-----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, JAKQ7R3rJWtcpbQLCj/ToCOUaZnkGZ5dIsGNfPg/Od3hYACcQEU6bLFk/vb8lNzI PrFtvsif8fL7uljwMz+0pg== 0000950130-99-001771.txt : 19990331 0000950130-99-001771.hdr.sgml : 19990331 ACCESSION NUMBER: 0000950130-99-001771 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19990330 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AT&T CORP CENTRAL INDEX KEY: 0000005907 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 134924710 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-32542 FILM NUMBER: 99576895 BUSINESS ADDRESS: STREET 1: 32 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10013 BUSINESS PHONE: 2123875400 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN TELEPHONE & TELEGRAPH CO DATE OF NAME CHANGE: 19920703 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: 5619 DTC PARKWAY STREET 2: C/O TELE COMMUNICATIONS INC CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3032675500 MAIL ADDRESS: STREET 1: C/O TELE COMMUNICATIONS INC STREET 2: 5619 DTC PARKWAY CITY: ENGLEWOOD STATE: CO ZIP: 80111 SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------ SCHEDULE 13D AT&T CORP. ---------------------- (Name of Issuer) (1) Class A Liberty Media Group Common Stock, par value $1.00 per share. (2) Class B Liberty Media Group Common Stock, par value $1.00 per share. - -------------------------------------------------------------------------------- (Title of Classes of Securities) (1) Class A Liberty Media Group Common Stock: 001957208 (2) Class B Liberty Media Group Common Stock: 001957307 - -------------------------------------------------------------------------------- (CUSIP Numbers) Dr. John C. Malone c/o Liberty Media Corporation 8101 East Prentice Avenue, Englewood, CO 80111 (303-721-5400) -------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 9, 1999 ------------------- (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which 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 information required on 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 ("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). Exhibit Index is on Page 15 Cusip No. for Class A Liberty Media Group Common Stock: 001957208 Cusip No. for Class B Liberty Media Group Common Stock: 001957307 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons 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 if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization U.S. - -------------------------------------------------------------------------------- Number of Shares Beneficially Owned by Each Reporting Person With (7) Sole Voting Power 1,790,807 Shares of Class A Liberty Group Stock /1, 2/ 50,504,008 Shares of Class B Liberty Group Stock /1, 3, 4/ (8) Shared Voting Power 0 Shares (9) Sole Dispositive Power 1,790,807 Shares of Class A Liberty Group Stock /1, 2/ 25,751,028 Shares of Class B Liberty Group Stock /1, 3, 4/ 2 (10) Shared Dispositive Power 0 Shares - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 1,790,807 Shares of Class A Liberty Group Stock /1, 2/ 50,504,008 Shares of Class B Liberty Group Stock /1, 3, 4/ - -------------------------------------------------------------------------------- (12) Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [_] - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) /4, 5, 6/ Class A Liberty Group Stock less than 1% Class B Liberty Group Stock 89.3% - -------------------------------------------------------------------------------- (14) Type of Reporting Person IN ____________________ 1. Includes, as applicable, 12,726 shares of Class A Liberty Group Stock and 852,360 shares of Class B Liberty Group Stock beneficially owned by Dr. Malone's spouse, as to which Dr. Malone disclaims beneficial ownership. 2. Includes 1,778,000 shares of Class A Liberty Group Stock which Dr. Malone would acquire upon the exercise of stock options granted in tandem with stock appreciation rights, of which options for 1,410,800 shares are currently exercisable. Does not include shares of Class A Liberty Group Stock issuable upon conversion of shares of Class B Liberty Group Stock owned by Dr. Malone or his spouse. 3. Includes 1,456,000 shares of Class B Liberty Group Stock which Dr. Malone would acquire upon the exercise of stock options granted in tandem with stock appreciation rights, of which options for 291,200 shares are currently exercisable. Shares of Class B Liberty Group Stock owned by Dr. Malone and his spouse are subject to the Call Agreement and the Stockholders' Agreement. See Item 6. 4. Includes (x) 23,895,582 shares of Class B Liberty Group Stock owned by the Magness Group (with respect 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) and (y) 857,397 shares of Class B Liberty Group Stock held by the Hindery Group, which shares Dr. Malone has the power to vote. Dr. Malone has no right to dispose of any of the shares held by the 3 Magness Group or the Hindery Group (which shares are excluded in (9) above). See Item 6. 5. Each share of Common Stock and Class B Liberty Group Stock is entitled to 1 vote per share and each share of Class A Liberty Group Stock is entitled to .1 vote per share. Accordingly, when these classes of stock are aggregated, Dr. Malone may be deemed to beneficially own voting equity securities representing approximately 2.1% of the voting power with respect to a general election of directors of the Issuer. Certain matters concerning the Liberty Media Group require the approval of the holders of Class A Liberty Group Stock and Class B Liberty Group Stock, voting together as a separate class, in which case, Dr. Malone may be deemed to beneficially own shares of Liberty Group Stock representing approximately 45.8% of the voting power of the Liberty Group Stock. 6. Based upon the following number of shares estimated to be outstanding following the Merger: Common Stock: 2,189,239,921 shares; Class A Liberty Group Stock: 539,993,860 shares; Class B Liberty Group Stock: 55,072,794 shares. See Item 5. 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 AT&T Corp. ------------------------- (Commission File No. 1-1105) ITEM 1. Security and Issuer Dr. John C. Malone is filing this Statement on Schedule 13D (the "Statement") with respect to the following classes of stock of AT&T Corp., a New York corporation (the "Issuer" or "AT&T"), beneficially owned by Dr. Malone: (1) Class A Liberty Media Group Common Stock, par value $1.00 per share (the "Class A Liberty Group Stock"); and (2) Class B Liberty Media Group Common Stock, par value $1.00 per share (the "Class B Liberty Group Stock", and together with the Class A Liberty Group Stock, the "Liberty Group Stock"). The Issuer's executive offices are located 32 Avenue of the Americas, New York, New York 10013. Dr. Malone is filing this Statement to report his acquisition of beneficial ownership, on March 9, 1999, of shares of Class A Liberty Stock and Class B Liberty Stock in connection with the merger (the "Merger") of a wholly owned subsidiary of the Issuer with and into Tele-Communications, Inc. ("TCI"). In the Merger, Dr. Malone's shares of (i) Tele-Communications, Inc. Series A TCI Group Common Stock, par value $1.00 per share ("Series A TCI Group Stock"), and Tele-Communications, Inc. Series B TCI Group Common Stock, par value $1.00 per share ("Series B TCI Group Stock"), were converted into shares of the Issuer's Common Stock, par value $1.00 per shares (the "Common Stock"), (ii) Tele- Communications, Inc. Series A Liberty Media Group Common Stock, par value $1.00 per share ("TCI Series A Liberty Group Stock"), and Tele-Communications, Inc. Series A TCI Ventures Group Common Stock, par value $1.00 per share ("TCI Series A Ventures Group Stock"), were converted into shares of Class A Liberty Group Stock, 5 and (iii) Tele-Communications, Inc. Series B Liberty Media Group Common Stock, par value $1.00 per share ("TCI Series B Liberty Group Stock"), and Tele- Communications, Inc. Series B TCI Ventures Group Common Stock, par value $1.00 per share ("TCI Series B Ventures Group Stock"), were converted into shares of Class B Liberty Group Stock. Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), this Statement relates to the shares of Class A Liberty Group Stock issuable upon conversion of shares of Class B Liberty Group Stock. At the option of the holder, each share of Class B Liberty Group Stock is convertible into one share of Class A Liberty Group Stock. The shares of Class A Liberty Group Stock are not convertible into shares of Class B Liberty Group Stock. ITEM 2. Identity and Background The reporting person is Dr. John C. Malone, whose business address is 8101 East Prentice Avenue, Englewood, Colorado 80111. Dr. Malone is Chairman of the Board of Liberty Media Corporation ("Liberty") and a Director 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 or Other Consideration Dr. Malone acquired beneficial ownership of the shares of Liberty Group Stock reported on this Statement pursuant to the Agreement and Plan of Restructuring and Merger, dated as of June 23, 1998 (the "Merger Agreement"), among TCI, the Issuer and Italy Merger Corp., an indirect wholly owned subsidiary of the Issuer. Dr. Malone also acquired beneficial ownership of shares of the Common Stock as a result of the Merger. In the Merger, TCI became a wholly owned subsidiary of AT&T and (i) each share of Series A TCI Group Stock was converted into .7757 of a share of Common Stock, (ii) each share of Series B TCI Group Stock was converted into .8533 of a share of Common Stock, (iii) each share of TCI Series A Liberty Group Stock was converted into one share of Class A Liberty Group Stock, (iv) each share of TCI Series B Liberty Group Stock was converted into one share of Class B Liberty Group Stock, (v) each share of TCI Series A Ventures Group Stock was converted into .52 of share of Class A Liberty Group Stock, and (vi) each share of TCI Series B Ventures Group Stock was converted into .52 of share of Class B Liberty Group Stock. Dr. Malone had previously acquired beneficial ownership of equity securities of TCI in transactions reported on Dr. Malone's Report on Schedule 13D, as amended, with respect to TCI. 6 ITEM 4. Purpose of Transaction Dr. Malone is the Chairman of the Board of Liberty and each of the other Covered Entities (as defined in AT&T's Certificate of Incorporation, as amended (the "AT&T Charter")), and is also a Director of the Issuer. In addition, Dr. Malone owns and has the power to vote shares of Liberty Group Stock representing approximately 45.8% of the combined voting power of the Class A Liberty Group Stock and Class B Liberty Group Stock in circumstances where the Class A Liberty Group Stock and Class B Liberty Group Stock vote together as a separate class. Pursuant to the Merger Agreement, the Issuer appointed Dr. Malone to its Board of Directors on March 17, 1999, and is required during the period ending March 9, 2002 to nominate Dr. Malone for re-election to the Issuer's Board at each subsequent AT&T stockholder meeting at which directors are to be elected. This Statement is being filed with respect to Dr. Malone's beneficial ownership of Class A Liberty Group Stock and Class B Liberty Group Stock, and does not relate to actions taken by Dr. Malone in his official capacity with respect to Liberty or the Issuer. Following the Merger, AT&T's "Liberty Media Group" consists of the assets and businesses of TCI's Liberty Media Group and its TCI Ventures Group prior to the Merger, except for certain assets which were transferred to the TCI Group in connection with the Merger, and its "Common Stock Group" consists of all of the other assets and businesses of AT&T. The Liberty Group Stock is intended to reflect the results of the Liberty Media Group. Substantially all of the business of the Liberty Media Group is conducted through Liberty and the Covered Entities. The holders of Common Stock, Class A Liberty Group Stock and Class B Liberty Group Stock generally vote together as a single class with respect to all matters voted on by the stockholders of the Issuer (including the election of directors of the Issuer); except that the holders of the Class A Liberty Group Stock and Class B Liberty Group Stock are entitled to vote together as a separate class with respect to certain matters concerning the Liberty Media Group. The holders of the Common Stock and the Class B Liberty Group Stock are entitled to 1 vote per share and the holders of the Class A Liberty Group Stock are entitled to .1 vote per share. The following circumstances will require the separate class approval of the holders of Liberty Group Stock: (i) any amendment to the AT&T Charter that would change the total number of authorized shares or the par value of Liberty Group Stock or that would adversely change the rights of the holders of Liberty Group Stock; (ii) a Covered Disposition (as defined in the AT&T Charter), which generally includes a sale or transfer by AT&T of its equity interest in Liberty, any Covered Entity, or Liberty Media Group LLC or a grant of a pledge or other security interest in the equity interest of AT&T in Liberty, any Covered Entity, or Liberty Media Group LLC; or 7 (iii) any merger or similar transaction in which the Liberty Group Stock is converted, reclassified or changed into or otherwise exchanged for any consideration unless specified requirements are met that are generally intended to ensure that the rights of the holders are not materially altered and the composition of the holders is not changed. Because the holders of Class B Liberty Group Stock are entitled to cast 1 vote per share while holders of Class A Liberty Group Stock are entitled to cast .1 vote per share, Dr. Malone's beneficial ownership of Liberty Group Stock constitutes approximately 45.8% of the voting power of the Liberty Group Stock when voting as a separate class. Dr. Malone's ability to dispose of the Class B Liberty Group 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). TCI's rights under each such agreement were assigned to Liberty in connection with the Merger. All of the equity interests in the Liberty Media Group are currently owned by AT&T; however, a majority of the members of Liberty's Board of Directors (the "Liberty Board") are individuals elected by TCI prior to the Merger. Liberty has three classes of directors: one class elected for a term of one year; one class elected for a term of seven years; and one class elected for a term of 10 years. Each class of directors will have an equal number of members. Such directors may not be removed other than for "cause," and, in the event of the death or resignation of a director, the remaining directors of such class will choose a successor to fill the remaining term of such deceased or resigning director. Upon the expiration of the term of a class of Liberty directors, the stockholders of Liberty will be entitled to elect directors to fill such vacancy. Currently, all of the outstanding capital stock of Liberty is owned by Liberty Ventures Group LLC, which is an indirect wholly owned subsidiary of AT&T. As a result of the structure of the Liberty Board, the second and third classes of directors will constitute a majority of the Liberty Board until at least 2006. Under Delaware law, the business of a corporation is managed by its board of directors. As a result, although AT&T owns all of the equity interests in the Liberty Media Group and, initially, all of the common stock of Liberty, the incumbent directors of Liberty (and their successors) will be able to control most aspects of the day-to-day business of Liberty and its subsidiaries following the Merger. Dr. Malone is a member of the class of directors of the Liberty Board whose term will expire in 2009. In the event the incumbent directors (or their designated successors) cease to constitute a majority of the Liberty Board, or Liberty Media Management LLC determines that, in its reasonable judgment, the incumbent Liberty directors (or successors) are likely to cease to constitute a majority of the Liberty Board, such event will constitute a "Triggering Event." Liberty Media Management LLC is a limited liability company, the equity interests of which are currently owned by Dr. Malone. Upon the occurrence of a Triggering Event, subject to the terms and conditions of a contribution agreement entered into in connection with the Merger among Liberty, Liberty Media Group LLC, Liberty Media Management LLC and Liberty Ventures Group LLC, all of the assets of Liberty and 8 the Covered Entities will be contributed to Liberty Media Group LLC, substantially all of the equity interests of which are owned