Exhibit 7(C)(2)
LIBERTY MEDIA CORPORATION
(a Delaware corporation)
$237,800,000
7-3/4% Senior Notes due 2009
UNDERWRITING AGREEMENT
December 3, 2001
Credit Suisse First Boston Corporation
Salomon Smith Barney Inc.
TD Securities (USA) Inc.
J.P. Morgan Securities Inc
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, N.Y. 10010-3629
Ladies and Gentlemen:
Liberty Media Corporation, a Delaware corporation (the "Company"),
confirms its agreement with Credit Suisse First Boston Corporation (the "Lead
Underwriter"), Salomon Smith Barney Inc. ("SSB"), TD Securities (USA) Inc.
("TD") and J.P. Morgan Securities Inc. ("JPM," and together with the Lead
Underwriter, SSB and TD, the "Underwriters") with respect to the issue and sale
by the Company and the purchase by the Underwriters, acting severally and not
jointly, of the respective principal amounts set forth in Schedule A hereto of
$237,800,000 aggregate principal amount of the Company's 7-3/4% Senior Notes due
2009 (the "Notes"). The Notes are to be issued pursuant to the indenture dated
as of July 7, 1999 between the Company and The Bank of New York, as trustee (the
"Trustee"), as supplemented by the eighth supplemental indenture, dated as of
December 3, 2001, between the Company and the Trustee (collectively, the
"Indenture"). Notes issued in book-entry form will be issued to Cede & Co. as
nominee of The Depository Trust Company ("DTC") pursuant to a letter agreement,
to be dated as of the Closing Time (as defined in Section 2(b)), among the
Company, the Trustee and DTC.
The Company understands that the Underwriters propose to make a public
offering of the Notes as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission"), in accordance with the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder
(collectively, the "Act"), a shelf registration statement on Form S-3 (File No.
333-66034), including a prospectus relating to debt
and equity securities of the Company issuable from time to time in one or more
series, including the Notes, which has become effective under the Act. The
Company will promptly file with the Commission a prospectus supplement
specifically relating to the offering of the Notes pursuant to Rule 424 under
the Act (the "Prospectus Supplement"). As used in this Agreement, the term
"Registration Statement" means such registration statement, including exhibits
and financial statements and schedules and documents incorporated by reference
therein, as amended or supplemented to the date hereof. The term "Base
Prospectus" means the prospectus, dated August 16, 2001, filed with the
Registration Statement on August 16, 2001. The term "Prospectus" means the Base
Prospectus together with the Prospectus Supplement. Any reference herein to the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date
of the Prospectus, and any reference herein to any amendment or supplement to
the Prospectus, except the reference in the second sentence of Section 3(a)(ii),
shall be deemed to refer to and include any documents filed after such date
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference therein.
Section 1. Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter and agrees with each Underwriter, as
follows:
(a) Registration Statement; Indenture. The Company meets the requirements
for use of Form S-3 under the Act. The Registration Statement has become
effective under the Act, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the Company,
are contemplated by the Commission. The Registration Statement, when declared
effective by the Commission, complied in all material respects with the
requirements of the Act; the Base Prospectus when filed with the Commission
complied in all material respects with the requirements of the Act; and the
Prospectus Supplement when filed with the Commission will comply in all material
respects with the requirements of the Act. As of the Closing Time, the
Registration Statement and the Prospectus will comply in all material respects
with the requirements of the Act, and the Indenture will comply in all material
respects with the requirements of the Trust Indenture Act of 1939, as amended,
and the rules and regulations of the Commission promulgated thereunder
(collectively, the "Trust Indenture Act"). The Registration Statement, when
declared effective by the Commission, did not, and as of the Closing Time, will
not, contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided that this representation, warranty and agreement shall
not apply to (i) statements in or omissions from the Prospectus Supplement made
in reliance upon and in conformity with information furnished to the Company in
writing by or on behalf of any Underwriter expressly for use therein or (ii)
that part of the Registration Statement which consists of the Statements of
Eligibility and Qualification on Form T-1 under the Trust Indenture Act of the
Trustee. The Prospectus, at the date thereof, did not, and, at the Closing
Time, will not, contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, that this representation, warranty and
