<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 1, 1994
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------
TELE-COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
DELAWARE 4841 84-1260157
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION OR 5619 DTC PARKWAY
ORGANIZATION) ENGLEWOOD, COLORADO 80111-3000
(303) 267-5500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
STEPHEN M. BRETT, ESQ.
TELE-COMMUNICATIONS, INC.
TERRACE TOWER II
5619 DTC PARKWAY
ENGLEWOOD, COLORADO 80111-3000
(303) 267-5500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
ROBERT W. MURRAY JR., ESQ. NORMAN D. SLONAKER, ESQ.
BAKER & BOTTS, L.L.P. BROWN & WOOD
885 THIRD AVENUE ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10022-4834 NEW YORK, NEW YORK 10048-0557
(212) 705-5000 (212) 839-5300
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [_]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Depositary Shares......................... (1) (2) $575,000,000(3) $198,276
- -------------------------------------------------------------------------------------------------------
% PRIDES, Convertible Preferred Stock,
Series F, par value $.01 per share....... (1) N/A N/A N/A
- -------------------------------------------------------------------------------------------------------
Class A Common Stock, par value $1.00 per
share, reserved for issuance upon conver-
sion or redemption of the % PRIDES,
Convertible Preferred Stock, Series F.... (4) N/A N/A N/A
- -------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) An indeterminate number of Depositary Shares and related % PRIDES,
Convertible Preferred Stock, Series F equal to the Proposed Maximum
Aggregate Offering Price of the Depositary Shares (which assumes exercise
of the Underwriters' over-allotment option) divided by the actual initial
offering price to the public per Depositary Share.
(2) The initial offering price per Depositary Share will depend, in part, on
the market prices of the Class A Common Stock at the time the initial
offering price to the public of the Depositary Shares and related %
PRIDES, Convertible Preferred Stock, Series F, is determined.
(3) Assumes exercise of the Underwriters' over-allotment option.
(4) An indeterminate number of shares of Class A Common Stock issuable upon, or
in connection with, the conversion or redemption of the Depositary Shares
and related % PRIDES, Convertible Preferred Stock, Series F, including
shares of Class A Common Stock issuable in respect of accrued and unpaid
dividends and additional shares of Class A Common Stock that may become
issuable as a consequence of adjustments to the Common Equivalent Rate and
Optional Conversion Rate (the respective rates at which a Depositary Share
and related % PRIDES, Convertible Preferred Stock, Series F, are
mandatorily or voluntarily convertible into shares of Class A Common
Stock).
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 1, 1994
PROSPECTUS
- ----------
22,000,000 DEPOSITARY SHARES
TELE-COMMUNICATIONS, INC.
EACH REPRESENTING A ONE-HUNDREDTH INTEREST IN A SHARE OF
% PRIDESSM
CONVERTIBLE PREFERRED STOCK, SERIES F, PAR VALUE $.01 PER SHARE
----------
Each of the Depositary Shares offered hereby (the "Depositary Shares")
represents a one-hundredth interest in a share of Preferred Redeemable
Increased Dividend Equity SecuritiesSM, % PRIDESSM, Convertible Preferred
Stock, Series F ("PRIDES"), of Tele-Communications, Inc. (the "Company") to be
deposited with Shawmut Bank Connecticut, National Association, as the
Depositary, and entitles the holder to that proportion of all the rights,
preferences, and privileges of the share of PRIDES represented thereby.
The annual dividend payable with respect to each Depositary Share is $
(being one-hundredth of the annual dividend rate of $ for each share of
PRIDES). Dividends will be cumulative from the date of issuance and will be
payable quarterly in arrears on each February 15, May 15, August 15 and
November 15, commencing February 15, 1995. The liquidation preference
applicable to each Depositary Share (being one-hundredth of the liquidation
preference for each share of PRIDES) is equal to the sum of (i) the per share
price to the public shown below, and (ii) one-hundredth of the amount of
accrued and unpaid dividends on each share of PRIDES.
On November 15, 1999 (the "Mandatory Conversion Date"), unless either
previously redeemed or converted at the option of the holder, each of the
outstanding Depositary Shares will mandatorily convert into (i) one share of
Class A Common Stock, par value $1.00 per share, of the Company (the "Class A
Common Stock"), subject to adjustment in certain events, and (ii) the right to
receive an amount in cash equal to all accrued and unpaid dividends with
respect to each Depositary Share.
Shares of PRIDES (and the related Depositary Shares) are not redeemable prior
to November 15, 1997. At any time and from time to time on or after November
15, 1997 until immediately prior to the Mandatory Conversion Date, the Company
may redeem any or all of the outstanding shares of PRIDES (and thereby the
related Depositary Shares). Upon any such redemption, each holder will receive,
in exchange for each Depositary Share so redeemed, the number of shares of
Class A Common Stock equal to the sum of (i) $ (equivalent to $
for each share of PRIDES), declining after February 14, 1998 as set forth
herein to $ (equivalent to $ for each share of PRIDES) on October
15, 1998 and until the Mandatory Conversion Date, and (ii) all accrued and
unpaid dividends thereon (the "Call Price"), divided by the Current Market
Price (as defined herein) on the applicable date of determination, but in no
event less than of a share of Class A Common Stock. At any time prior to
the Mandatory Conversion Date, unless previously redeemed, each of the
Depositary Shares is convertible at the option of the holder thereof into
of a share of Class A Common Stock (equivalent to a conversion price of $
per share of Class A Common Stock (the "Conversion Price")), subject to
adjustment in certain events. The number of shares of Class A Common Stock a
holder will receive upon redemption, and the value of the shares received upon
conversion, will vary depending on the market price of the Class A Common Stock
from time to time, all as set forth herein.
As of the date of this Prospectus, the Company has not paid and does not
intend to pay cash dividends on the Class A Common Stock, whereas dividends
will accrue on the PRIDES (and thereby on the Depositary Shares) at the rate of
% per annum. The opportunity for equity appreciation afforded by an
investment in the Depositary Shares (and in the PRIDES represented thereby) is
less than that afforded by an investment in the Class A Common Stock because
the Conversion Price is higher than the per share price to the public of the
Depositary Shares and the Company may, at its option, redeem the shares of
PRIDES (and thereby the Depositary Shares) at any time on or after November 15,
1997 and prior to the Mandatory Conversion Date, and may be expected to do so
if, among other circumstances, the Current Market Price of the Class A Common
Stock exceeds the Call Price. For a detailed description of the terms of the
shares of PRIDES and the Depositary Shares, see "Description of PRIDES" and
"Description of Depositary Shares."
SEE "CERTAIN CONSIDERATIONS" FOR CERTAIN FACTORS THAT SHOULD BE CAREFULLY
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE DEPOSITARY SHARES OFFERED HEREBY.
Application has been made to list the Depositary Shares on the Nasdaq
National Market. On October 31, 1994, the last reported sale price of the Class
A Common Stock on the Nasdaq National Market was $22 5/8 per share.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Depositary Share...................... $ $ $
- --------------------------------------------------------------------------------
Total(4).................................. $ $ $
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) Plus accrued dividends, if any, from the date of issue.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $ .
(4) The Company has granted to the Underwriters an option exercisable within 30
days after the date of this Prospectus to purchase up to 3,300,000
additional Depositary Shares to cover over-allotments, if any. If such
option is exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."
----------
The Depositary Shares are offered by the several Underwriters, subject to
prior sale, when, as and if issued to and accepted by them, and subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the Depositary Shares will be made in New York, New York on or
about November , 1994.
SMService mark of Merrill Lynch & Co., Inc.
----------
MERRILL LYNCH & CO.
CS FIRST BOSTON
MORGAN STANLEY & CO.