by AT&T, unless the Triggering Event is waived by Liberty Media Management LLC. However, Liberty Media Management LLC will own the remaining equity interests in Liberty Media Group LLC and will be the sole manager of Liberty Media Group LLC. The foregoing descriptions of the Merger, the Merger Agreement, and the relationship between the Common Stock Group and the Liberty Media Group are qualified in their entirety by reference to the Merger Agreement and the AT&T/TCI Proxy Statement/Prospectus, dated January 8, 1999, regarding the Merger, each of which is an exhibit to this Statement and is hereby incorporated by reference herein. Other than as described herein, Dr. Malone does not otherwise 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 material change in the Issuer's business or corporate structure; (vii) any change in the Issuer's charter, by- laws, 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 Common Stock Group's business and prospects, the Liberty Media Group's business and prospects, other developments concerning the Common Stock Group and the Liberty Media Group, 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, Class A Liberty Group Stock and the Class B Liberty Group Stock. Notwithstanding anything contained herein, Dr. Malone reserves the right, depending on other relevant factors, to acquire additional shares of Common Stock, Class A Liberty Group Stock, and Class B Liberty Group Stock in open market or privately negotiated transactions, 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. 9 ITEM 5. Interest in Securities of the Issuer (a) Dr. Malone beneficially owns (without giving effect to the conversion of Class B Liberty Group Stock into Class A Liberty Group Stock): (i) 1,790,807 shares of Class A Liberty Group Stock (including options to acquire 1,778,000 shares, of which options for 1,410,800 shares are currently exercisable), which represent less than 1% of the outstanding shares of Class A Liberty Group Stock; and (ii) 50,504,008 shares of Class B Liberty Group Stock (which amount includes (x) Dr. Malone's right to direct the voting of 23,895,582 shares owned by the Magness Group and 857,397 shares owned by the Hindery Group and (y) options to acquire 1,456,000 shares, of which options for 291,200 shares are currently exercisable), which represent approximately 89.3% of the outstanding shares of Class B Liberty Group Stock. The foregoing percentage interests are based on 541,771,860 shares of Class A Liberty Group Stock and 56,528,794 shares of Class B Liberty Group Stock estimated to have been issued in the Merger, based upon information provided to Dr. Malone by the Issuer (as adjusted to reflect shares issued in respect of Dr. Malone's options as if exercised in full). When all classes of stock beneficially owned by Dr. Malone are aggregated, Dr. Malone may be deemed to beneficially own voting equity securities of the Issuer representing approximately 2.1% 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 Liberty Group Stock. Subject to the Malone Call Agreement described in Item 6 below, 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 Class B Liberty Group Stock. In addition, as indicated in Item 5(a) above, Dr. Malone has the power to direct the voting of 857,397 shares of Class B Liberty Group Stock owned by the Hindery Group as described in Item 6 below. Dr. Malone does not have the power to dispose of such shares owned by the Hindery Group. He also has the power to direct the voting of 23,895,582 shares of Class B Liberty Group Stock owned by the Magness Group pursuant to the terms of the Stockholders' Agreement described in Item 6 below. Dr. Malone does not have the power to dispose of such shares owned by the Magness Group. (c) Neither Dr. Malone nor, to his knowledge, his spouse, has executed any transactions in respect of the Class A Liberty Group Stock or the Class B Liberty Group Stock during the preceding 60 days, other than in connection with the Merger or as reported in Item 6. (d) Except as described in Item 6 below, 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 Class A Liberty Group Stock or Class B Liberty Group Stock beneficially owned by Dr. Malone or, to his knowledge, by his spouse. (e) Not applicable. 10 ITEM 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer TCI, 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 can not be reached, Dr. Malone will vote all shares the Class B Liberty Group 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 Class B Liberty Group 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 Class B Liberty Group 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 Class B Liberty Group Stock beneficially owned by Dr. Malone. In connection with the Merger, TCI's rights under the Stockholders' Agreement were assigned to Liberty. 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. TCI 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 TCI 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 of TCI paying to the Malone Group $150,000,000 for such right. In connection with the Merger, TCI's rights under the Malone Call Agreement were assigned to Liberty. When such right is triggered, Liberty may acquire the Class B Liberty Group Stock at a price equal to the market price of the Class A Liberty Group 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 Class B Liberty Group Stock would be the price paid for the Class A Liberty Group 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 Class B Liberty Group Stock, except for certain exempt transfers. If Liberty exercises its call right, it may also be required to purchase shares of Class B Liberty Group 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 TCI and Liberty to the Malone Group, each of which is an exhibit to this Statement and is incorporated by reference herein. A similar agreement (the "Magness Call Agreement") was entered into with 11 the Magness Group. The Magness Call Agreement was also assigned to Liberty in connection with the Merger. Pursuant to a stockholders' agreement, dated as of March 9, 1999 (the "Malone/Hindery Agreement"), among Leo J. Hindery and the Robin Cook Hindery 1989 Trust (collectively, the "Hindery Group") and Dr. Malone, Dr. Malone has the right to direct the vote of all shares of Class B Liberty Group Stock owned by the Hindery Group. In addition, the Malone/Hindery Agreement provides that transfers of shares of Class B Liberty Group Stock by the Hindery Group are subject to a right of first refusal in favor of Dr. Malone, subject to certain exceptions. Dr. Malone may exercise such right of first refusal by exchanging shares of Class A Liberty Group Stock for the shares of Class B Liberty Group Stock proposed to be transferred or by purchasing such shares of Class A Liberty Group Stock for cash. In addition, subject to certain exceptions, the Hindery Group may not convert shares of Class B Liberty Group Stock to Class A Liberty Group Stock without first offering Dr. Malone the right to exchange shares of Class A Liberty Group Stock for the shares of Class B Liberty Group Stock proposed to be converted. The foregoing description of the Malone/Hindery Agreement is qualified in its entirety by reference to the Malone/Hindery Agreement, which 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) Agreement and Plan of Restructuring and Merger, dated as of June 23, 1998, among AT&T Corp., Italy Merger Corp. and Tele-Communications, Inc. incorporated by reference to Appendix A to the AT&T/TCI Proxy Statement/Prospectus that forms a part of the Registration Statement on Form S-4 of AT&T (File No. 333-70279), filed on January 8, 1999 (the "AT&T Registration Statement")). 7(b) AT&T/TCI Proxy Statement/Prospectus, dated January 8, 1999 (incorporated by reference to the AT&T Registration Statement). 7(c) Stockholders' Agreement dated as of February 9, 1998, among 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 in respect of TCI). 7(d) Letter Agreement, dated as of March 5, 1999, amending certain terms of the Stockholders' Agreement dated as of February 9, 1998. 7(e) Call Agreement dated as of February 9, 1998, between Tele-Communications, Inc. and the Malone Group (incorporated by reference to Exhibit 7(n) to Dr. Malone's Amendment No. 8 to Schedule 13D in respect of TCI) 12 7(f) Letter, dated as of March 5, 1999, from TCI and Liberty addressed to Dr. Malone and Leslie Malone. 