agreement shall not apply to statements in or omissions from the Prospectus
Supplement made in reliance upon and in conformity with information furnished
to the Company
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in writing by or on behalf of any Underwriter expressly for use therein. The
documents incorporated by reference or deemed to be incorporated by reference in
the Registration Statement and the Prospectus, when they were filed (or, if an
amendment with respect to any such document was filed, when such amendment was
filed) with the Commission, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and further documents so filed and incorporated by
reference will, when they are filed with the Commission, conform in all material
respects to the requirements of the Exchange Act and the rules and regulations
of the Commission promulgated thereunder, none of such documents, when filed,
when read together with the information in the Prospectus, at the time the
Registration Statement became effective, at the date of the Prospectus and at
the Closing Time, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary (a) in the case
of the Registration Statement, to make the statements therein not misleading, or
(b) in the case of the Prospectus, in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; and no
such further document, when it is filed, will contain an untrue statement of a
material fact or will omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(b) Description of the Notes and Indenture. The Notes and the Indenture
conform in all material respects to the respective descriptions thereof
contained in the Prospectus and will be in substantially the respective forms
filed with or incorporated by reference into, as the case may be, the
Registration Statement.
(c) Independent Accountants. The accountants who certified the financial
statements and supporting schedules included or incorporated by reference in the
Registration Statement are independent public accountants with respect to the
Company within the meaning of Regulation S-X under the Act.
(d) Financial Statements. The consolidated financial statements, together
with related schedules and notes, set forth or incorporated by reference in the
Prospectus and the Registration Statement, comply as to form in all material
respects with the requirements of the Act and fairly present in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries at the respective dates indicated and the results of their
respective operations and their respective cash flows for the respective periods
indicated, in accordance with generally accepted accounting principles
consistently applied throughout such periods (except as otherwise noted therein
and subject, in the case of unaudited interim financial statements, to normal
year-end adjustments).
(e) No Material Adverse Change in Business. Since the respective dates as
of which information is given in the Prospectus, except as otherwise stated
therein, there has been no material adverse change in the condition, financial
or otherwise, or in the results of operations or business affairs of the Company
and its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), other than changes
relating to the economy in general or the Company's industry in general and not
specifically relating to the Company.
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(f) Good Standing. The Company and each of its subsidiaries listed on
Schedule B hereto (each a "Designated Subsidiary") have been duly organized and
are validly existing and in good standing under the laws of their respective
jurisdictions of organization, are duly qualified to do business and are in good
standing in each jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified or in good standing
would not reasonably be expected to have a Material Adverse Effect, and each has
all corporate power and authority necessary to own or hold their respective
properties and to conduct the businesses as described in the Prospectus, and the
Company has the corporate power and authority to enter into and perform its
obligations under this Agreement.
(g) Authorization of this Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(h) Authorization of the Indenture. The Indenture has been duly
authorized, executed and delivered by the Company and, when executed and
delivered by the Trustee, will constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors' rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law) (the "Bankruptcy Exceptions").
(i) Authorization of the Notes. The Notes have been duly authorized and
executed by the Company and, when authenticated, issued and delivered in the
manner provided for in the Indenture and delivered against payment of the
purchase price therefor as provided in this Agreement, will constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited by
the Bankruptcy Exceptions, and will be in the form contemplated by, and entitled
to the benefits of, the Indenture.