INCORPORATED
----------
The date of this Prospectus is November , 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEPOSITARY
SHARES OFFERED HEREBY OR THE UNDERLYING PRIDES OR THE CLASS A COMMON STOCK AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE NASDAQ NATIONAL MARKET, IN THE OVER-THE-
COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN PASSIVE
MARKET MAKING TRANSACTIONS IN THE CLASS A COMMON STOCK ON THE NASDAQ NATIONAL
MARKET IN ACCORDANCE WITH RULE 10b-6A UNDER THE SECURITIES EXCHANGE ACT OF
1934. SEE "UNDERWRITING."
The Company was incorporated in 1994 under the name "TCI/Liberty Holding
Company" for the purpose of combining the Company's predecessor, Tele-
Communications, Inc. (renamed "TCI Communications, Inc." and referred to herein
as "TCIC"), and Liberty Media Corporation ("Liberty"). On August 4, 1994 the
mergers (the "TCI/Liberty Combination") of TCIC and Liberty with separate
wholly-owned subsidiaries of the Company were consummated in a tax-free
transaction and each of TCIC and Liberty became wholly-owned subsidiaries of
the Company. In connection with the TCI/Liberty Combination, the Company
changed its name to Tele-Communications, Inc. and TCIC changed its name to TCI
Communications, Inc. UNLESS THE CONTEXT INDICATES OTHERWISE, AS USED IN THIS
PROSPECTUS THE TERM "COMPANY" MEANS, ON AND AFTER AUGUST 4, 1994, TELE-
COMMUNICATIONS, INC. (FORMERLY NAMED "TCI/LIBERTY HOLDING COMPANY") AND, BEFORE
AUGUST 4, 1994, TCIC (FORMERLY NAMED "TELE-COMMUNICATIONS, INC."), AND THEIR
RESPECTIVE CONSOLIDATED SUBSIDIARIES.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the following
documents filed with the Securities and Exchange Commission (the "Commission")
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"): (i)
the Company's Annual Report on Form 10-K for the year ended December 31, 1993,
as amended by Form 10-K/A (Amendment 1) (Commission File No. 0-5550), (ii) the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994,
as amended by Form 10-Q/A (Amendment 1) (Commission File No. 0-5550), (iii) the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994
(Commission File No. 0-5550), (iv) the Company's Current Reports on Form 8-K
dated February 15, 1994, February 25, 1994, April 6, 1994 and May 27, 1994, as
amended by Form 8-K/A (Amendment 1) (Commission File No. 0-5550), and (v) the
Company's Current Reports on Form 8-K dated August 5, 1994, August 18, 1994,
August 26, 1994 and October 27, 1994 (Commission File No. 0-20421).
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior
to the termination of the offering of the Depositary Shares described in this
Prospectus shall be deemed to be incorporated herein by reference and to be a
part hereof from the respective dates of the filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a Prospectus
is delivered, on the written or oral request of any such person, a copy of any
or all of the documents incorporated by reference herein other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into the documents that this Prospectus incorporates). Such requests should be
addressed to Stephen M. Brett, Esq., Executive Vice President and General
Counsel, Tele-Communications, Inc., Terrace Tower II, 5619 DTC Parkway,
Englewood, Colorado 80111-3000; telephone (303) 267-5500.
2
<PAGE>
SUMMARY
The following summary information should be read in conjunction with, and is
qualified in its entirety by, the more detailed information and financial
statements appearing elsewhere in this Prospectus or incorporated by reference
herein. Unless otherwise indicated, all information in this Prospectus assumes
that the over-allotment option granted to the Underwriters will not be
exercised.
THE COMPANY
The Company, through its subsidiaries and affiliates, is principally engaged
in the construction, acquisition, ownership and operation of cable television
systems and the provision of satellite-delivered video entertainment,
information and home shopping programming services to various video
distribution media, principally cable television systems. The Company believes
that, measured by the number of basic subscribers, it is the largest provider
of cable television services in the United States. At June 30, 1994, the
Company operated cable television systems serving approximately 11.8 million
basic subscribers (after giving pro forma effect to the TCI/Liberty Combination
and the proposed merger with TeleCable Corporation). See "Recent Developments."
In addition, at December 31, 1993, the Company's affiliates, accounted for
under the equity method, provided cable television services to approximately
4.7 million basic subscribers. The Company is also an investor in new
television and telecommunications ventures and technologies. The Company is a
Delaware corporation and its executive offices are located at Terrace Tower II,
5619 DTC Parkway, Englewood, Colorado 80111-3000; telephone (303) 267-5500.
THE OFFERING
SECURITIES............ Depositary Shares, each such share representing a one-
hundredth interest in a share of PRIDES and entitling
the holder to that portion of all the rights,
preferences and privileges of a share of PRIDES
(including dividend, voting, conversion and liquidation
rights and preferences). The Depositary Shares
mandatorily convert into shares of Class A Common Stock
on November 15, 1999 (the "Mandatory Conversion Date"),
and the Company has the option to redeem the shares of
PRIDES (and the related Depositary Shares), in whole or
in part, at any time and from time to time on or after
November 15, 1997, and prior to the Mandatory
Conversion Date at the Call Price (as defined herein),
payable in shares of Class A Common Stock. In addition,
the PRIDES are convertible into shares of Class A
Common Stock at the option of the holder at any time
prior to the Mandatory Conversion Date as set forth
below.
DIVIDENDS............. Holders of Depositary Shares will be entitled to
receive annual cumulative cash dividends at a rate per
annum of % of the stated value (equivalent to a
rate of $ per annum for each Depositary Share),
from the date of initial issuance, payable quarterly in
arrears on each February 15, May 15, August 15 and
November 15 or if any such date is not a business day,
on the next succeeding business day commencing February
15, 1995. See "Description of Depositary Shares--
Dividends and other Distributions."
MANDATORY CONVERSION.. On the Mandatory Conversion Date, unless previously
redeemed or converted, each outstanding Depositary
Share will mandatorily convert into (i) one share of
Class A Common Stock, subject to adjustment in certain
events, and (ii) the right to receive cash in an amount
equal to all accrued and unpaid dividends with respect
to such Depositary Share (other
3
<PAGE>
than previously declared dividends payable to a holder
of record as of a prior date). See "Description of
PRIDES--Mandatory Conversion of PRIDES" and
"Description of Depositary Shares--Dividends and other
Distributions." The value of the Class A Common Stock
that may be received by holders of Depositary Shares
upon their mandatory conversion may be more or less
than the amount paid for the Depositary Shares offered
hereby due to market fluctuations in the price of the
Class A Common Stock.
OPTIONAL REDEMPTION... Shares of PRIDES and the related Depositary Shares are
not redeemable prior to November 15, 1997. At any time
and from time to time on or after November 15, 1997,
and ending immediately prior to the Mandatory
Conversion Date, the Company may redeem any or all of
the outstanding shares of PRIDES and thereby the
related Depositary Shares. Upon any such redemption,
each holder of a Depositary Share will receive, in
exchange for each Depositary Share so redeemed, the
number of shares of Class A Common Stock equal to the
sum of (i) $ (equivalent to $ for each
share of PRIDES), declining after February 14, 1998 as
set forth herein to $ (equivalent to $
for each share of PRIDES) on October 15, 1998 and
thereafter until the Mandatory Conversion Date and (ii)
all accrued and unpaid dividends thereon (the "Call
Price"), divided by the Current Market Price (as
defined herein) on the applicable date of
determination, but in no event less than of a share
of Class A Common Stock. The Company may elect to pay
accrued and unpaid dividends to the redemption date in
cash, in which case such dividends would not be
included in the foregoing calculation. See "Description
of PRIDES--Optional Redemption" and "Description of
Depositary Shares--Conversion and Call Provisions." The
number of shares of Class A Common Stock to be
delivered in payment of the applicable Call Price will
be determined on the basis of the Current Market Price
of the Class A Common Stock prior to the announcement
of the redemption, and the market price of the Class A
Common Stock may vary between the date of such
determination and the subsequent delivery of such
shares.
CONVERSION AT THE
OPTION OF THE
HOLDER...............
At any time prior to the Mandatory Conversion Date,
unless previously redeemed, each Depositary Share is
convertible at the option of the holder thereof into
of a share of Class A Common Stock for each
Depositary Share (the "Optional Conversion Rate"),
equivalent to a conversion price of $ per share of
Class A Common Stock (the "Conversion Price"), subject
to adjustment as described herein. See "Description of
PRIDES--Conversion Adjustments" and "Description of
Depositary Shares--Conversion and Call Provisions." The
number of shares of Class A Common Stock a holder will
receive upon redemption, and the value of the shares
received upon conversion, will vary depending on the
market price of the Class A Common Stock from time to
time, all as set forth herein. The right of holders to
convert shares of PRIDES called for redemption (and the
related Depositary Shares) will terminate immediately
prior to the close of business on the redemption date.
See "Description of
4
<PAGE>
PRIDES--Conversion at the Option of the Holder" and
"Description of Depositary Shares--Dividends and other
Distributions."
ENHANCED DIVIDEND
YIELD; LESS EQUITY
APPRECIATION THAN
CLASS A COMMON
STOCK................