7(g) Stockholders' Agreement, dated as of March 9, 1999, by and among Dr. Malone, Leo J. Hindery, Jr. and the Robin Cook Hindery 1989 Trust. 13 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. March 29, 1999 /s/ John C. Malone ------------------------------ John C. Malone 14 EXHIBIT INDEX EXHIBIT NUMBER EXHIBIT PAGE 7(a) Agreement and Plan of Restructuring and Merger, dated as of June 23, 1998, among AT&T Corp., Italy Merger Corp. and Tele-Communications, Inc. incorporated by reference to Appendix A to the AT&T/TCI Proxy Statement/Prospectus that forms a part of the Registration Statement on Form S-4 of AT&T (File No. 333-70279), filed on January 8, 1999 (the "AT&T Registration Statement")). 7(b) AT&T/TCI Proxy Statement/Prospectus, dated January 8, 1999 (incorporated by reference to the AT&T Registration Statement). 7(c) Stockholders' Agreement dated as of February 9, 1998, among 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 in respect of TCI). 7(d) Letter Agreement, dated as of March 5, 1999, amending certain terms of the Stockholders' Agreement dated as of February 9, 1998. 7(e) Call Agreement dated as of February 9, 1998, between Tele-Communications, Inc. and the Malone Group (incorporated by reference to Exhibit 7(n) to Dr. Malone's Amendment No. 8 to Schedule 13D in respect of TCI) 7(f) Letter, dated as of March 5, 1999, from TCI and Liberty addressed to Dr. Malone and Leslie Malone. 7(g) Stockholders' Agreement, dated as of March 9, 1999, by and among Dr. Malone, Leo J. Hindery, Jr. and the Robin Cook Hindery 1989 Trust. 15 EX-7.D 2 LETTER AGREEMENT DATED 03-05-99 Exhibit 7(d) Tele-Communications, Inc. Liberty Media Corporation 5619 DTC Parkway 8101 East Prentice Avenue, Suite 500 Englewood, Colorado 80111 Englewood, Colorado 80111 March 5, 1999 Dr. John C. Malone Ms. Leslie Malone Mr. Gary Magness Mr. Kim Magness Magness Securities LLC Magness FT Investment Company, LLC The Kim Magness Family Foundation The Gary Magness Family Foundation c/o Tele-Communications, Inc. 5619 DTC Parkway Englewood, Colorado 80111 Ladies and Gentlemen: Reference is made to the Stockholders' Agreement, dated as of February 9, 1998, among TCI, John C. Malone, Leslie Malone, Gary Magness, both in any Representative Capacity and individually, Kim Magness, both in any Representative Capacity and individually, the Estate of Bob Magness and the Estate of Betsy Magness (the "Stockholders' Agreement"). As you know, after the original execution of the Stockholders' Agreement, Magness Securities LLC, Magness FT Investment Company, LLC, The Kim Magness Family Foundation and The Gary Magness Family Foundation were each added as a party and a member of the "Magness Group." Capitalized terms used but not expressly defined in this letter have the meanings given to them in the Stockholders' Agreement. Section references in this letter are to Sections of the Stockholders' Agreement. The purpose of this letter is to confirm and clarify the following: 1. Each of you consents to the assignment by TCI to Liberty Ventures Group LLC, a Delaware limited liability company ("LVG"), and the subsequent assignment by LVG to Liberty Media Corporation, a Delaware corporation ("LMC"), of all of TCI's rights, interests and obligations under the Stockholders' Agreement, and agrees that upon such assignments TCI shall have no further rights or obligations under the Stockholders' Agreement. 2. TCI agrees with each of you that if, for any reason, the Agreement and Plan of Restructuring and Merger, dated as of June 23, 1998, among TCI, AT&T Corp., a New York corporation ("AT&T"), and Italy Merger Corp., a Delaware corporation and a wholly owned subsidiary of AT&T ("MergerSub"), terminates without consummation of the merger of MergerSub into TCI contemplated thereby (the "Merger"), the assignments described in paragraph 1 will be rescinded. 3. From and after the Merger (and after giving effect to the assignments provided for above), the Stockholders' Agreement will continue in effect in accordance with its terms and the following: (a) References to "TCI" will be references to LMC and any successor (by merger, consolidation, sale, transfer, exchange, or otherwise) to all or substantially all of its business and assets, other than a Spin-Off Company (LMC and any such successor being referred to herein as "Liberty"). (b) The definition of the term "Director Votes" is deleted from Exhibit A to the Stockholders' Agreement. (c) The term "Company" will mean (i) Liberty if and while common stock of which it is the issuer is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, or (ii) any "Spin-Off Company" if and while common stock of which it is the issuer is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended, and a majority of Liberty's directors then in office constitute a majority of the Board of Directors of such Spin-Off Company. (d) The term "High Vote Share" will mean: (i) the Class B Liberty Media Group Common Stock, par value $1.00 per share, of AT&T and any capital stock into which such stock may be changed (whether as a result of a recapitalization, reorganization, merger, consolidation, share exchange, stock dividend or other transaction or event) (the "LMCB-Common"), and (ii) common stock of any class or series issued by Liberty or any Spin-Off Company that entitles the holders to greater voting power per share than the voting power per share to which holders of some other class or series of common stock of such issuer are entitled with respect to significant matters (such as the election of directors) as to which the holders of outstanding -2- shares of both classes or series vote together (with each other or with each other and one or more other classes or series of common stock of that issuer). (e) The term "Low Vote Stock" will mean: (i) the Class A Liberty Media Group Common Stock, par value $1.00 per share, of AT&T and any capital stock into which such stock may be changed (whether as a result of a recapitalization, reorganization, merger, consolidation, share exchange, stock dividend or other transaction or event) (the "LMCA-Common"), and (ii) common stock of any class or series issued by Liberty or any Spin-Off Company that entitles the holders to lesser voting power per share than the voting power per share to which holders of some other class or series of common stock of such issuer are entitled with respect to significant matters (such as the election of directors) as to which the holders of outstanding shares of both classes or series vote together (with each other or with each other and one or more other classes or series of common stock of that issuer). (c) The term "Spin-Off Company" shall mean any corporation or limited liability company which initially is a subsidiary of Liberty, which succeeds to substantially all of the businesses and assets of Liberty and which is then "spun-off" to either Liberty shareholders (if Liberty then has common stock which is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended) or the holders of the LMCA-Common and the LMCB-Common. If the foregoing accurately expresses our understanding, please sign and return the enclosed counterpart of this letter. Sincerely, TELE-COMMUNICATIONS, INC. By: --------------------------------- Stephen M. Brett Executive Vice President, Secretary and General Counsel -3- LIBERTY VENTURES GROUP LLC By: --------------------------------- Stephen M. Brett Vice President LIBERTY MEDIA CORPORATION By: --------------------------------- Stephen M. Brett Vice President Confirmed: ESTATE OF BETSY MAGNESS By: - -------------------------- --------------------------------- JOHN C. MALONE Kim Magness, Personal Representative - -------------------------- LESLIE MALONE ESTATE OF BOB MAGNESS By: --------------------------------- - -------------------------- Kim Magness, Personal KIM MAGNESS, individually Representative and as Trustee of the Magness Family Irrevocable By: Trusts and the Magness --------------------------------- Issue GST Trusts Gary Magness, Personal Representative -4- __________________________ GARY MAGNESS, individually MAGNESS SECURITIES LLC and as Trustee of the Magness Family Irrevocable Trusts and the Magness By: Issue GST Trusts --------------------------------- Kim Magness, Manager