(j) Absence of Defaults and Conflicts. Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which or any of them may be bound, or
to which any of the property or assets of the Company or any of its subsidiaries
is subject (collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect. The execution, delivery and
performance of this Agreement, the Indenture and the Notes and any other
agreement or instrument entered into or issued or to be entered into or issued
by the Company in connection with the transactions contemplated hereby or
thereby or in the Prospectus and the consummation of the transactions
contemplated herein and in the Prospectus (including the issuance and sale of
the Notes and the use of the proceeds from the sale of the Notes as described in
the Prospectus Supplement under the caption "Use of Proceeds") and compliance by
the Company with its obligations hereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or without the
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giving of notice or passage of time or both, conflict with or constitute a
breach of, or default or a Repayment Event (as defined below) under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, the
Agreements and Instruments except for such conflicts, breaches or defaults or
liens, charges or encumbrances that, singly or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect, nor will such
action result in any violation of the provisions of the charter or by-laws of
the Company or any of its subsidiaries or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their assets or properties. As used
herein, a "Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person acting
on such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any of its
subsidiaries.
(k) Absence of Proceedings. Except as disclosed in the Prospectus, there
is no action, suit, proceeding, inquiry or investigation before or brought by
any court or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the Company, threatened, against the Company or any of its
subsidiaries which might reasonably be expected to result in a Material Adverse
Effect, or which might reasonably be expected to materially and adversely affect
the properties or assets of the Company or any of its subsidiaries or the
consummation of the transactions contemplated by this Agreement or the
performance by the Company of its obligations hereunder or thereunder. The
aggregate of all pending legal or governmental proceedings to which the Company
or any of its subsidiaries is a party or of which any of their respective
property or assets is the subject which are not described in the Prospectus,
including ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(l) Absence of Further Requirements. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency is necessary or required for the
performance by the Company of its obligations hereunder, in connection with the
offering, issuance or sale of the Notes hereunder or the consummation of the
transactions contemplated by this Agreement or for the due execution, delivery
or performance of the Indenture by the Company, except such as have been already
obtained.
(m) Investment Company Act. The Company is not, and upon the issuance and
sale of the Notes as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus Supplement will not be, an "investment
company" or an entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
Section 2. Sale and Delivery to Underwriters; Closing.
(a) Notes. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby sells to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, hereby
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purchases from the Company, for the purchase price set forth in Schedule C
hereto, the aggregate principal amount of Notes set forth in Schedule A hereto
opposite the name of such Underwriter.
(b) Payment. Payment of the purchase price for and delivery of the Notes
are being made at the office of Baker Botts L.L.P., 599 Lexington Avenue, New
York, New York concurrently with the execution of this Agreement by the
Underwriters and the Company (such time of payment and delivery being herein
called the "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company in accordance with
the direction procedures agreed to by the Company and the Underwriters, against
delivery to The Bank of New York, as custodian, of a single global certificate
representing, in the aggregate, the Notes being purchased by the Underwriters
(the "Global Note"). It is understood that each Underwriter has authorized
certain of its representatives holding accounts with DTC, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for, the
Notes which it has agreed to purchase.
(c) Transaction Fee. The Company, at the Closing Time, shall pay a
transaction fee to each Underwriter equal to 0.625% of the aggregate principal
amount of Notes set forth on Schedule A hereto opposite the name of such
Underwriter.
(d) Global Note; Registration. The Notes shall be registered in the form
of a single global Note in the name of Cede & Co. as nominee of DTC.
Section 3. Covenants.
(a) Covenants of the Company. The Company covenants with each Underwriter
as follows:
(i) Registration Statement; Prospectus. The Company, as promptly as
possible, will furnish to each Underwriter, without charge, one conformed
copy of the Registration Statement, including all documents incorporated
by reference therein, and will deliver to each Underwriter such number of
copies of the Prospectus as such Underwriter may reasonably request. The
Company will notify each Underwriter, for so long as it owns any Notes,
promptly (A) of the effectiveness of any amendment to the Registration
Statement and of the filing of any supplement to the Prospectus, (B) of
any comments of the Commission regarding the Registration Statement or the
Prospectus or of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information, (C) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation or threatening of any proceedings for that purpose and (D) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Notes for offer and sale in any
jurisdiction or the initiation or threatening of any proceedings for such
purpose. The Company will use its reasonable best efforts to prevent the
issuance of any order suspending the effectiveness of the Registration
Statement or suspending the qualification of the Notes for offer or sale
in any
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jurisdiction, and if any such order is issued, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible moment.
