incorporated by reference to Exhibit 7(n) to Dr. Malone's Amendment No. 8 to Schedule 13D filed in respect of Tele-Communications, Inc.). 7(d) Letter, dated as of March 5, 1999, from Tele-Communications, Inc. and Liberty Media Corporation addressed to Dr. Malone and Leslie Malone (incorporated by reference to Exhibit 7(f) to Dr. Malone's Schedule 13D filed in respect of AT&T). 7(e) Form of Option Agreement between Liberty Media Corporation and Dr. Malone.
Page 10 of 10 EX-99.7.E 3 y52743ex99-7_e.txt FORM OF OPTION AGREEMENT 1 LIBERTY MEDIA CORPORATION 2001 INCENTIVE PLAN (AS AMENDED AND RESTATED EFFECTIVE AUGUST 10, 2001) NON-QUALIFIED STOCK OPTION AGREEMENT THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement") is made as of _______________, 2001 (the "Effective Date"), by and between LIBERTY MEDIA CORPORATION, a Delaware corporation (the "Company"), and the individual whose name, address and social security number appear on the signature page hereto (the "Grantee"). Pursuant to the Amended and Restated AT&T Corp. Liberty Media Group 2000 Incentive Plan (the "Original Plan") adopted by the Company as of December 6, 2000, the Grantee was provided an award of Free-Standing SARs (as defined in the Original Plan), which award is governed by the terms of a Stock Appreciation Rights Agreement (With Contingent Options) (the "Original Agreement") dated as of February 28, 2001 between the Company and the Grantee. The Original Agreement provided that, upon the occurrence of a Liberty Spin-Off (as defined in the Original Agreement), (i) the Company would assume the Original Plan with appropriate amendments and modifications to reflect the Liberty Spin-Off, and (ii) the Company and the Grantee would execute and deliver this Agreement pursuant such assumed plan. The Company has adopted and approved the Liberty Media Corporation 2000 Incentive Plan (As Amended and Restated August 10, 2001 (the "Plan"), a copy of which is attached to this Agreement as Exhibit A and by this reference made a part hereof, for the benefit of eligible employees of the Company and its Subsidiaries. Capitalized terms used and not otherwise defined herein will have the meaning given thereto in the Plan. The Company and the Grantee therefore agree as follows: 1. DEFINITIONS. The following terms, when used in this Agreement, have the following meanings: "Base Price" means, except as provided in Section 12 below, $15.35. "Business Day" means any day other than Saturday, Sunday or a day on which banking institutions in Denver, Colorado, are required or authorized to be closed. "Close of Business" means, on any day, 5:00 p.m., Denver, Colorado time. "Committee" has the meaning specified in the recitals to this Agreement. 2 "Company" has the meaning specified in the recitals to this Agreement. "Effective Date" has the meaning specified in the preamble hereto. "Grantee" has the meaning specified in the preamble to this Agreement. "LMCA" has the meaning specified in Section 12 of this Agreement. "LMCA Option" has the meaning specified in Section 12 of this Agreement. "LMCB" has the meaning specified in Section 2 of this Agreement. "LMCB Options" has the meaning specified in Section 2 of this Agreement. "Option Shares" has the meaning specified in Section 4(a) of this Agreement. "Required Withholding Amount" has the meaning specified in Section 5 of this Agreement. "Term" has the meaning specified in Section 2 of this Agreement. 2. GRANT OF OPTIONS. Subject to the terms and conditions herein, pursuant to the Plan, the Company grants to the Grantee options to purchase from the Company, exercisable during the period commencing on the Effective Date and expiring at Close of Business on February 28, 2011 (the "Term"), subject to earlier termination as provided in Section 7 below, at the Base Price, the number of shares of Liberty Media Corporation Class B Common Stock ("LMCB") set forth on the signature page hereto. The Options granted hereunder are "Nonqualified Stock Options" and are hereinafter referred to as the "LMCB Options." The Base Price and LMCB Options are subject to adjustment pursuant to Section 10 below. No fractional shares of LMCB will be issuable upon exercise of an LMCB Option, and the Grantor will receive, in lieu of any fractional share of LMCB that the Grantee otherwise would receive upon such exercise, cash equal to the fraction representing such fractional share multiplied by the Fair Market Value of one share of LMCB as of the date on which such exercise is considered to occur pursuant to Section 4 below. 3. CONDITIONS OF EXERCISE. Unless otherwise determined by the Committee in its sole discretion, the LMCB Options will be exercisable only in accordance with the conditions stated in this Section 3. (a) Except as otherwise provided in Section 10.1(b) of the Plan or in the last sentence of this Section 3(a), the LMCB Options will not be exercisable until February 28, 2002 and may be exercised thereafter only to the extent they have become exercisable in accordance with the following schedule: 2 3