MAGNESS FT INVESTMENT COMPANY, LLC By: --------------------------------- Kim, Magness, Manager THE KIM MAGNESS FAMILY FOUNDATION By: --------------------------------- Kim Magness, President THE GARY MAGNESS FAMILY FOUNDATION By: --------------------------------- Gary Magness, President -5- EX-7.E 3 CALL AGREEMENT BETWEEN TELE-COM AND MALONE GRP Exhibit 7(e) Tele-Communications, Inc. Liberty Media Corporation 5619 DTC Parkway 8101 East Prentice Avenue, Suite 500 Englewood, Colorado 80111 Englewood, Colorado 80111 March 5, 1999 Dr. John C. Malone Ms. Leslie Malone c/o Tele-Communications, Inc. 5619 DTC Parkway Englewood, Colorado 80111 Dear John and Leslie: Reference is made to the Call Agreement, dated as of February 9, 1998 (the "Malone Call Agreement"), between Tele-Communications, Inc., a Delaware corporation ("TCI"), and John C. Malone and Leslie Malone (the "Malones"). Capitalized terms used but not expressly defined in this letter have the meanings given to them in the Malone Call Agreement. Section references in this letter are to Sections of the Malone Call Agreement. The purpose of this letter is to confirm and clarify the following: 1. Each of the Malones consents to the assignment by TCI to Liberty Ventures Group LLC, a Delaware limited liability company ("LVG"), and the subsequent assignment by LVG to Liberty Media Corporation, a Delaware corporation ("LMC"), of all of TCI's rights, interests and obligations under the Malone Call Agreement, and agrees that upon such assignments TCI shall have no further rights or obligations under the Malone Call Agreement. Each of the Malones also agrees that if a Triggering Event (as defined below) occurs in the future and is not waived, LMC may assign all of its rights, interests and obligations under the Malone Call Agreement to Liberty Media Group LLC and, in the event of such assignment, references to LMC herein shall thereafter refer to Liberty Media Group LLC. "Triggering Event" has the meaning ascribed to such term in the Contribution Agreement, being entered into on March 9, 1999, among LMC, Liberty Media Management LLC, Liberty Media Group LLC and Liberty Ventures Group LLC. 2. TCI and the Malones agree that if, for any reason, the Agreement and Plan of Restructuring and Merger, dated as of June 23, 1998, as amended, among TCI, AT&T Corp., a New York corporation ("AT&T"), and Italy Merger Corp., a Delaware corporation and a wholly owned subsidiary of AT&T ("MergerSub"), terminates without consummation of the merger of MergerSub into TCI contemplated thereby (the "Merger"), the assignments described in paragraph 1 shall be rescinded. 3. The Malones confirm and agree that TCI has exercised its right under Section 7.9 of the Malone Call Agreement to require that, from and after the Merger (and after giving effect to the assignments provided for above), the Malone Call Agreement continue in effect in accordance with its terms and the following: a. References to the "Company" will be references to AT&T and any successor (by merger, consolidation, sale, transfer, exchange, or otherwise) to all or substantially all of its business and assets, except as indicated below: i. in order to effectively give LMC the rights and obligations it is intended to have after the assignments referred to in paragraph 1 above, (x) the rights, interests, covenants and obligations of the "Company" under the first sentence of Section 2.1 and under Sections 2.2 through 7.16, inclusive, will be rights, interests, covenants and obligations of LMC and any successor (by merger, consolidation, sale, transfer, exchange, or otherwise) to all or substantially all of its business and assets (LMC or such successor being referred to as "Liberty"), and (y) references to the "Company" in the definitions of the terms "Board of Directors" and "Malone Group" in Section 1.1 will be references to Liberty; ii. references to the Company with respect to covenants of the Company that have been fully performed by TCI prior to the date hereof, including, without limitation, in the second sentence of Section 2.1, shall continue to refer to TCI, and iii references to the Company in the definitions of Magness Call Agreement and Stockholders Agreement refer to TCI. b. The definition of the term "High Vote Stock" shall mean the Class B Liberty Media Group Common Stock, $1.00 par value per share, issued by AT&T (or any successor referred to in paragraph 3(a) above), as it exists immediately after the Merger, and any capital stock into which the Class B Liberty Media Group Common Stock may thereafter be changed (whether as a result of a recapitalization, reorganization, merger, consolidation, share exchange, stock dividend, stock redemption, spinoff, split off or other transaction or event). The definition of the term "Low Vote -2- Stock" shall mean the Class A Liberty Media Group Common Stock, $1.00 par value per share, issued by AT&T (or any successor referred to in paragraph 3(a) above), as it exists immediately after the Merger, and any capital stock into which the Class A Liberty Media Group Common Stock may thereafter be changed (whether as a result of a recapitalization, reorganization, merger, consolidation, share exchange, stock dividend, stock redemption, spinoff, split off or other transaction or event). c. The term "Sale of the Company" shall mean a transaction which results in a Change of Control of the issuer of the High Vote Stock (subject to the same exclusions as currently pertain in the definition of such term). d. In any case where the Holder has the right to elect under Section 2.2(d) to receive payment of the Gross Purchase Price for any High Vote Stock included in the Subject Shares in shares of a corresponding series of Low Vote Stock, and in any case where the Company has the right under Section 3.1 to elect to pay all or any portion of the Closing Date Amount or Company Price in shares of Low Vote Stock, such election will not be effective unless Liberty arranges for AT&T to issue such Low Vote Stock and to grant to the selling Holder the registration rights with respect to such shares of Low Vote Stock contemplated by Section 2.2(e). Similarly, the Company's election under Section 3.1 will not be effective unless Liberty arranges for AT&T to comply with Section 3.2. If the foregoing accurately expresses our understanding, please sign and return the enclosed counterpart of this letter. Sincerely, TELE-COMMUNICATIONS, INC. By: ---------------------------- Stephen M. Brett Executive Vice President, Secretary and General Counsel -3- LIBERTY VENTURES GROUP LLC By: ---------------------------- Stephen M. Brett Vice President LIBERTY MEDIA CORPORATION By: ---------------------------- Stephen M. Brett Vice President Confirmed: - ----------------------------- JOHN C. MALONE - ----------------------------- LESLIE MALONE -4- EX-7.G 4 STOCK HOLDERS AGREEMENT Exhibit 7(g) STOCKHOLDERS' AGREEMENT This Stockholders' Agreement (this "Agreement") is made as of March 9, 1999, by and among John C. Malone ("Malone"); Leo J. Hindery, Jr. ("Hindery"); and The Robin Cook Hindery 1989 Trust (the "Robin Trust"). In consideration of the mutual promises and covenants contained in this Agreement, and intending to be legally bound, the parties agree as follows: ARTICLE I: DEFINITIONS 1.1 Definitions. The following terms, when used in this Agreement, will have ----------- the meanings set forth below. Affiliate: of a Person is any other Person that Controls, is Controlled by or is under common Control with such Person. Affiliate Offer: a bona fide written offer from an Affiliate of any member of the Stockholder Group to purchase or otherwise acquire all or part of the Liberty Shares owned by one or more members of the Stockholder Group. AT&T: AT&T Corp., a New York corporation. AT&T Transaction: the transactions contemplated by the Agreement and Plan of Restructuring and Merger dated as of June 23, 1998, by and among AT&T, Italy Merger Corp., and Tele- Communications, Inc. Business Day: any day that is not a Saturday, a Sunday or a day on which banking institutions in New York, New York, Denver, Colorado or San Francisco, California are required or authorized to be closed. Control: the power to elect a majority of the directors (or similar officials) of a Person or to direct or cause the direction of the management