(ii) Notice and Effect of Material Events; Amendment of Prospectus.
The Company will immediately notify each Underwriter, for so long as it
owns any Notes, and confirm such notice in writing, of (A) any filing made
by the Company of information relating to the offering of the Notes with
any securities exchange or any other regulatory body in the United States
or any other jurisdiction, and (B) at any time during the Distribution
Period (as defined below), any material changes in or affecting the
condition, financial or otherwise, or the results of operations, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise which (x) make any statement in the
Prospectus false or misleading or (y) are not disclosed in the Prospectus.
The Company will advise each Underwriter, for so long as it owns any
Notes, promptly of any proposal to amend or supplement the Prospectus with
respect to the Notes and will not effect any such amendment or supplement
without the consent of each such Underwriter, which shall not be
unreasonably withheld. Notwithstanding the foregoing, if during the period
of time that the Prospectus is required by law to be delivered any event
shall occur which in the judgment of the Company should be set forth (or
incorporated by reference) in the Prospectus in order to make the
statements therein, in light of the circumstances under which the
Prospectus is delivered to a subsequent purchaser, not misleading, or if
it is necessary to supplement or amend the Prospectus to comply with law,
the Company will promptly prepare and duly file with the Commission an
appropriate supplement or amendment thereto, and promptly file all reports
and any definitive proxy statement or information statement required to be
filed by the Company with the Commission pursuant to Section 13 or 14 of
the Exchange Act subsequent to the date of the Prospectus, and will
deliver to each Underwriter, without charge, such number of copies thereof
as such Underwriter may reasonably request. If during such period of time,
any event shall occur which in the reasonable judgment of any Underwriter
or counsel to the Underwriters should be so set forth (or incorporated by
reference) in the Prospectus, or which in the reasonable judgment of any
Underwriter makes it necessary to so supplement or amend the Prospectus,
the Company promptly will file with the Commission a supplement or an
amendment to the Prospectus or a report pursuant to Section 13 or 14 of
the Exchange Act. Until the end of the Distribution Period, the Company
shall cause the Registration Statement and the Prospectus (1) to comply in
all material respects with the applicable requirements of the Securities
Act and the rules and regulations of the Commission and (2) not to contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. The term "Distribution Period" shall mean the period beginning
on the date hereof and ending on the earlier to occur of (A) the day on
which the Underwriters have completed their distribution of the Notes and
(B) 90 days following the date hereof; provided, however, that the
Distribution Period shall be extended for a period of time equal to the
aggregate Black-Out Periods.
(iii) Black-Out Periods. Notwithstanding anything to the contrary
contained herein, if at any time following the date hereof and until the
end of the Distribution
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Period, the Company determines, in its reasonable business judgment, that
the Registration Statement and the distribution of the Notes pursuant
thereto could interfere with or otherwise adversely affect any financing,
acquisition, corporate reorganization, or other material transaction or
development involving the Company, or require the Company to disclose
matters that otherwise would not be required to be disclosed at such time,
then the Company may require the suspension by the Underwriters, for a
period of up to 72 consecutive hours, of the distribution of Notes by
giving written notice to the Underwriters. Any such notice need not
specify the reasons for such suspension. Any such suspension shall
continue until the earlier to occur of the expiration of such 72-hour
period and the determination of the Company, notice of which is given to
the Underwriters, that such registration and offering would no longer have
an effect described in the first sentence of this paragraph (each such
suspension period, a "Black-Out Period"). The Company may not require the
suspension by the Underwriters of the distribution of Notes pursuant to
this paragraph (A) during the first 30 days following the date hereof and
(B) for more than 72 hours during any consecutive 30 day period. Each
Underwriter shall promptly inform the Company upon the completion of its
distribution of the Notes.
(iv) Rating of Securities. The Company shall take all reasonable
action necessary to enable Standard & Poors, a division of The McGraw Hill
Companies, Inc. ("S&P"), and Moody's Investors Service Inc. ("Moody's") to
provide their respective credit ratings of the Notes.