Percentage of LMCB Date Options Becoming Exercisable ---- ---------------------------- February 28, 2002 30.0% February 28, 2003 17.5% February 28, 2004 17.5% February 28, 2005 17.5% February 28, 2006 17.5% ---- Total 100.0%
Notwithstanding the foregoing, all LMCB Options will become exercisable on the date of the Grantee's termination of employment if (i) the Grantee's employment with the Company and its Subsidiaries terminates by reason of Disability or (ii) the Grantee dies while employed by the Company or a Subsidiary. (b) To the extent the LMCB Options become exercisable, such LMCB Options may be exercised in whole or in part (at any time or from time to time, except as otherwise provided herein) until expiration of the Term or earlier termination thereof. (c) The Grantee acknowledges and agrees that the Committee, in its discretion and as contemplated by Section 3.3 of the Plan, may adopt rules and regulations from time to time after the date hereof with respect to the exercise of the LMCB Options and that the exercise by the Grantee of LMCB Options will be subject to the further condition that such exercise is made in accordance with all such rules and regulations as the Committee may determine are applicable thereto. 4. MANNER OF EXERCISE. LMCB Options will be considered exercised (as to the number of LMCB Options specified in the notice referred to in Section 4(a) below) on the latest of (i) the date of exercise designated in the written notice referred to in Section 4(a) below, (ii) if the date so designated is not a Business Day, the first Business Day following such date or (iii) the earliest Business Day by which the Company has received all of the following: (a) Written notice, in such form as the Committee may require, containing such representations and warranties as the Committee may require and designating, among other things, the date of exercise and the number of shares of LMCB ("Option Shares") to be purchased; 3 4 (b) Payment of the Base Price for each Option Share to be purchased in any (or a combination) of the following forms: (A) cash, (B) check or (C) the delivery, together with a properly executed exercise notice, of irrevocable instructions to a broker to deliver promptly to LMC the amount of sale or loan proceeds required to pay the purchase price (and, if applicable the Required Withholding Amount, as described in Section 6 below); and (c) Any other documentation that the Committee may reasonably require. 5. MANDATORY WITHHOLDING FOR TAXES. The Grantee acknowledges and agrees that the Company will deduct from the shares of LMCB otherwise payable or deliverable upon exercise of any LMCB Options that number of shares of LMCB (valued at their Fair Market Value) that is equal to the amount of all federal, state and local taxes required to be withheld by the Company upon such exercise, as determined by the Committee (the "Required Withholding Amount"). If the Grantee elects to make payment of the Base Price by delivery of irrevocable instructions to a broker to deliver promptly to LMC the amount of sale or loan proceeds required to pay the purchase price, such instructions may also include instructions to deliver the Required Withholding Amount to LMC. In such case, LMC will notify the broker promptly of the Liberty Committee's determination of the Required Withholding Amount. 6. PAYMENT OR DELIVERY BY THE COMPANY. As soon as practicable after receipt of all items referred to in Section 4, and subject to the withholding referred to in Section 5, the Company will deliver or cause to be delivered to the Grantee certificates issued in the Grantee's name for the number of shares of LMCB purchased by exercise of LMCB Options, and (ii) any cash payment to which the Grantee is entitled in lieu of a fractional share of LMCB, as provided in Section 2 above. Any delivery of shares of LMCB will be deemed effected for all purposes when certificates representing such shares have been delivered personally to the Grantee or, if delivery is by mail, when the stock transfer agent of the Company has deposited the certificates in the United States mail, addressed to the Grantee, and any cash payment will be deemed effected when a check from the Company, payable to the Grantee and in the amount equal to the amount of the cash payment, has been delivered personally to the Grantee or deposited in the United States mail, addressed to the Grantee. 