and policies of a Person, whether by the ownership of voting interests, by contract or otherwise. Fair Market Value: the cash price at which a willing seller would sell and a willing buyer would buy specified property, both having full -1- knowledge of the relevant facts and being under no compulsion to buy or sell, in an arm's-length transaction without unusual time constraints. HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Liberty Class A Stock: the Class A Liberty Media Group Common Stock of AT&T having a par value of $1.00 per share. Liberty Class B Stock: the Class B Liberty Media Group Common Stock of AT&T having a par value of $1.00 per share. Liberty Shares: the 662,889 shares of Liberty Class B Stock acquired by Hindery pursuant to the AT&T Transaction and the 194,507 shares of Liberty Class B Stock acquired by the Robin Trust pursuant to the AT&T Transaction, and any other securities issued in exchange for any of the foregoing (except shares of Liberty Class A Stock exchanged for Liberty Class B Stock as provided in Article III), that are held by or for the benefit of any member of the Stockholder Group from time to time. Malone Election Notice: as defined in Section 3.2(a). Material Consent: the consent, waiver or authorization of, or filing with, any Person the lack of which reasonably could be expected to result in (a) material liability to the Offeror or the Purchaser if a purchase of Liberty Shares by Malone pursuant to Article III is consummated or (b) either the Offeror or the Purchaser being deprived of all or a material part of the benefits incident to the purchase and sale of Liberty Shares pursuant to Article III. Person: any natural person, corporation, partnership, trust, unincorporated organization, association, limited liability company or other entity. Stockholder Group: Hindery, the Robin Trust, any Person that is a trustee or beneficiary of the Trust from time to time, and each Transferee. -2- Third Party Offer: a bona fide written offer from a prospective purchaser that is not an Affiliate of any member of the Stockholder Group to purchase all or a portion of the Liberty Shares. Trading Price: the average of the daily market prices of one Liberty Share for 25 consecutive Business Days commencing 30 Business Days before the date on which Malone gives a Malone Election Notice. The daily market price of a Liberty Share on any Business Day will be (a) the last sale price on such day on the principal stock exchange on which Liberty Shares are then listed or admitted to trading or (b) if no sale takes place on such date on that exchange, the average of the reported closing bid and asked prices on such day as officially noted on that exchange. The Trading Price will be appropriately adjusted to reflect the effects of any stock dividend, stock split, reclassification or combination affecting Liberty Shares as a class, the record date or ex- dividend date of which occurs during the period in which the Trading Price is to be determined or thereafter prior to the closing of the purchase of Liberty Shares for which the calculation of the Trading Price is required to be made. Transfer: with respect to any property, a sale, exchange, transfer, assignment, pledge, grant of a security interest in or other disposition of all or any interest, of record or beneficially, in such property (whether voluntary, involuntary or by operation of law). Transferee: a Person to whom a Transfer of Liberty Shares is made in compliance with this Agreement. ARTICLE II: VOTING ARRANGEMENTS Each member of the Stockholder Group agrees to exercise all of the voting and consent rights associated with the Liberty Shares owned by such Person on all matters as to which such voting or consent rights are required or permitted to be exercised as Malone directs. Each member of the Stockholder Group will execute and deliver to Malone such proxies and other instruments and documents as Malone may request from time to time to give effect to or to evidence the rights granted in this Article II. -3- ARTICLE III: TRANSFER RESTRICTIONS 3.1 Liberty Share Transfers. No member of the Stockholder Group will Transfer ----------------------- any of the Liberty Shares, or any interest therein, held by it or of which it is a beneficial owner except to the extent specifically permitted by this Article III. Any Transfer of Liberty Shares or an interest therein other than as specifically permitted by this Article III will be void and of no effect. The restrictions on, and obligations with respect to, Transfers of Liberty Shares set forth in this Agreement will be in addition to, and not in lieu of, any other restrictions or obligations imposed by applicable law or set forth in any instrument or agreement by which the Liberty Shares or any member of the Stockholder Group is bound. 3.2 Right of First Refusal. ---------------------- (a) A member of the Stockholder Group may Transfer all or any portion of the Liberty Shares held or beneficially owned by it to an Affiliate or to a Person that is not an Affiliate only after complying with the provisions of this Section 3.2. No member of the Stockholder Group may Transfer any record or beneficial interest in any Liberty Share separately from all of the legal and beneficial interests in such Liberty Share, except to the extent necessary for the Liberty Shares to be held of record by any trust or for Liberty Shares to be distributed to beneficiaries of any trust to the extent permitted by Section 3.3. If any member of the Stockholder Group wishes to sell on the NASDAQ National Market System or on any national securities exchange (an "Open Market Sale"), or receives and wishes to accept a Third Party Offer or an Affiliate Offer for, or wishes to contribute to an entity qualified under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (a "Charitable Contribution"), all or any portion of the Liberty Shares held or beneficially owned by it (the "Offered Shares"), that Person (the "Offeror") must first offer to Malone the opportunity to purchase the Offered Shares. The offer will be made by notice (an "Offer Notice") given by the Offeror to Malone (a) accompanied (i) in the case of a Third Party Offer, by a copy of the Third Party Offer that specifically identifies the Person making the Third Party Offer and, to the extent known to the Offeror, each Person that directly or indirectly Controls such Person, (ii) in the case of an Affiliate Offer, by a notice that specifically identifies the Affiliate making the Affiliate Offer and each Person that directly or indirectly Controls such Affiliate, or (iii) in the case of a Charitable Contribution, by a notice identifying the charitable organization to which the Offeror desires to transfer Offered Shares, and (b) in any case stating the Offeror's bona fide intention to Transfer the Offered Shares in an Open Market Sale or pursuant to the Third Party Offer, Affiliate Offer, or Charitable Contribution. The Offeror will provide such additional information as may reasonably be requested by Malone to evaluate the terms of the prospective Transfer. Malone may elect to purchase all or a portion of the Offered Shares by giving notice of such election to the Offeror (the "Malone Election Notice") within 20 days after his receipt of the Offer Notice (the "Malone Election Period"). (b) The consideration payable by Malone for each Offered Share that Malone has elected to purchase, at Malone's election will be either (i) one share of Liberty Class A Stock (or that number of shares of Liberty Class A Stock, or shares of any successor class or series of stock issued in -4- replacement of Liberty Class A Stock, into which one Liberty Share is convertible at the time of determination) or (ii) if the Offered Shares are the subject of a Third Party Offer, cash in an amount equal to the consideration payable for one Liberty Share pursuant to the Third Party Offer, and if the Offered Shares are to be sold in an Open Market Sale or are the subject of an Affiliate Offer, cash in an amount equal to the Trading Price; provided, however, that if the Offered Shares are to be Transferred as a Charitable Contribution, the consideration payable by Malone for the Offered Shares will be determined under paragraph (b)(i) and Malone will not have the right to elect to pay the consideration