As of the date of this Prospectus, the Company has not
paid and does not intend to pay cash dividends on the
Class A Common Stock, whereas dividends will accrue on
the shares of PRIDES at the rate of % per annum. The
opportunity for equity appreciation afforded by an
investment in the Depositary Shares is less than that
afforded by an investment in the Class A Common Stock
because the Conversion Price is higher than the per
share price to the public of the Depositary Shares and
the Company may, at its option, redeem the shares of
PRIDES (and thereby the Depositary Shares) at any time
on or after November 15, 1997, and prior to the
Mandatory Conversion Date, and may be expected to do so
if, among other circumstances, the Current Market Price
of the Class A Common Stock after November 15, 1997
exceeds the Call Price. In such event, a holder of a
Depositary Share will receive less than one share of
Class A Common Stock, but no less than of a share
of Class A Common Stock. A holder may also surrender
for conversion any Depositary Shares called for
redemption up to the close of business on the
redemption date, and a holder that so elects to convert
will receive of a share of Class A Common Stock per
Depositary Share. The per share value of the Class A
Common Stock received by a holder of a Depositary Share
may be more or less than the per share amount paid for
the Depositary Shares offered hereby, due to market
fluctuations in the price of the Class A Common Stock.
See "Description of PRIDES--Enhanced Dividend Yield;
Less Equity Appreciation Than Class A Common Stock" and
"Description of Depositary Shares--Dividends and other
Distributions."
VOTING RIGHTS......... The holders of shares of PRIDES will have the right,
with the holders of Class A Common Stock and the
Company's Class B Common Stock, par value $1.00 per
share ("Class B Common Stock" and, collectively with
the Class A Common Stock, the "Common Stock"), to vote
in the election of Directors to the Company's Board of
Directors and upon each other matter coming before any
meeting of the holders of Common Stock on the basis of
4/5 of a vote for each Depositary Share (equivalent to
80 votes for each share of PRIDES). On any such matter,
the holders of shares of PRIDES and the holders of
Common Stock will vote together as one class (and with
the holders of any other class or series of the
Company's preferred stock entitled to vote as a class
with the Common Stock on such matter) except as
otherwise provided by law or the Company's Restated
Certificate of Incorporation. In addition, (i) whenever
dividends on the shares of PRIDES or any other class or
series of the Company's preferred stock ranking on a
parity with the PRIDES (all such classes and series,
including the shares of PRIDES, being hereinafter
called "Parity Stock") shall be in arrears and unpaid
for six quarterly dividend periods, and in certain
other circumstances, the holders of the shares of
PRIDES (voting separately as a class with the holders
of all other series of outstanding Parity Stock upon
which like voting rights have been conferred and are
5
<PAGE>
exercisable) will be entitled to vote, on the basis of
100 votes for each share of PRIDES (equivalent to one
vote for each Depositary Share), for the election of
two Preferred Stock Directors (as defined herein) of
the Company, these Directors to be in addition to the
number of Directors constituting the Board of Directors
immediately prior to the accrual of such right, and
(ii) the holders of the shares of PRIDES will have
voting rights with respect to certain alterations of
the Company's Restated Certificate of Incorporation and
certain other matters, voting on the same basis or
separately as a series. The owners of Depositary Shares
will be entitled to direct the voting of the shares of
PRIDES represented thereby. See "Description of
PRIDES--Voting Rights," "Description of Capital Stock--
Common Stock" and "Description of Depositary Shares--
Voting of PRIDES."
LIQUIDATION
PREFERENCE AND
RANKING..............
The shares of PRIDES will rank (i) senior in right and
priority of payment to the Class A Common Stock, the
Class B Common Stock, and the Company's Class B 6%
Cumulative Redeemable Exchangeable Junior Preferred
Stock ("Class B Preferred Stock") and (ii) on a parity
with the Company's Class A Preferred Stock, Convertible
Preferred Stock, Series C ("Series C Preferred Stock"),
and Redeemable Convertible Preferred Stock, Series E
("Series E Preferred Stock"), as to payment of
dividends, rights of redemption and rights on
liquidation. The liquidation preference of each share
of PRIDES is an amount equal to the sum of (i) the
stated liquidation preference, being 100 times the
price to the public per Depositary Share shown on the
cover page of this Prospectus (equivalent to a stated
liquidation preference per Depositary Share of an
amount equal to such price to the public) and (ii) all
accrued and unpaid dividends thereon. See "Description
of PRIDES--Dividends" and "--Liquidation Rights" and
"Description of Depositary Shares."
NASDAQ NATIONAL
MARKET SYMBOL OF
CLASS A COMMON
STOCK................
TCOMA
LISTING............... Application has been made to list the Depositary Shares
on the Nasdaq National Market under the symbol "TCOMO."
USE OF PROCEEDS....... The net proceeds from the sale of the Depositary Shares
offered hereby will be used, together with internally
generated funds, for general corporate purposes, which
may include funding for the Company's present and
future (i) investments, both domestic and
international, in cable, satellite and telephony
distribution systems and related ventures, (ii)
programming investments and (iii) developmental
expenses and investments in new telecommunications
technologies and related programming. To the extent the
net proceeds are not immediately used for such
purposes, they will initially be used to reduce
outstanding indebtedness on a reducing revolving loan
that matures on December 31, 1999. See "Use of
Proceeds" and "Recent Developments."
6
<PAGE>
CERTAIN CONSIDERATIONS
The following factors, among others, should be considered carefully before
making an investment decision with respect to the Depositary Shares.
Losses. The Company incurred a net loss in each of the last three fiscal
years and losses from continuing operations in the fiscal years ended December
31, 1993 and December 31, 1991. The Company had net earnings for the six-month
periods ended June 30, 1994 and 1993. Notwithstanding the losses it has
incurred, the Company has been able to, and expects to continue to be able to,
satisfy its debt service and other obligations as and when they become due. The
Company's operating income before depreciation, amortization and other non-cash
credits or charges ($1,858 million, $1,637 million and $1,430 million for the
years ended December 31, 1993, 1992 and 1991, respectively, and $902 million
and $939 million for the six months ended June 30, 1994 and 1993, respectively)
has historically been sufficient to cover its interest expense ($731 million,
$718 million and $826 million for the years ended December 31, 1993, 1992 and
1991, respectively, and $363 million for each of the six-month periods ended
June 30, 1994 and 1993). The Company's interest coverage ratio for the years
ended December 31, 1993, 1992 and 1991 was 254%, 228%, and 173%, respectively,
and for the six months ended June 30, 1994 and 1993 was 248% and 259%,
respectively.
Ratios of Earnings to Combined Fixed Charges and Preferred Stock
Dividends. The ratio of earnings to combined fixed charges and preferred stock
dividends was less than 1.00 for the years ended December 31, 1991, 1990 and
1989 as earnings available for combined fixed charges and preferred stock
dividends were inadequate to cover combined fixed charges and preferred stock
dividends for such periods. The amounts of the coverage deficiencies for the
years ended December 31, 1991, 1990 and 1989 were $177,000,000, $399,000,000
and $430,000,000, respectively. On a pro forma basis, the effect of the (i)
issuance and sale of the 22,000,000 Depositary Shares (representing 220,000
shares of PRIDES) offered hereby, (ii) the TCI/Liberty Combination and (iii)
the proposed merger with TeleCable Corporation would change the historical
ratios of earnings to combined fixed charges and preferred stock dividends for
the six months ended June 30, 1994 from 1.18 to and for the year ended
December 31, 1993 from 1.22 to . For the ratio calculations, earnings
available for combined fixed charges and preferred stock dividends consist of
earnings (losses) before income taxes plus combined fixed charges and preferred
stock dividends (minus capitalized interest), distributions from and (earnings)
losses of less than 50%-owned affiliates with debt not guaranteed by the
Company (net of earnings not distributed of less than 50%-owned affiliates),
and minority interest in earnings (losses) of consolidated subsidiaries (other
than preferred stock dividend requirements). Combined fixed charges and
preferred stock dividends consist of (i) interest (including capitalized
interest) on indebtedness, excluding interest to 50%-owned affiliates, (ii) the
Company's proportionate share of interest of 50%-owned affiliates, (iii) that
portion of rental expense the Company believes to be representative of interest
(one-third of rental expense), (iv) amortization of deferred debt expense, (v)
that portion of minority interest in earnings of consolidated subsidiaries that
represents preferred stock dividend requirements, excluding preferred stock
dividend requirements to 50%-owned affiliates, (vi) preferred stock dividend
requirements of 50%-owned affiliates, other than amounts to the Company and
(vii) on a pro forma basis, preferred stock dividend requirements of the
Company relating to the PRIDES, less the reduction in interest expense
resulting from the repayment of indebtedness with proceeds from the PRIDES. The
Company has guaranteed the debt of certain less than 50%-owned affiliates and
certain other entities in which it has an interest. Fixed charges of
$13,833,000, $2,517,000, $506,000, $710,000, and $745,000 relating to such
guarantees for the years ended December 31, 1993, 1992, 1991, 1990 and 1989
respectively, and fixed charges of $5,927,000 and $1,258,000 relating to such
guarantees for the six months ended June 30, 1994 and 1993, respectively, and,
on a pro forma basis, fixed charges of $6,913,000 and $14,365,000 relating to
such guarantees for the six months ended June 30, 1994 and for the year ended
December 31, 1993, respectively, have not been included in fixed charges.