7. EARLY TERMINATION OF LMCB OPTIONS. Unless otherwise determined by the Committee in its sole discretion, the LMCB Options will terminate, prior to the expiration of the Term, at the time specified below: (a) Subject to Section 7(b), if the Grantee's employment with the Company and its Subsidiaries terminates other than (i) by the Company or a Subsidiary for cause or (ii) by reason of death or Disability, then the LMCB Options will terminate at the Close of Business on the first Business Day following the expiration of the 90-day period which began on the date of termination of the Grantee's employment. For 4 5 purposes of this Section 7, "cause" will have the meaning specified in Section 10.2(b) of the Plan. (b) If the Grantee dies while employed by the Company or a Subsidiary, or prior to the expiration of a period of time following termination of the Grantee's employment during which the LMCB Options remain exercisable as provided in Section 7(a) or Section 7(c), as applicable, the LMCB Options will terminate at the Close of Business on the first Business Day following the expiration of the one-year period which began on the date of the Grantee's death. (c) Subject to Section 7(b), if the Grantee's employment with the Company and its Subsidiaries terminates by reason of Disability, then the LMCB Options will terminate at the Close of Business on the first Business Day following the expiration of the one-year period which began on the date of termination of the Grantee's employment. (d) If the Grantee's employment with the Company and its Subsidiaries is terminated by the Company for "cause" (as defined in Section 10.2(b) of the Plan), then the LMCB Options will terminate immediately upon such termination of the Grantee's employment. In any event in which LMCB Options remain exercisable for a period of time following the date of termination of the Grantee's employment as provided above, the LMCB Options may be exercised during such period of time only to the extent the same were exercisable as provided in Section 3 above on such date of termination of the Grantee's employment. A change of employment is not a termination of employment within the meaning of this Section 7 provided that, after giving effect to such change, the Grantee continues to be an employee of the Company or any Subsidiary of the Company. Notwithstanding any period of time referenced in this Section 7 or any other provision of this Section 7 that may be construed to the contrary, the LMCB Options will in any event terminate upon the expiration of the Term. 8. NONTRANSFERABILITY OF LMCB OPTIONS. During the Grantee's lifetime, LMCB Options are not transferable (voluntarily or involuntarily) other than pursuant to a Domestic Relations Order and, except as otherwise required pursuant to a Domestic Relations Order, are exercisable only by the Grantee or the Grantee's court appointed legal representative. The Grantee may designate a beneficiary or beneficiaries to whom the LMCB Options will pass upon the Grantee's death and may change such designation from time to time by filing a written designation of beneficiary or beneficiaries with the Committee on the form annexed hereto as Exhibit B or such other form as may be prescribed by the Committee, provided that no such designation will be effective unless so filed prior to the death of the Grantee. If no such designation is made or if the 5 6 designated beneficiary does not survive the Grantee's death, the LMCB Options will pass by will or the laws of descent and distribution. Following the Grantee's death, the LMCB Options, if otherwise exercisable, may be exercised by the person to whom such option or right passes according to the foregoing and such person will be deemed the Grantee for purposes of any applicable provisions of this Agreement. 9. NO STOCKHOLDER RIGHTS. Prior to the exercise of LMCB Options in accordance with the terms and conditions set forth in this Agreement, the Grantee will not be deemed for any purpose to be, or to have any of the rights of, a stockholder of the Company with respect to any shares of LMCB, nor will the existence of this Agreement affect in any way the right or power of the Company or any stockholder of the Company to accomplish any corporate act, including, without limitation, the acts referred to in Section 10.16 of the Plan. 10. ADJUSTMENTS. If the outstanding shares of LMCB are subdivided into a greater number of shares (by stock dividend, stock split, reclassification or otherwise) or are combined into a smaller number of shares (by reverse stock split, reclassification or otherwise), or if the Committee determines that any stock dividend, extraordinary cash dividend, reclassification, recapitalization, reorganization, split-up-spin-off, combination, exchange