determined under paragraph (b)(ii) for such Offered Shares. Malone will indicate in the Malone Election Notice whether he elects to pay the purchase price in cash or shares of Liberty Class A Stock. To the extent the consideration proposed to be paid for Liberty Shares in a Third Party Offer consists of property other than cash, if Malone elects to purchase Offered Shares for cash he will pay an amount equal to the Fair Market Value of such property. (c) For purposes of this Article III, the Fair Market Value of the non- cash consideration proposed to be paid for Liberty Shares in a Third Party Offer will be determined by agreement of the Offeror and Malone. If they cannot agree on such Fair Market Value within 10 Business Days after a Malone Election Notice is given, such Fair Market Value will be determined by an appraiser acceptable to the Offeror and Malone. If they are unable to agree on a single appraiser within 10 Business Days after a Malone Election Notice is given (the "Selection Period"), the Offeror and Malone each will select an appraiser by giving notice to each other of such appraiser's identity within 10 Business Days after the end of the Selection Period. The Offeror and Malone each will cause the appraiser they have selected to determine the Fair Market Value of the non-cash consideration in question and to submit a written report of its determination within 30 Business Days after the appraiser is selected. If the higher of the two appraisals is equal to or less than 120% of the lower appraisal, the average of the two will be the Fair Market Value of the non-cash consideration. If the higher of the two appraisals is more than 120% of the lower appraisal, the two appraisers will appoint a third appraiser within 10 Business Days and cause the third appraiser to submit a written report of its determination of the Fair Market Value of the non-cash consideration within 30 Business Days after such appraiser's selection. Such third appraiser will not be informed of the determinations of the other two appraisers. If three appraisals are necessary, then the average of the two appraisals in which the Fair Market Values are closest together will be deemed the Fair Market Value of the non-cash consideration or, if the highest and lowest appraisal differ from the middle appraisal by equal amounts, then the middle appraisal will be deemed the Fair Market Value. Any appraiser appointed pursuant to this Section 3.2(c) will be a nationally-recognized investment banking firm. The Offeror and Malone will pay the fees and costs of the appraisers appointed by them. The Offeror and Malone will share equally the fees and costs of any third appraiser appointed pursuant to this Section 3.2 (c). (d) Unless the Offeror and Malone otherwise agree, the closing of any purchase of Liberty Shares pursuant to this Section 3.2 will be held at the principal corporate offices of Liberty Media Corporation at 10:00 a.m. local time on the later of (i) the day that is 20 days after the Malone Election Notice is given and (ii) two Business Days after the parties have obtained all Material Consents. If a purchase of Liberty Shares pursuant to this Section 3.2 requires any filing under the -5- HSR Act, the requirement for obtaining that consent for purposes of this Section 3.2 will be deemed satisfied if the applicable waiting period under the HSR Act has expired or has been terminated without the receipt of a notice of objection or the commencement or threat of litigation by a government entity to restrain the consummation of the purchase of the Liberty Shares to be purchased. The Offeror and Malone will cooperate to prevent any inconsistency between any HSR Act filings they are required to make and will furnish to each other such information and reasonable assistance as the other may reasonably request in connection with such filings and any request by a governmental agency for additional information. Each party to this Agreement covenants to and with the other parties that it will use its reasonable best efforts to obtain any Material Consent required to consummate any purchase of Liberty Shares by Malone pursuant to this Article III as promptly as practicable. (e) At the closing of any purchase and sale of the Offered Shares by Malone, (i) Malone will pay the purchase price in the form in which Malone has elected to make such payment pursuant to Section 3.2(b) and (ii) the Offeror will transfer to Malone all of the record and beneficial interests in the Offered Shares to be purchased, free and clear of all liens, claims and encumbrances, and will deliver such bills of sale, assignments and other agreements and instruments to Malone, and will take all such other reasonable actions at and after the closing as Malone may request, to effectively vest the Offered Shares to be purchased in Malone. (f) If any Material Consent cannot be obtained within 12 months after the date a Malone Election Notice is given, the Malone Election Notice will be deemed rescinded and the Offeror may Transfer the Offered Shares (i) in an Open Market Sale on such terms as are generally available on such markets if a proposed Open Market Sale by the Offeror gave rise to the right of first refusal pursuant to this Section 3.2, (ii) pursuant to a Charitable Contribution, or (iii) to the Person that made the Third Party Offer or Affiliate Offer for the consideration and upon the terms and conditions set forth in the Third Party Offer or Affiliate Offer (or, if the Person that made the Third Party Offer or Affiliate Offer no longer wishes to purchase the Offered Shares, in an Open Market Sale on such terms as are generally available on such markets) if a Third Party Offer or Affiliate Offer gave rise to the right of first refusal pursuant to this Section 3.2, in any case for a period of 60 days beginning on the day after the first anniversary of the date the Malone Election Notice was given, provided that the Offered Shares so Transferred are first converted into Liberty - -------- Class A Stock. Upon such conversion the Liberty Class A Stock so converted will not again be subject to the right of first refusal provisions of this Section 3.2 prior to the Transfer of such stock within the 60-day period as permitted by this paragraph (f). If the Offered Shares are not so Transferred during such 60-day period, the Offeror's right to Transfer such Offered Shares will again be subject to the provisions of this Section 3.2. (g) If Malone does not elect to purchase all of the Offered Shares, the Offeror will be free for a period of 60 days after the end of the Malone Election Period to Transfer the Offered Shares that Malone has not elected to purchase in an Open Market Sale on such terms as are generally available on such markets, pursuant to a Charitable Contribution, or to the Person that made the Third Party Offer or Affiliate Offer for the consideration and upon the terms and conditions set forth -6- in the Third Party Offer or Affiliate Offer, as applicable. If those Offered Shares are not so Transferred during such 60-day period, the Offeror's right to Transfer such Offered Shares will again be subject to the provisions of this Section 3.2. (h) If any Offeror entitled to Transfer Offered Shares during a 60-day period pursuant to paragraph (f) or (g) is precluded from Transferring all of the Offered Shares such Offeror otherwise would be entitled to Transfer solely because of restrictions imposed by Rule 144 under the Securities Act of 1933, as amended, on the volume of securities that may be sold within a three-month period, such Offeror may Transfer the Offered Shares the Offeror is precluded by Rule 144 from Transferring during an additional period of 90 days, beginning on the day after the end of the 60-day Transfer period permitted by paragraphs (f) and (g). (i) Except for the conversion of Offered Shares into Liberty Class A Stock pursuant to paragraph (f), any member of the Stockholder Group who wishes to convert any Liberty Shares of which such Person is the holder or beneficial owner into Liberty Class A Stock will first offer to Malone the opportunity to purchase such Liberty Shares, which will be treated as Offered Shares that are subject to the provisions of Section 3.2(a). If Malone gives a Malone Election Notice with respect to all or any portion of such Offered Shares, the consideration payable upon the purchase of such Offered Shares will be the Trading Price, payable in the form elected by Malone as described in Section 3.2(b). 