Holding Company Structure; Restrictions on Dividends. The Company is a
holding company and its assets consist solely of investments in its
subsidiaries. All of the consolidated liabilities of the Company have been
incurred by its subsidiaries. The Company's rights, and therefore the extent to
which the holders of the PRIDES will be able to participate in the distribution
of assets of any subsidiary upon the latter's liquidation
7
<PAGE>
or reorganization, will be subject to prior claims of the subsidiary's
creditors, including trade creditors, except to the extent that the Company may
itself be a creditor with recognized claims against such subsidiary (in which
case the claims of the Company would still be subject to the prior claims of
any secured creditor of such subsidiary and of any holder of indebtedness of
such subsidiary that is senior to that held by the Company).
The Company's ability to pay dividends on the PRIDES, and on any other
classes and series of Parity Stock, is dependent upon the ability of the
Company's subsidiaries to distribute amounts to the Company in the form of
dividends, loans or advances or in the form of repayment of loans and advances
from the Company. The subsidiaries are separate and distinct legal entities and
have no obligation, contingent or otherwise, to pay the dividends on the PRIDES
or to make any funds available therefor, whether by dividends, loans or other
payments. The payment of dividends, loans or advances to the Company by its
subsidiaries may be subject to statutory or regulatory restrictions, is
contingent upon the cash flows generated by those subsidiaries and is subject
to various business considerations. Further, certain of the Company's
subsidiaries are subject to loan agreements that prohibit or limit the transfer
of funds by such subsidiaries to the Company in the form of dividends, loans,
or advances and require that such subsidiaries' indebtedness to the Company be
subordinate to the indebtedness under such loan agreements. The Company's
subsidiaries currently have the ability to transfer funds to the Company in
amounts exceeding the Company's dividend requirement on the PRIDES. The amount
of net assets of subsidiaries subject to such restrictions exceeds the
Company's consolidated net assets. See "Price Range of Class A Common Stock and
Dividends."
8
<PAGE>
THE COMPANY
Since the early 1950's, the Company and its predecessors, through its
subsidiaries and affiliates, have been principally engaged in the construction,
acquisition, ownership and operation of cable television systems and, more
recently, in the provision of satellite delivered programming services to
various distribution media, principally cable television systems. The Company
has become involved, as an investor and developer, in new television and
telecommunications ventures and technologies. The Company is organized into
four business units: Domestic Cable and Communications; Programming;
International Cable and Programming; and Technology/Venture Capital.
DOMESTIC CABLE AND COMMUNICATIONS
Based on the number of basic subscribers served by the Company and its
affiliates, the Company is the largest provider of cable television services in
the United States. At June 30, 1994, the Company, through its subsidiaries,
operated cable television systems serving approximately 11.8 million basic
subscribers throughout the continental United States and Hawaii (after giving
pro forma effect to the TCI/Liberty Combination and the proposed merger with
TeleCable Corporation). In addition, at December 31, 1993, the Company's
affiliates, accounted for under the equity method, provided cable television
services to approximately 4.7 million basic subscribers. Through the current
and planned upgrade of its cable plant, including the utilization of fiber
optic cable, the Company expects to reduce expenses by improving system
reliability and to increase revenues through added channel capacity and
services. The system upgrades are an important element in the Company's efforts
to develop additional revenue opportunities, including opportunities involving
telephony and interactive services.
In addition to its owned and operated cable television systems, the Company
has an investment, along with other cable television operators, in Teleport
Communications Group, Inc., the nation's largest competitive access provider,
and intends to further expand its telephony investments as permitted by
applicable federal and state regulatory authorities. The Company also has an
investment in Primestar Partners, a direct broadcast satellite service.
PROGRAMMING
The Company, through its subsidiaries and affiliates, provides satellite-
delivered video entertainment, information and home shopping television
services to video distribution outlets, including cable television systems,
broadcast television stations and home satellite networks. The Company has
ownership interests in several domestic programming businesses, including
Turner Broadcasting System, Inc.; Discovery Communications, Inc.; Home Shopping
Network Inc.; QVC, Inc.; Encore Media Corporation; BET Holdings, Inc.;
International Family Entertainment; E! Entertainment Television; and two
national and 15 regional sports networks. Recently, the Company launched
STARZ!, a first-run premium programming service. The Company is also the owner
of Netlink USA, one of the larger providers of programming packages to home
satellite dish owners.
INTERNATIONAL CABLE AND PROGRAMMING
The Company has significant investments in cable and telecommunications
operations and television programming in international markets. The Company
seeks to invest in markets with favorable regulatory environments and
attractive growth opportunities. Among its overseas investments, the Company
has a 50% interest in TeleWest Communications plc ("TeleWest"), a joint venture
with U S WEST Communications, Inc. TeleWest provides cable television and
residential and business cable telephony in the United Kingdom. The Company
also has a majority interest in Flextech plc, which provides television
programming in the United Kingdom through its interests in Bravo, The
Children's Channel, UK Gold, UK Living and The Family Channel UK. Through
certain other joint ventures, the Company has interests in cable television
systems and television programming in Hungary, Norway, Sweden, Israel, Ireland,
Malta, France, Chile, Puerto Rico, the Dominican Republic, New Zealand,
Australia, Singapore and Japan.
9
<PAGE>
TECHNOLOGY/VENTURE CAPITAL
The Company is an investor in companies and joint ventures involved in
developing and providing programming for new television and telecommunications
technologies. Current investments and technologies under development include
interactive and set-top box technology, new programming networks, entertainment
software and other services for wireline and wireless switched broadband
interactive networks. The Company has formed a joint venture with Sega of
America and Time Warner Entertainment, L.P. to develop and market the first
video game channel, called "The Sega Channel." More recently, the Company has
made investments in TSX Corporation, a producer of communications equipment,
and Interactive Network, Inc., a developer of interactive television
programming systems. The Company has announced a proposed investment in Acclaim
Entertainment, Inc. ("Acclaim") and the formation of a joint venture with
Acclaim that will develop, acquire and distribute games and other interactive
entertainment software over various telecommunications networks. The Company
has also been at the forefront of digital compression technology and is a
founder of the National Digital Television Center, a provider of digital
compression services.
RECENT DEVELOPMENTS
On August 4, 1994, the TCI/Liberty Combination was consummated. As a result
of the TCI/Liberty Combination, TCIC and Liberty, which prior to the
TCI/Liberty Combination were each separate publicly held companies, became
wholly-owned subsidiaries of the Company and the stockholders of TCIC and
Liberty became stockholders of the Company in a tax-free transaction.
On August 8, 1994, the Company, TCIC and TeleCable Corporation ("TeleCable")
entered into a definitive merger agreement whereby TeleCable will be merged
with and into TCIC (the "TeleCable Merger"). At June 30, 1994, TeleCable
operated cable television systems that served approximately 740,000 basic
subscribers in 15 states. The aggregate $1.6 billion purchase price (which is
subject to adjustment at the closing of the TeleCable Merger) will be satisfied
by TCIC's assumption of approximately $300 million of TeleCable's net
liabilities and the issuance to TeleCable's shareholders of approximately 42
million shares of Class A Common Stock and 1 million shares of a new series of
preferred stock to be designated "Convertible Preferred Stock, Series D" (the
"Series D Preferred Stock"), with an aggregate initial liquidation value of
$300 million. The Series D Preferred Stock will accrue dividends at a rate of
5.5% per annum, will be convertible into 10 million shares of Class A Common
Stock and will be redeemable by the Company after five years, or the holder can
cause the Company to redeem after ten years, from the date it is issued. See
"Description of Capital Stock--Preferred Stock." Consummation of the TeleCable
Merger is subject to various franchise and other governmental approvals and the
approval of TeleCable's shareholders.
On October 25, 1994, the Company, Comcast Corporation ("Comcast"), Cox Cable
Communications, Inc. ("Cox") and Sprint Corporation (collectively, the "Venture
Participants") announced a joint venture to offer domestic local, long
distance, wired and wireless telephone services. The Venture Participants have
signed definitive wireless agreements and created partnerships ("Wireless
Partnerships") to bid jointly for broadband personal communications services
(PCS) licenses that the FCC will auction in a series of simultaneous multiple
round auctions commencing in December 1994. The parties have also agreed to
work together to develop definitive agreements for their local wired telephone
activities. The Venture Participants intend that Teleport Communications Group,
Inc. (and certain affiliated entities), which is owned by several cable
television operators (including the Company, Comcast and Cox) and is the
nation's largest competitive access provider, will be contributed to the
venture. The Venture Participants' ability to offer an integrated package of
voice, video and data services is subject in most states to receipt of certain
regulatory consents and approvals and/or the modification or repeal of existing
legislative barriers.