(v) DTC. The Company will cooperate with the Underwriters and their
representatives and use commercially reasonable efforts to permit the
Notes to be eligible for clearance and settlement through the facilities
of DTC.
(vi) Use of Proceeds. The Company will use the net proceeds received
by it from the sale of the Notes in the manner specified in the Prospectus
Supplement under "Use of Proceeds".
(vii) Blue Sky Qualifications. The Company will use commercially
reasonable efforts, in cooperation with the Underwriters, to register or
qualify the Notes for offering and sale under all applicable state
securities or "blue sky" laws of such jurisdictions as the Underwriters
may designate; provided, however, that the Company shall not be required
to (A) qualify as a foreign corporation or as a dealer in securities in
any jurisdiction where it would not otherwise be required to qualify but
for this subsection (vi), (B) take any action which would subject it to
general service of process or taxation in any such jurisdiction where it
is not then so subject, or (C) conform its capitalization or the
composition of its assets at the time to the securities or blue sky laws
of such jurisdiction.
(viii)Cooperation. Until the earlier of (A) 90 days after the date
hereof and (B) the date on which the Underwriters have completed the
distribution of the Notes, the Company will, at the request of the Lead
Underwriter and on at least 24 hours prior notice, participate by
telephone in group conference call presentations and one-on-one
presentations to potential buyers of Notes from the Underwriters;
provided, however, that
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the Lead Underwriter may not request the Company's participation in such
presentations more than three times in the aggregate and not more than
once during any consecutive 48 hour period, and provided further that the
Company shall not be obligated to participate in any such presentations
during a Black-Out Period. The Company's participation will be
substantially consistent in scope and character with past practices of the
Company in group conference call presentations and one-on-one
presentations involving the sales of similar notes by the Company in
underwritten or Rule 144A offering.
(b) Covenants of the Underwriters.
(i) Regulation M. Each Underwriter covenants with the Company that,
with respect to any Notes purchased by such Underwriter hereunder that
such Underwriter continues to own or hold at any time on or after the 90th
day following the Closing Time, such Underwriter will, upon receipt of
written notice from the Company of the Company's intention to bid for or
purchase any Note or any security of the same class and series as the
Notes (within the meaning of Regulation M promulgated by the Commission
(or any successor or equivalent rule or regulation, "Regulation M")) or to
take any other action, directly or indirectly, the taking of which would
be proscribed by Regulation M during a distribution of the Notes, such
Underwriter will, and will cause its "affiliated purchasers" (as defined
in Rule 100 of Regulation M) to, cease distributing the Notes for such
period of time as the Company may reasonably deem necessary so that the
action or actions proposed to be taken, directly or indirectly, by it may
be taken in full compliance with Regulation M.
(ii) OID Notice. If the first price at which a substantial amount of
the Notes are sold (other than to Underwriters or to persons acting in a
similar capacity) is not greater than (A) 98.25% of par value or (B), if
the first day on which a substantial amount of the Notes are sold (other
than to Underwriters or to persons acting in a similar capacity) occurs on
or after July 15, 2002, 98.5% of par value (as applicable, the "Applicable
Issue Price"), as determined in the reasonable judgment of the Lead
Underwriter, then each Underwriter shall promptly inform the Company of
the aggregate amount of any Notes sold at a price equal to or less than
the Applicable Issue Price.
Section 4. Payment of Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, including (a) the
preparation, printing, delivery to the Underwriters and any filing of the
Prospectus and any amendment or supplement thereto, (b) the preparation and
delivery to the Underwriters of this Agreement, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Notes, (c) the preparation, issuance and delivery of
the Global Note to The Bank of New York, as custodian, including any transfer
taxes, any stamp or other duties payable upon the sale, issuance and delivery of
the Notes to the Underwriters and any charges of DTC in connection therewith,
(d) the fees and disbursements of the Company's counsel, accountants and other
advisors, (e) the fees and expenses of the Trustee, including the reasonable
fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Notes, and (f) any fees payable in connection with the rating
of the Notes. Each Underwriter will be responsible for the fees and
disbursements of its counsel in connection with the preparation of this
Agreement, the Indenture, the Notes and the Prospectus.