of shares, warrants or rights offering to purchase any shares of LMCB, or other similar corporate event (including mergers or consolidations other than those which constitute Approved Transactions, which shall be governed by Section 10.1(b) of the Plan) affects shares of LMCB such that an adjustment is required to preserve the benefits or potential benefits intended to be made available under this Agreement, then the LMCB Options will be subject to adjustment (including, without limitation, as to the number of LMCB Options and the Base Price per share of such LMCB Options) in the sole discretion of the Committee and in such manner as the Committee may deem equitable and appropriate in connection with the occurrence of any of the events described in this Section 10 following the Effective Date. 11. RESTRICTIONS IMPOSED BY LAW. Without limiting the generality of Section 10.8 of the Plan, the Grantee will not exercise the LMCB Options, and the Company will not be obligated to make any cash payment or issue or cause to be issued any shares of LMCB, if counsel to the Company determines that such exercise, payment or issuance would violate any applicable law or any rule or regulation of any governmental authority or any rule or regulation of, or agreement of the Company with, any securities exchange or association upon which shares of LMCB are listed or quoted. The Company will in no event be obligated to take any affirmative action in order to cause the exercise of the LMCB Options or the resulting payment of cash or issuance of shares of LMCB to comply with any such law, rule, regulation or agreement. 12. ELECTION TO CONVERT LMCB OPTIONS TO LMCA OPTIONS. At any time during the Term, the Grantee may elect to convert all or any portion of the Grantee's unexercised LMCB Options to Options with respect to shares of Liberty Media Corporation Class A Common Stock ("LMCA") (each LMCB Option so converted, an "LMCA Option"). As to any LMCB Options so converted, (i) the provisions of this Agreement will continue to apply, with the terms "LMCA 6 7 Option" and "LMCA," respectively, substituted for the terms "LMCB Option" and "LMCB" in each place that such terms appear and (ii) the Base Price for any such LMCA Option will be $14.70 (subject to any adjustment under Section 10). 13. NOTICE. Unless the Company notifies the Grantee in writing of a different procedure, any notice or other communication to the Company with respect to this Agreement will be in writing and will be delivered personally or sent by United States first class mail, postage prepaid and addressed as follows: Liberty Media Corporation 12300 Liberty Boulevard Englewood, Colorado 80112 Attn: Charles Y. Tanabe, Esq. Any notice or other communication to the Grantee with respect to this Agreement will be in writing and will be delivered personally, or will be sent by United States first class mail, postage prepaid, to the Grantee's address as listed in the records of the Company on the Effective Date, unless the Company has received written notification from the Grantee of a change of address. 14. AMENDMENT. Notwithstanding any other provision hereof, this Agreement may be supplemented or amended from time to time as approved by the Committee as contemplated in Section 10.7(b) of the Plan. Without limiting the generality of the foregoing, without the consent of the Grantee, (a) this Agreement may be amended or supplemented from time to time as approved by the Committee (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 add to the covenants and agreements of the Company for the benefit of the Grantee or surrender any right or power reserved to or conferred upon the Company in this Agreement, subject to any required approval of the Company's or the Company's stockholders and, provided, in each case, that such changes or corrections will not adversely affect the rights of the Grantee with respect to the Award evidenced hereby, or (iii) 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 any applicable federal or state securities laws; and (b) subject to any required action by the Board or the stockholders of the Company, the LMCB Options granted under this Agreement may be canceled by the Company and a new Award made in substitution therefor, provided that the Award so substituted will satisfy all of the requirements of the Plan as of the date such new 7 8 Award is made and no such action will adversely affect any LMCB Options to the extent then exercisable. 15. GRANTEE EMPLOYMENT. Nothing contained in this Agreement, and no action of the Company or the Committee with respect hereto, will confer or be construed to confer on the Grantee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any employing Subsidiary to terminate the Grantee's employment at any time, with or without cause, subject to the provisions of any employment agreement between the Grantee and the Company or any Subsidiary. 