10
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Depositary Shares
offered hereby, after deducting expenses, will be $ ($ if the
Underwriters' over-allotment option is exercised in full). The net proceeds
from this offering will be used, together with internally generated funds, for
general corporate purposes, which may include funding of current and future (i)
investments, both domestic and international, in cable, satellite and telephony
distribution systems and related ventures (including funding for the Company's
capital and other financial commitments to the Wireless Partnerships), (ii)
programming investments and (iii) developmental expenses and investments in new
telecommunications technologies and related programming.
To the extent the net proceeds are not immediately applied for such purposes,
they will initially be used to reduce outstanding indebtedness on a reducing
revolving loan that matures on December 31, 1999. The current interest rate on
such indebtedness is 5.3% and the loan was originated pursuant to a Credit
Agreement, dated December 22, 1993, between the Company and the banks signatory
to the Credit Agreement.
CAPITALIZATION
The following table sets forth (a) the historical capitalization of the
Company and its consolidated subsidiaries at June 30, 1994, (b) the pro forma
capitalization of the Company and its consolidated subsidiaries at June 30,
1994 reflecting (i) the issuance of Class A Common Stock and the issuance of
Class B Preferred Stock in connection with the TCI/Liberty Combination and (ii)
the assumed issuance of Class A Common Stock and Series D Preferred Stock and
assumption of certain debt in connection with the TeleCable Merger (see "Recent
Developments"), and (c) the pro forma capitalization adjusted to reflect (i)
the issuance and sale of the Depositary Shares offered hereby (assuming no
exercise of the Underwriters' over-allotment option) and (ii) the initial
application of the net proceeds to reduce indebtedness outstanding under one of
the Company's reducing revolving loans pending their later use as set forth
under "Use of Proceeds." The following should be read in conjunction with the
Company's consolidated financial statements and the notes thereto.
<TABLE>
<CAPTION>
JUNE 30, 1994
---------------------------------
AS REPORTED PRO FORMA AS ADJUSTED
----------- --------- -----------
(IN MILLIONS)
<S> <C> <C> <C>
Total Debt................................... $10,111 10,626
Minority interests in equity of consolidated
subsidiaries................................ 318 416 416
Series D Redeemable Preferred Stock.......... -- 300 300
Stockholders' equity:
Class B Preferred Stock.................... -- -- --
PRIDES..................................... -- --
Class A Common Stock....................... 483 611 611
Class B Common Stock....................... 47 89 89
Additional paid-in capital................. 2,310 3,692
Cumulative foreign currency translation
adjustment................................ (14) (14) (14)
Unrealized holding gains for available-for-
sale securities........................... 128 370 370
Note receivable from related party......... -- (15) (15)
Accumulated deficit........................ (310) (310) (310)
Treasury stock, at cost.................... (333) (545) (545)
------- ------ ------
Total stockholders' equity................. 2,311 3,878
------- ------ ------
Total capitalization..................... $12,740 15,220
======= ====== ======
</TABLE>
11
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table sets forth selected historical financial data for the
Company for the six-month periods ended June 30, 1994 and 1993 and for each of
the five fiscal years in the period ended December 31, 1993. The table also
sets forth selected unaudited pro forma balance sheet data for the Company as
of June 30, 1994, giving pro forma effect to the TCI/Liberty Combination and
the TeleCable Merger as if such transactions had occurred as of June 30, 1994,
and selected unaudited pro forma statement of operations data for the Company
for the six months ended June 30, 1994 and for the year ended December 31,
1993, giving pro forma effect to the TCI/Liberty Combination and the TeleCable
Merger as if the same had occurred prior to January 1, 1993. See "Recent
Developments." The pro forma financial data are not necessarily indicative of
the financial position or results of operations that would have been obtained
had the TCI/Liberty Combination and the TeleCable Merger been effective at or
prior to such assumed dates, or of the future results of operations of the
Company. The following information is qualified in its entirety by, and should
be read in conjunction with, the consolidated financial statements and notes
thereto of the Company and the unaudited condensed pro forma financial
statements and notes thereto of the Company incorporated by reference in this
Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------------------- -------------------------------------------
PRO FORMA PRO FORMA
1994 1994 1993 1993 1993 1992 1991 1990 1989
--------- ----- ----- --------- ----- ----- ----- ----- -----
(IN MILLIONS, EXCEPT PER SHARE AND RATIO AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
DATA:
Revenue................ $2,927 2,141 2,060 5,649 4,153 3,574 3,214 2,940 2,358
Operating, selling,
general and
administrative
expenses.............. $1,909 1,239 1,121 3,605 2,295 1,937 1,784 1,678 1,343
Depreciation and
amortization.......... $ 554 481 443 1,062 911 764 756 716 560
Operating income....... $ 493 439 493 940 916 864 674 546 455
Earnings (loss) from:
Continuing
operations.......... $ 45 38 79 (33) (7) 7 (78) (191) (262)
Discontinued
operations.......... -- -- -- -- -- (15) (19) (63) (3)
------ ----- ----- ----- ----- ----- ----- ----- -----
45 38 79 (33) (7) (8) (97) (254) (265)
Dividend requirement
on redeemable
preferred stocks...... (13) -- (1) (26) (2) (15) -- -- --
------ ----- ----- ----- ----- ----- ----- ----- -----
Net earnings (loss)
attributable to
common shareholders... $ 32 38 78 (59) (9) (23) (97) (254) (265)
====== ===== ===== ===== ===== ===== ===== ===== =====
Primary earnings
(loss) attributable
to common
shareholders per
common and common
equivalent share:
Continuing
operations.......... $ .05 .08 .17 (.10) (.02) (.01) (.22) (.54) (.74)
Discontinued
operations.......... -- -- -- -- -- (.04) (.05) (.18) (.01)
------ ----- ----- ----- ----- ----- ----- ----- -----
$ .05 .08 .17 (.10) (.02) (.05) (.27) (.72) (.75)
====== ===== ===== ===== ===== ===== ===== ===== =====
Primary weighted
average common shares
outstanding........... 652 451 468 592 433 424 360 355 353
Ratio of earnings to
combined fixed
charges and preferred
stock dividends(1).... 1.18x 1.36x 1.22x 1.02x -- -- --
OTHER DATA:
Operating income
before depreciation,
amortization and non-
cash operating
expenses(2)........... $1,018 902 939 2,044 1,858 1,637 1,430 1,262 1,015
Consolidated basic
subscribers........... 11.8 10.9 10.5 11.6 10.7 10.2 8.9 8.5 7.8
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
---------------- ----------------------------------
PRO FORMA
1994 1994 1993 1992 1991 1990 1989
--------- ------ ------ ------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY BALANCE SHEET DATA:
Property and equipment,
net...................... $ 6,038 5,207 4,935 4,562 4,081 4,156 3,692
Franchise costs, net...... $11,079 9,097 9,197 9,300 8,104 7,348 6,811
Net assets of
discontinued operations.. $ -- -- -- -- 242 54 580
Total assets.............. $20,990 17,118 16,520 16,310 15,166 14,106 13,560
Total Debt................ $10,626 10,111 9,900 10,285 9,455 8,922 8,007
Stockholders' equity...... $ 3,878 2,311 2,112 1,726 1,570 748 840
Shares outstanding (net
of treasury shares):
Class A Common Stock.... 525 404 403 382 370 310 305
Class B Common Stock.... 85 47 47 48 49 48 48
</TABLE>
(footnotes on following page)
12
<PAGE>
FOOTNOTES
(1) For the ratio calculations, earnings available for combined fixed charges
and preferred stock dividends consist of earnings (losses) before income
taxes plus combined fixed charges and preferred stock dividends (minus
capitalized interest), distributions from and (earnings) losses of less
than 50%-owned affiliates with debt not guaranteed by the Company (net of
earnings not distributed of less than 50%-owned affiliate), and minority
interests in earnings (losses) of consolidated subsidiaries (other than
preferred stock dividend requirements). Combined fixed charges and
preferred stock dividends consist of (i) interest (including capitalized
interest) on indebtedness, excluding interest to 50%-owned affiliates,
(ii) the Company's proportionate share of interest of 50%-owned
affiliates, (iii) that portion of rental expense the Company believes to
be representative of interest (one-third of rental expenses), (iv)
amortization of deferred debt expense, (v) that portion of minority
interest in earnings of consolidated subsidiaries that represents
preferred stock dividend requirements, excluding preferred stock dividend
requirements to 50%-owned affiliates, (vi) preferred stock dividend
requirements of 50%-owned affiliates, other than amounts to the Company,
and (vii) on a pro forma basis, preferred stock dividend requirements of
the Company relating to the PRIDES, less the reduction in interest expense
resulting from the repayment of indebtedness with proceeds from the
PRIDES. The Company has guaranteed the debt of certain less than 50%-owned
affiliates and certain other entities in which it has an interest. Fixed
charges of $13,833,000, $2,517,000, $506,000, $710,000, and $745,000
relating to such guarantees for the years ended December 31, 1993, 1992,
1991, 1990 and 1989, respectively, and $5,927,000 and $1,258,000 for the
six months ended June 30, 1994 and 1993, respectively, and, on a pro forma
basis, fixed charges of $6,193,000 and $14,365,000 relating to such
guarantees for the six months ended June 30, 1994 and for the year ended
December 31, 1993, respectively, have not been included in fixed charges.