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Section 5. Deliveries to Underwriters. The following items shall be
delivered to each Underwriter at or before the Closing Time:
(a) Opinion of Baker Botts L.L.P. The opinion, dated as of the Closing
Time, of Baker Botts L.L.P., counsel for the Company, in the form set forth as
Exhibit A hereto.
(b) Opinion of Sherman & Howard L.L.C.. The opinion, dated as of the
Closing Time, of Sherman & Howard L.L.C., special counsel for the Company, in
the form set forth as Exhibit B hereto.
(c) Opinion of Carter, Ledyard & Milburn. The opinion, dated as of the
Closing Time, of Carter, Ledyard & Milburn, special counsel for the Company, in
the form set forth as Exhibit C hereto.
(d) Rating Letters. A letter, dated as of the Closing Time, from each of
Moody's and S&P confirming that the Notes have been rated at least Baa3 by
Moody's and BBB- by S&P.
(e) Accountant's Comfort Letter. A letter dated the Closing Time, in form
and substance satisfactory to the Underwriters from KPMG Peat Marwick LLP,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained or incorporated by
reference in the Registration Statement and the Prospectus.
Section 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and expense,
as incurred, arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or
any amendment thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein not
misleading, and against any and all loss, liability, claim, damage and
expense, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Prospectus (or any
amendment thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense,
as incurred, to the extent of the aggregate amount paid in settlement of
any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
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(iii) against any and all expense, as incurred (including the fees
and disbursements of counsel chosen by the Underwriters), reasonably
incurred in investigating or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent
that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter expressly for use in the Prospectus
Supplement (or any amendment thereto); and provided, further, that this
indemnity agreement shall not apply to any loss, liability, claim, damage or
expense to the extent arising out of any allegation, untrue statement or
omission if such allegation, untrue statement or omission was made in (A) any
Prospectus used during any Black-Out Period or (B) any Prospectus used after
such time as the obligation of the Company to keep the same current and
effective has expired.
(b) Indemnification of Company. Each Underwriter severally agrees to
indemnify and hold harmless the Company, its directors and each of its officers,
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Prospectus Supplement in reliance upon and in conformity with written
information relating to a Underwriter furnished in writing to the Company by or
on behalf of such Underwriter expressly for use in the Prospectus Supplement.
(c) Actions against Parties; Notification. Each indemnified party shall
give written notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, and the indemnifying party shall assume the defense thereof,
including the employment of counsel satisfactory to the indemnified party and
the payment of all expenses. Any omission to so notify an indemnifying party
shall not relieve such indemnifying party from any liability hereunder to the
extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. Any such indemnified party shall have the
right to employ separate counsel in any such action or proceeding and to
participate in the defense thereof, but the fees and expenses of such separate
counsel shall be such indemnified party's unless (i) the indemnifying party has
agreed to pay such fees and expenses or (ii) the indemnifying party shall have
failed to assume the defense of such action or proceeding and employ counsel
satisfactory to the indemnified party in any such action or proceeding or (iii)
the named parties to any such action or proceeding (including any impleaded
parties) include both such indemnified party and indemnifying party, and the
indemnified party shall have been advised by its counsel that there may be a
conflict of interest between such indemnified party and indemnifying party in
the conduct of the defense of such action (in which case, if such indemnified
party notifies the indemnifying party in writing that it elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action or
proceeding on behalf of
11
such indemnified party), it being understood, however, that the indemnifying
party shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (unless the
members of such firm are not admitted to practice in a jurisdiction where an
action is pending, in which case the indemnifying party shall pay the reasonable
fees and expenses of one additional firm of attorneys to act as local counsel in
such jurisdiction) at any time for all indemnified parties, which firm shall be
designated in writing by the indemnified party. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section or Section 7
hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (A) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (B) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
Section 7. Contribution. If the indemnification provided for in Section 6
hereof is unavailable to hold harmless an indemnified party (other than by
reason of the first sentence of Section 6(c)) in respect of any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, (a) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Notes pursuant to this Agreement or (b) if
the allocation provided by clause (a) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (a) above but also the relative fault of the Company on
the one hand and of the Underwriters on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Notes
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Notes pursuant to
this Agreement (before deducting expenses) received by the Company and the
transaction fee received by the Underwriters in connection with the purchase of
the Notes (which
12
fee is 0.625% of the aggregate principal amount of the Notes), bear to the
aggregate initial offering price of the Notes.