16. NONALIENATION OF BENEFITS. Except as provided in Section 8 of this Agreement, (i) no right or benefit under this Agreement will be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same will be void, and (ii) no right or benefit hereunder will in any manner be liable for or subject to the debts, contracts, liabilities or torts of the Grantee or other person entitled to such benefits. 17. GOVERNING LAW. This Agreement will be governed by, and construed in accordance with, the internal laws of the State of Colorado. Each party irrevocably submits to the general jurisdiction of the state and federal courts located in the State of Colorado in any action to interpret or enforce this Agreement and irrevocably waives any objection to jurisdiction that such party may have based on inconvenience of forum. 18. CONSTRUCTION. References in this Agreement to "this Agreement" and the words "herein," "hereof," "hereunder" and similar terms include all Exhibits and Schedules appended hereto. The word "include" and all variations thereof are used in an illustrative sense and not in a limiting sense. All decisions of the Committee upon questions regarding this Agreement will be conclusive. Unless otherwise expressly stated herein, in the event of any inconsistency between the terms of the Plan and this Agreement, the terms of the Plan will control. The headings of the sections of this Agreement have been included for convenience of reference only, are not to be considered a part hereof and will in no way modify or restrict any of the terms or provisions hereof. 19. DUPLICATE ORIGINALS. The Company and the Grantee may sign any number of copies of this Agreement. Each signed copy will be an original, but all of them together represent the same agreement. 20. RULES BY COMMITTEE. The rights of the Grantee and the obligations of the Company hereunder will be subject to such reasonable rules and regulations as the Committee may adopt from time to time. 21. ENTIRE AGREEMENT. This Agreement is in satisfaction of and in lieu of all prior discussions and agreements, oral or written, between the Company and the Grantee regarding the subject matter hereof. The Grantee and the Company hereby declare and represent that no promise 8 9 or agreement not herein expressed has been made and that this Agreement contains the entire agreement between the parties hereto with respect to the Award and replaces and makes null and void any prior agreements between the Grantee and the Company regarding the Award. This Agreement will be binding upon and inure to the benefit of the parties and their respective heirs, successors and assigns. 22. GRANTEE ACCEPTANCE. The Grantee will signify acceptance of the terms and conditions of this Agreement by signing in the space provided at the end hereof and returning a signed copy to the Company. [Signature Page Follows] 9 10 SIGNATURE PAGE TO NON-QUALIFIED STOCK OPTION AGREEMENT DATED AUGUST 10, 2001 BETWEEN LIBERTY MEDIA CORPORATION AND GRANTEE LIBERTY MEDIA CORPORATION By: ---------------------------------- Name: ---------------------------------- Title: --------------------------------- ACCEPTED: ---------------------------------------- [John C. Malone, Address and Social Security Number] Number of shares of LMCB as to which Options are granted: ------------ 10 11 EXHIBIT A TO NON-QUALIFIED STOCK OPTION AGREEMENT [COPY OF LIBERTY MEDIA CORPORATION 2000 INCENTIVE PLAN] 11 12 EXHIBIT B TO NON-QUALIFIED STOCK OPTION AGREEMENT DESIGNATION OF BENEFICIARY I, __________________________________ (the "Grantee"), hereby declare that upon my death ______________________________________ (the "Beneficiary") of Name _____________________________________________________________________________, Street Address City State Zip Code who is my _____________________________________________, will be entitled to the Relationship to Grantee LMCB Options and all other rights accorded the 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 the Grantee's death. If any such condition is not satisfied, such rights will devolve according to the Grantee's will or the laws of descent and distribution. It is further understood that all prior designations of beneficiary under the Agreement are hereby revoked and that this Designation of Beneficiary may only be revoked in writing, signed by the Grantee, and filed with the Company prior to the Grantee's death. _______________________________ ________________________________________ Date Grantee 12 -----END PRIVACY-ENHANCED MESSAGE-----