The ratio of earnings to combined fixed charges and preferred stock
dividends was less than 1.00 for the years ended December 31, 1991, 1990
and 1989 as earnings available for combined fixed charges and preferred
stock dividends were inadequate to cover combined fixed charges and
preferred stock dividends for such periods. The amount of the coverage
deficiencies for the years ended December 31, 1991, 1990 and 1989 were
$177,000,000, $399,000,000 and $430,000,000, respectively. On a pro forma
basis, the effect of the (i) issuance and sale of the 22,000,000
Depositary Shares (representing 220,000 shares of PRIDES) offered hereby,
(ii) the TCI/Liberty Combination and (iii) the proposed TeleCable Merger
would change the historical ratios of earnings to combined fixed charges
and preferred stock dividends for the six months ended June 30, 1994 from
1.18 to and for the year ended December 31, 1993 from 1.22 to .
(2) Operating income before depreciation, amortization and non-cash operating
expenses should not be considered as an alternative to net income or to
cash flows or to any other measure of performance or liquidity as an
indicator of an entity's operating performance.
PRICE RANGE OF CLASS A COMMON STOCK AND DIVIDENDS
The Class A Common Stock is traded on the Nasdaq National Market under the
symbol "TCOMA." The following table sets forth the high and low sales prices
of Class A Common Stock for the periods indicated. The prices have been
rounded up to the nearest eighth and do not include retail markups, markdowns
or commissions.
<TABLE>
<CAPTION>
HIGH LOW
------- ---------
<S> <C> <C>
Year ended December 31, 1992
First Quarter......................................... $18 1/8 $15 3/8
Second Quarter........................................ 20 16 1/8
Third Quarter......................................... 20 7/8 16 3/4
Fourth Quarter........................................ 22 16 1/2
Year ended December 31, 1993
First Quarter......................................... 25 1/2 20 3/4
Second Quarter........................................ 24 17 1/2
Third Quarter......................................... 26 3/4 21 5/8
Fourth Quarter........................................ 33 1/4 24 7/8
Year ended December 31, 1994
First Quarter......................................... 30 1/4 20 3/8
Second Quarter........................................ 23 3/8 18 1/4
Third Quarter*........................................ 24 1/8 19 45/64
Fourth Quarter (through October 31, 1994)............. 22 7/8 22 1/2
</TABLE>
- --------
*The TCI/Liberty Combination was consummated on August 4, 1994.
On October 31, 1994, the last reported sale price of the Class A Common
Stock on the Nasdaq National Market was $22 5/8 per share.
The Company has not paid cash dividends on the Class A Common Stock or Class
B Common Stock and has no present intention of doing so. Payment of cash
dividends, if any, in the future will be determined by the Company's Board of
Directors in light of the Company's earnings, financial condition and other
relevant considerations. As a holding company, the Company's ability to pay
cash dividends is dependent upon its ability to receive cash dividends and
advances from its subsidiaries. Certain loan agreements to which certain
subsidiaries of the Company are parties or are subject contain restricted
payment provisions that limit the amount of dividends, other than stock
dividends, that those companies may pay. Future loan agreements may contain
similar provisions. See "Certain Considerations--Holding Company Structure;
Restrictions on Dividends."
13
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue 1,100,000,000 shares of Class A Common
Stock and 150,000,000 shares of Class B Common Stock. In addition, it is
authorized to issue up to 12,375,096 shares of Preferred Stock, par value $.01
per share ("Preferred Stock"), divided into 700,000 shares of Class A Preferred
Stock, 1,675,096 shares of Class B Preferred Stock, and 10,000,000 shares of
Series Preferred Stock, par value $.01 per share (the "Series Preferred
Stock"). The following summary of certain provisions of the Company's Restated
Certificate of Incorporation and Bylaws does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all provisions of
such Restated Certificate of Incorporation and Bylaws.
COMMON STOCK
Each share of Class A Common Stock has one vote and each share of Class B
Common Stock has 10 votes per share. The Class A and Class B Common Stock are
otherwise identical in all respects, except that each share of Class B Common
Stock is convertible into one share of Class A Common Stock at the option of
the holder. A number of shares of Class A Common Stock equal to the number of
shares of Class B Common Stock outstanding from time to time are set aside and
reserved for issuance upon conversion of shares of Class B Common Stock. The
Class A Common Stock is not convertible into Class B Common Stock.
Subject to the preferential rights, if any, of holders of any then
outstanding Preferred Stock, the holders of the Class A and Class B Common
Stock are entitled to receive dividends when and as declared by the Board of
Directors out of funds legally available for such payment. Holders of Class A
and Class B Common Stock have no preemptive rights to purchase additional
shares. Subject to the preferential rights of holders of any then outstanding
Preferred Stock, the holders of Class A and Class B Common Stock are entitled
to share ratably in the assets of the Company available for distribution to
stockholders in the event of the Company's liquidation, dissolution or winding
up.
The holders of the Class A and Class B Common Stock vote as one class for the
election of directors and have no cumulative voting rights in the election of
directors. The Company's Restated Certificate of Incorporation also provides
that the Board of Directors be divided into three classes of approximately
equal size, with one class to be elected for a three-year term at each annual
meeting of stockholders.
The Restated Certificate of Incorporation may be amended or repealed only
upon a vote of the holders of 66 2/3% of the total voting power of the
outstanding Class A and Class B Common Stock and any then outstanding Preferred
Stock entitled to vote with the Class A and Class B Common Stock generally on
matters submitted to stockholders for a vote (collectively "Voting Stock"),
voting as one class, and the Company's Bylaws may be amended only upon the
affirmative vote of at least 75% of the members of the Board of Directors, or
by a vote of holders of 66 2/3% of the total voting power of the outstanding
Voting Stock, voting as a single class. In addition, the Restated Certificate
of Incorporation provides that, subject to the rights of the holders of any
class or series of Preferred Stock, a vote of the holders of 66 2/3% of the
total voting power of the outstanding Voting Stock, voting as a single class,
is required to remove directors (who may be removed only for cause) and to
approve dissolution and certain mergers, consolidations, sales of assets and
similar transactions.
The transfer agent for the Company's Class A and Class B Common Stock is The
Bank of New York, 48 Wall Street, New York, New York 10005.
PREFERRED STOCK
In addition to the Class A Preferred Stock and Class B Preferred Stock, the
Company's Restated Certificate of Incorporation authorizes the Board of
Directors to, among other things, issue up to 10,000,000 shares of Series
Preferred Stock from time to time, in one or more series, with such
designations, preferences and relative participating, optional or other special
rights, qualifications, limitations or restrictions thereof as shall be stated
and expressed in a resolution or resolutions providing for the issue of such
series adopted by the Board of Directors.
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All shares of any one series of the Series Preferred Stock are required to be
alike in every particular and all series are required to rank equally and be
identical in all respects, except insofar as they may vary with respect to
matters which the Board of Directors is expressly authorized by the Restated
Certificate of Incorporation to determine in the resolution or resolutions
providing for the issue of any series of the Series Preferred Stock.
As of the date of this Prospectus, the Company had issued and outstanding
592,798 shares of Class A Preferred Stock (all of which shares are held by
subsidiaries of the Company); 1,675,096 shares of Class B Preferred Stock (of
which 55,070 shares are held by subsidiaries of the Company); and 316,961
shares of Series Preferred Stock, of which 70,559 shares have been issued as
Convertible Preferred Stock, Series C (the "Series C Preferred Stock") and
246,402 shares have been issued as Series E Preferred Stock. All of the
outstanding shares of Series E Preferred Stock are held by subsidiaries of the
Company. The Common Stock and the Class B Preferred Stock ranks junior to the
Class A Preferred Stock, Series C Preferred Stock and Series E Preferred Stock
with respect to the declaration and payment of dividends, rights of redemption,
and rights on liquidation. In addition, the terms of the TeleCable Merger
provide for the issuance of 1,000,000 shares of a series of Series Preferred
Stock to be designated "Convertible Preferred Stock, Series D." If the Series D
Preferred Stock is issued upon the consummation of the TeleCable Merger, the
Series D Preferred Stock will rank senior to the Common Stock and the Class B
Preferred Stock and pari passu with the Class A Preferred Stock, Series C
Preferred Stock and Series E Preferred Stock with respect to the declaration
and payment of dividends, rights of redemption, and rights on liquidation. The
PRIDES will rank senior to the Common Stock and the Class B Preferred Stock and
pari passu with the Class A Preferred Stock, Series C Preferred Stock, Series E
Preferred Stock and, if issued, the Series D Preferred Stock, with respect to
the declaration and payment of dividends, rights of redemption, and rights on
liquidation.