3.3 Distributions to Beneficiaries. Notwithstanding any other provision of ------------------------------ this Agreement, any trust that holds Liberty Shares may distribute to any Person that is a beneficiary of such trust from time to time the number of Liberty Shares that are beneficially owned by such Person, provided that such Person complies with the provisions of Section 3.5. 3.4 Other Permitted Transfers. Notwithstanding any other provision of this ------------------------- Agreement, subject to the provisions of Section 3.5, any member of the Stockholder Group may (a) pledge all or part of the Liberty Shares of which such Person is the legal or beneficial owner to US Bank or any other lending institution as security for a loan, or (b) Transfer all or part of the Liberty Shares owned by such Person to any spouse, parent, child, grandchild or sibling of such Person or to any trust or other investment vehicle established primarily for the benefit of any of the foregoing persons or their heirs, provided that prior to a Transfer permitted by clause (a) or (b) the member of the Stockholder Group making the Transfer causes the Transferee to provide a written certificate establishing that the Transfer qualifies as a private placement of the Liberty Shares to be Transferred under applicable securities laws and as to the Transferee's investment intent with respect to such Liberty Shares. 3.5 Other Conditions to Transfer. Any Person (other than Malone) to whom ---------------------------- Liberty Shares are permitted by this Article III to be Transferred must (except in the case of a Transfer of Shares pursuant to Section 3.2(g)), prior to such Transfer, agree in writing to be bound by the terms of this Agreement as a member of the Stockholder Group if such Person is not already a party hereto and all references to the "Stockholder Group" in this Agreement will be deemed to include the Transferee with respect to any Liberty Shares that are Transferred to such Transferee. No member of the -7- Stockholder Group will make any Transfer of Liberty Shares that would violate U.S. federal or state securities laws. ARTICLE IV: MISCELLANEOUS 4.1 Stock Certificate Legend. All certificates representing Liberty Shares ------------------------ will bear a legend in substantially the following form: "The shares represented by this certificate may not be sold, transferred or encumbered except in accordance with the terms of a Stockholders' Agreement, dated as of March 9, 1999, a copy of which is on file with the Company." If an Offeror Transfers all or part of the Offered Shares to a Transferee as permitted by Section 3.2(f) or 3.2(g), the Transferee of such Offered Shares will be issued a new certificate evidencing such Offered Shares without the legend set forth above (other than, in the case of Liberty Shares Transferred pursuant to Section 3.4, the portion of such legend referring to the restrictions imposed by this Agreement) upon the receipt by AT&T of evidence satisfactory to it and its legal counsel that the Offered Shares are registered or that such sale will comply with Rule 144 or 145 under the Securities Act of 1933, as amended, and any applicable state securities laws, and upon satisfaction of the transfer procedures normally applicable to the Liberty Shares. 4.2 Termination. This Agreement will terminate upon the earliest to occur of ----------- (a) the death of Malone, or (b) April 30, 2008. The termination of this Agreement will not affect the rights and obligations of the parties accrued prior to such termination. 4.3 Notices. All notices, requests, demands and other communications required ------- or permitted to be made pursuant to this Agreement will be in writing and will be deemed to have been given if delivered in person or by courier, sent by telecopy or sent by United States certified or registered mail, prepaid, addressed as follows: To Malone at: Liberty Media Corporation 8101 E. Prentice Ave. Englewood, CO 80111 Telecopy: (303) 721-5443 with a copy to the same address, Attention: Charles Y. Tanabe, Esq. -8- To Hindery at: Tele-Communications, Inc. 5619 DTC Parkway Englewood, Colorado 80111 Telecopy: (303) 488-3201 To the Robin Trust at: The Robin Cook Hindery 1989 Trust Stephen I. Leonard, Trustee Farallon Real Estate Services Company, Inc. 620 Davis Street San Francisco, CA 94111 Telecopy: (415) 956-3665 with a copy in the case of Hindery or the Robin Trust to: Pillsbury Madison & Sutro LLP 235 Montgomery Street San Francisco, California 94104 Attention: David L. Klott, Esq. Telecopy: (415) 983-1200 Any party may change the address to which notices are required to be sent by giving notice of such change in the manner provided in this Section. Any notice delivered personally or by courier will be deemed to be received on the date of delivery; any notice sent by telecopy will be deemed to be received upon confirmation of transmission by person or machine; and any notice so mailed will be deemed to be received on the date shown on the return receipt (evidence of rejection of delivery or inability to deliver because of a changed address of which no notice was given pursuant to the provisions of this Agreement will be deemed to be a receipt). 4.4 Modification; Waiver. This Agreement may be modified or terminated by -------------------- mutual agreement only by a writing signed by all the parties, and no provision or condition herein may be waived other than by a writing signed by the party waiving such provision or condition. 4.5 Headings. Article and Section headings in this Agreement are for the sole -------- purpose of convenient reference and in no way define, limit or prescribe the scope or intent of this Agreement or any part hereof, and such headings will not be considered in interpreting or construing this Agreement. 4.6 Assignment. Any rights exercisable by Malone under this Agreement may be ---------- exercised by any designee of Malone. Except as provided in the preceding sentence, no party will assign any of -9- its rights under this Agreement or delegate its duties hereunder unless it obtains the prior written consent of the other parties, which consent may be withheld at each such party's absolute discretion. 4.7 Specific Performance. The parties acknowledge that Malone would be -------------------- irreparably damaged if any member of the Stockholder Group violates or breaches its obligations under Article II or Article III, and that in either case money damages would be an inadequate remedy for such breach or violation. Accordingly, each member of the Stockholder Group agrees that the provisions of Article II and Article III will be specifically enforceable by Malone, and that Malone will be entitled to temporary and permanent injunctive relief and other equitable remedies, at his sole election, to enforce such provisions. Such rights of enforcement will be without prejudice to any other right or remedy available to Malone. 4.8 Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which may be deemed to be an original, and all of which taken together will constitute one instrument. 4.9 Governing Law. THIS AGREEMENT WILL BE GOVERNED BY THE LAWS OF THE STATE OF ------------- DELAWARE, WITHOUT REGARD TO ANY CONFLICTS OF LAWS RULES. 4.10 Other. This Agreement constitutes the entire agreement of the parties ----- regarding the subject matter hereof, and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are hereby merged into this Agreement. This Agreement will be binding upon and inure to the benefit of the parties and, subject to the limitations set forth in Section 4.6, their respective successors and assigns. The provisions of this Agreement are for the exclusive benefit of the parties and their permitted successors and assigns, and no other Person is intended to be a third party beneficiary or to have any rights by virtue of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. ---------------------------------- John C. Malone ---------------------------------- Leo J. Hindery, Jr. -10- THE ROBIN COOK HINDERY 1989 TRUST By: ----------------------------- Stephen I. Leonard, Trustee -11- -----END PRIVACY-ENHANCED MESSAGE-----