The relative fault of the Company on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section. The aggregate amount
of losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Notes purchased and sold by it hereunder exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
For purposes of this Section, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Underwriter, and
each person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company. The Underwriters' respective obligations to
contribute pursuant to this Section are several in proportion to the principal
amount of Notes set forth opposite their respective names in Schedule A hereto
and not joint.
Section 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Notes to the Underwriters.
13
Section 9. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication, as follows:
(a) if to the Company:
Liberty Media Corporation
12300 Liberty Boulevard
Englewood, Colorado 80112
Attention: Charles Y. Tanabe, Esq.
Facsimile: (720) 875-5382
(b) if to the Underwriters:
Credit Suisse First Boston Corporation
1 Madison Avenue
New York, New York 10010
Attention: Transaction Advisory Group
Facsimile: 212-325-8278
With a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, 34th Floor
Los Angeles, California 90071
Attention: Nick P. Saggese
Facsimile: 213-687-5600
or to such other person or address as any party shall specify by notice in
writing to the other party. All notices and other communications given to a
party in accordance with the provisions of this Agreement shall be deemed to
have been given (i) three business days after the same are sent by certified or
registered mail, postage prepaid, return receipt requested, (ii) when delivered
by hand or transmitted by telecopy (answer back received) or (iii) one business
day after the same are sent by a reliable overnight courier service, with
acknowledgment of receipt requested. Notwithstanding the preceding sentence,
notice of change of address shall be effective only upon actual receipt thereof.
Section 10. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Company and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriters
and the Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No
14
purchaser of Notes from any Underwriter shall be deemed to be a successor by
reason merely of such purchase.
Section 11. Amendment. Any provision of this Agreement may be amended or
modified in whole or in part at any time by an agreement in writing among the
Company and the Underwriters. No consent, waiver or similar act shall be
effective unless in writing and signed by the party sought to be bound.
Section 12. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
Section 13. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
Section 14. Effect of Headings. The Article and Section headings herein
are for convenience only and shall not affect the construction hereof.
15
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
LIBERTY MEDIA CORPORATION
By:
----------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
Credit Suisse First Boston Corporation
By:
-----------------------------------
Salomon Smith Barney Inc.
By:
-----------------------------------
TD Securities (USA) Inc.
By:
-----------------------------------
J.P. Morgan Securities Inc.
By:
-----------------------------------
16
SCHEDULE A
Principal
Amount of
Name of Underwriter Notes
------------------- -----
Credit Suisse First Boston Corporation............. $ 118,900.000
Salomon Smith Barney Inc........................... 39,634,000
TD Securities (USA) Inc............................ 39,633,000
J.P. Morgan Securities Inc......................... 39,633,000
-------------
Total........................................ $ 237,800,000
=============
Sch A-1
SCHEDULE B
Designated Subsidiaries
1. Starz Encore Group LLC
2. Liberty Digital, Inc.
3. Liberty Cablevision of Puerto Rico
Sch B-1
SCHEDULE C
LIBERTY MEDIA CORPORATION
$237,800,000
7-3/4% Senior Notes due 2009
1. The purchase price to be paid by the Underwriters for the Notes shall
be 100.268% of the principal amount thereof.
2. The interest rate on the Notes shall be 7-3/4% per annum.
3. The Notes shall be redeemable at the option of the Company as set forth
in the terms of the Notes.
Sch C-1