DESCRIPTION OF PRIDES
The summary contained herein of the terms of shares of PRIDES does not
purport to be complete and is subject to and qualified in its entirety by
reference to all of the provisions of the Company's Restated Certificate of
Incorporation and the Certificate of Designations (the "Certificate of
Designations") relating to the shares of PRIDES, copies of which have been
filed as exhibits to the Registration Statement of which this Prospectus is a
part.
The Company's Board of Directors has adopted resolutions authorizing the
issuance of up to 253,000 shares of % PRIDES, Convertible Preferred Stock,
Series F, stated value $ per share. Each of the Depositary Shares
represents beneficial ownership of one-hundredth of a share of PRIDES and
entitles the owner to that proportion of all the rights, preferences and
privileges of the share of PRIDES represented thereby. See "Description of
Depositary Shares." The per share price of the PRIDES upon the initial issuance
thereof (the "Purchase Price") is equal to the price to the public (appearing
on the cover page of this Prospectus) of 100 Depositary Shares. The PRIDES will
not be listed on any exchange or on The Nasdaq Stock Market, and the Company
does not expect that there will be any trading market for the shares of PRIDES
except as represented by the trading market for the Depositary Shares.
DIVIDENDS
Holders of shares of PRIDES will be entitled to receive, when and as declared
by the Board of Directors out of unrestricted funds legally available therefor,
cash dividends from the date of initial issuance of the shares of PRIDES at the
rate per annum of % of the stated value per share (equivalent to $ per
annum, or $ per quarter, for each share of PRIDES), payable quarterly in
arrears on each February 15, May 15, August 15 and November 15, or, if any such
date is not a business day, on the next succeeding business day; provided,
however, that with respect to any dividend period during which a redemption
occurs, the Company may, at its option, declare accrued dividends to, and pay
such dividends on, the date fixed for redemption, in which case such dividends
will be payable in cash to the holders of shares of PRIDES as of the record
date for such dividend payment and would not be included in the calculation of
the related Call Price as discussed below. The first dividend period will be
from the date of initial issuance of the shares of PRIDES to but excluding
February 15, 1995, and the first dividend will be payable on February 15, 1995.
Dividends will cease to accrue in respect of the shares of PRIDES on the
Mandatory Conversion Date or on the date of their earlier conversion or
redemption.
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Dividends payable on any dividend payment date will be paid to holders of
record as they appear on the stock register of the Company on the first day of
the month in which such dividend payment date shall occur, or, if any such day
is not a business day, on the next succeeding business day. Dividends payable
on shares of PRIDES for any period less than a full quarterly dividend period
will be computed on the basis of a 360-day year of twelve 30-day months and the
actual number of days elapsed in any period less than one month.
Dividends on shares of PRIDES will accrue on a daily basis whether or not
there are unrestricted funds legally available for the payment of such
dividends and whether or not such dividends are declared. Accrued but unpaid
dividends on shares of PRIDES will cumulate as of the dividend payment date on
which they first become payable, but no interest will accrue on accumulated but
unpaid dividends on shares of PRIDES.
The shares of PRIDES will rank on a parity, as to payment of dividends,
rights of redemption and rights on liquidation, with the Company's existing
Class A Preferred Stock, Series C Preferred Stock and Series E Preferred Stock
and with any future class or series of Preferred Stock issued by the Company,
unless the instruments creating such class or series expressly states otherwise
(the PRIDES, together with all such classes or series of Preferred Stock
ranking on a parity with the PRIDES, are herein referred to as "Parity Stock").
As long as any shares of PRIDES are outstanding, no dividends (other than
dividends payable in shares of, or warrants, rights or options exercisable for
or convertible into shares of, Common Stock or any other capital stock of the
Company ranking junior to the PRIDES as to the payment of dividends, rights of
redemption, and rights on liquidation ("Junior Stock") and cash in lieu of
fractional shares in connection with any such dividend) will be paid or
declared in cash or otherwise, nor will any other distribution be made (other
than a distribution payable in Junior Stock and cash in lieu of fractional
shares in connection with any such distribution), on any Junior Stock unless
(i) full dividends on Parity Stock (including the shares of PRIDES) have been
paid, or declared and set aside for payment, for all dividend periods
terminating at or before the date of such Junior Stock dividend or distribution
payment to the extent such dividends are cumulative; (ii) dividends in full for
the current quarterly dividend period have been paid, or declared and set aside
for payment, on all Parity Stock to the extent such dividends are cumulative;
(iii) the Company has paid or set aside all amounts, if any, then or
theretofore required to be paid or set aside for all purchase, retirement, and
sinking funds, if any, for any Parity Stock; and (iv) the Company is not in
default on any of its obligations to redeem any Parity Stock.
In addition, as long as any shares of PRIDES are outstanding, no shares of
any Junior Stock may be purchased, redeemed, or otherwise acquired by the
Company or any of its subsidiaries (except in connection with a
reclassification or exchange of any Junior Stock through the issuance of other
Junior Stock (and cash in lieu of fractional shares in connection therewith) or
the purchase, redemption or other acquisition of any Junior Stock with any
Junior Stock (and cash in lieu of fractional shares in connection therewith)),
nor may any funds be set aside or made available for any sinking fund for the
purchase or redemption of any Junior Stock unless: (i) full dividends on Parity
Stock have been paid, or declared and set aside for payment, for all dividend
periods terminating at or before the date of such purchase or redemption to the
extent such dividends are cumulative; (ii) dividends in full for the current
quarterly dividend period have been paid, or declared and set aside for
payment, on all Parity Stock to the extent such dividends are cumulative; (iii)
the Company has paid or set aside all amounts, if any, then or theretofore
required to be paid or set aside for all purchase, retirement, and sinking
funds, if any, for any Parity Stock; and (iv) the Company is not in default on
any of its obligations to redeem any Senior Preferred Stock.
Subject to the provisions described above, such dividends or other
distributions (payable in cash, property, or Junior Stock) as may be determined
by the Board of Directors may be declared and paid on the shares of any Junior
Stock from time to time and Junior Stock may be purchased, redeemed, or
otherwise acquired by the Company or any of its subsidiaries from time to time.
In the event of the declaration and payment of any such dividends or other
distributions, the holders of such Junior Stock will be entitled, to the
exclusion of the holders of the PRIDES, to share therein according to their
respective interests.
As long as any shares of PRIDES are outstanding, dividends or other
distributions may not be declared or paid on any Parity Stock (other than
dividends or other distributions payable in Junior Stock and cash in
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lieu of fractional shares in connection therewith), and the Company may not
purchase, redeem or otherwise acquire any Parity Stock (except with any Junior
Stock and cash in lieu of fractional shares in connection therewith), unless
either (a)(i) full dividends on Parity Stock have been paid, or declared and
set aside for payment, for all dividend periods terminating on or before the
date of such Parity Stock dividend, distribution, purchase, redemption or other
acquisition payment to the extent such dividends are cumulative; (ii) dividends
in full for the current quarterly dividend period have been paid, or declared
and set aside for payment, on all Parity Stock to the extent such dividends are
cumulative; (iii) the Company has paid or set aside all amounts, if any, then
or theretofore required to be paid or set aside for all purchase, retirement,
and sinking funds, if any, for any Parity Stock; and (iv) the Company is not in
default on any of its obligations to redeem any Parity Stock; or (b) with
respect to the payment of dividends only, any such dividends will be declared
and paid pro rata so that the amounts of any dividends declared and paid per
share of PRIDES and each other share of Parity Stock will in all cases bear to
each other the same ratio that accrued dividends (including any accumulation
with respect to unpaid dividends for prior dividend periods, if such dividends
are cumulative) per share of PRIDES and such other shares of Parity Stock bear
to each other.
Payment of dividends to the holders of the shares of PRIDES shall be subject
to the prior preferences and other rights of any class or series of preferred
stock of the Company ranking senior to the PRIDES with respect to the payment
of dividends, rights of redemption and rights on liquidation ("Senior Stock").
MANDATORY CONVERSION OF PRIDES
On the Mandatory Conversion Date, each outstanding share of PRIDES will,
unless previously either redeemed or converted at the option of the holder into
Common Stock, as hereinafter described, mandatorily convert into (i) shares of
Class A Common Stock at the Common Equivalent Rate (as defined below) in effect
on such date and (ii) the right to receive cash in an amount equal to all
accrued and unpaid dividends on such shares of PRIDES (other than previously
declared dividends payable to a holder of record as of a prior date) to the
Mandatory Conversion Date, whether or not declared, out of funds legally
available for the payment of dividends, subject to the right of the Company to
redeem the shares of PRIDES on or after November 15, 1997, and before the
Mandatory Conversion Date, as described below, and subject to the conversion of
the shares of PRIDES at the option of the holder at any time before the
Mandatory Conversion Date, as described below. The "Common Equivalent Rate" is
initially 100 shares of Common Class A Common Stock for each share of PRIDES
(equivalent to one share of Class A Common Stock for each Depositary Share) and
is subject to adjustment as described below. Dividends will cease to accrue on
the Mandatory Conversion Date in respect of the shares of PRIDES then
outstanding.
Because the price of the Class A Common Stock is subject to market
fluctuations, the value of the Class A Common Stock that may be received by
holders of shares of PRIDES upon their mandatory conversion may be more or less
than the amount paid for the shares of PRIDES offered hereby.
OPTIONAL REDEMPTION
Shares of PRIDES (and thereby the Depositary Shares) are not redeemable by
the Company before November 15, 1997. At any time and from time to time on or
after that date until immediately before the Mandatory Conversion Date, the
Company will have the right to redeem, in whole or in part, the outstanding
shares of PRIDES (and thereby the related Depositary Shares). Upon any such
redemption, the Company will deliver to the holder thereof in exchange for each
share of PRIDES subject to redemption the greater of: (i) the number of shares
of Class A Common Stock equal to the applicable Call Price (as described below)
in effect on the redemption date divided by the Current Market Price (as
defined below) of the Class A Common Stock, determined as of the second trading
day immediately preceding the Notice Date (as defined below), or (ii)
shares of Class A Common Stock (the "Minimum Redemption Rate") (subject to
adjustment in the manner described below). Dividends will cease to accrue on
the shares of PRIDES on the date fixed for their redemption. The Company may
elect to pay accrued and unpaid dividends to the redemption date in cash, in
which case such dividends would not be included in the foregoing calculation.
The Call Price of each share of PRIDES is the sum of (i) $ ($ per
Depositary Share) on and after November 15, 1997, to and including February 14,
1998; $ ($ per Depositary Share)
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on and after February 15, 1998, to and including May 14, 1998; $ ($
per Depositary Share) on and after May 15, 1998, to and including August 14,
1998; $ ($ per Depositary Share) on and after August 15, 1998, to
and including October 14, 1998; and $ ($ per Depositary Share, being
the price to the public of a Depositary Share appearing on the cover page of
this Prospectus) on and after October 15, 1998, to and including November 14,
1999; and (ii) all accrued and unpaid dividends thereon to but not including
the date fixed for redemption (other than previously declared dividends payable
to a holder of record as of a prior date).
The "Current Market Price" per share of the Class A Common Stock on any date
of determination means the lesser of (x) the average of the closing sale prices
of the Class A Common Stock as reported on the Nasdaq National Market for the
five consecutive trading days ending on and including such date of
determination and (y) the closing sale price of the Class A Common Stock as
reported on the Nasdaq National Market for such date of determination;
provided, however, that, with respect to any redemption of shares of PRIDES, if
any event resulting in an adjustment of the Common Equivalent Rate occurs
during the period beginning on the first day of such five-day period and ending
on the applicable redemption date, the Current Market Price as determined
pursuant to the foregoing will be appropriately adjusted to reflect the
occurrence of such event. The "Notice Date" with respect to any notice given by
the Company in connection with a redemption of the shares of PRIDES means the
earlier of the date of the public announcement of such redemption and the date
of the commencement of mailing of such notice to the holders of shares of
PRIDES.
If fewer than all the outstanding shares of PRIDES are to be called for
redemption, the shares of PRIDES to be called will be selected by the Company
from outstanding shares of PRIDES not previously called by lot or pro rata (as
nearly as may be) or by any other method determined by the Board of Directors
in its sole discretion to be equitable.
The Company will provide notice of any redemption of shares of PRIDES to
holders of record of the shares of PRIDES to be called for redemption not less
than 10 nor more than 60 days before the date fixed for redemption.
Accordingly, there cannot be notice given of redemption of shares of PRIDES
prior to September 16, 1997. Any such notice will be provided by mail, sent to
the holders of record of the shares of PRIDES to be called at each such
holder's address as it appears on the stock register of the Company, first
class postage prepaid; provided, however, that failure to give such notice or
any defect therein will not affect the validity of the proceeding for
redemption of any shares of PRIDES to be redeemed except as to the holder to
whom the Company has failed to give such notice or whose notice was defective.
On and after the redemption date, all rights of the holders of the shares of
PRIDES called for redemption will terminate except the right to receive the
redemption price and to receive dividends on such shares previously declared
and payable to the holders of record of such shares as of a prior date (unless
the Company defaults on the payment of the redemption price). A public
announcement of any call for redemption will be made by the Company before, or
at the time of, the mailing of such notice of redemption.
Each holder of shares of PRIDES called for redemption must surrender the
certificates evidencing such shares of PRIDES to the Company at the place
designated in the notice of redemption and will thereupon be entitled to
receive certificates for shares of Class A Common Stock and cash for any
fractional share amount.
The Depositary Shares are subject to call upon substantially identical terms
and conditions (including those as to notice to the owners of Depositary
Shares) as the shares of PRIDES, adjusted to reflect the fact that one hundred
Depositary Shares are the equivalent of one share of PRIDES. See "Description
of Depositary Shares--Conversion and Call Provisions."
CONVERSION AT THE OPTION OF THE HOLDER
The shares of PRIDES are convertible, in whole or in part, at the option of
the holders thereof, at any time before the Mandatory Conversion Date, unless
previously redeemed, into shares of Class A Common Stock at a rate of
shares of Class A Common Stock for each share of PRIDES (the "Optional
Conversion Rate"), equivalent to a conversion price of $ per share of
Class A Common Stock (the "Conversion Price"), subject to adjustment as
described below. The right to convert shares of PRIDES called for redemption
will terminate immediately before the close of business on any redemption date
with respect to such shares.
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Conversion of shares of PRIDES at the option of the holder may be effected by
delivering certificates evidencing such shares of PRIDES, together with written
notice of conversion and a proper assignment of such certificates to the
Company or in blank (and, if applicable, cash payment of an amount equal to the
dividend attributable to the current quarterly dividend period payable on such
shares), to the office of the transfer agent for PRIDES or to any other office
or agency maintained by the Company for that purpose and otherwise in
accordance with conversion procedures established by the Company. Each optional
conversion will be deemed to have been effected immediately before the close of
business on the date on which all of the foregoing requirements have been
satisfied. The conversion will be at the Optional Conversion Rate in effect at
such time and on such date.
Holders of shares of PRIDES at the close of business on a record date for any
payment of declared dividends will be entitled to receive the dividend payable
on such shares of PRIDES on the corresponding dividend payment date
notwithstanding the optional conversion of such shares of PRIDES following such
record date and before such dividend payment date. However, shares of PRIDES
surrendered for conversion after the close of business on a record date for any
payment of declared dividends and before the opening of business on the next
succeeding dividend payment date must be accompanied by payment in cash of an
amount equal to the dividend attributable to the current quarterly dividend
period payable on such date (unless such shares of PRIDES are subject to
redemption on a redemption date on or after such record date and on or prior to
such dividend payment date). A holder of shares of PRIDES called for redemption
on or after the record date for any dividend payment and on or prior to the
payment date for such dividend will receive the dividend on such shares of
PRIDES payable on such dividend payment date (provided such holder is the
registered holder on the related record date) and will be able to convert such
shares after the record date for such dividend without paying an amount equal
to such dividend to the Company upon conversion. Except as provided above, upon
any optional conversion of shares of PRIDES, the Company will make no payment
of or allowance for unpaid dividends, whether or not in arrears, on such shares
of PRIDES, or for previously declared dividends or distributions on the shares
of Class A Common Stock issued upon such conversion.
The Depositary Shares may be voluntarily converted by the holders thereof
upon the same terms and conditions (including those as to notice) as the shares
of PRIDES represented by such Depositary Shares, adjusted to reflect the fact
that one hundred Depositary Shares are equivalent to one share of PRIDES. See
"Description of Depositary Shares--Conversion and Call Provisions."
ENHANCED DIVIDEND YIELD; LESS EQUITY APPRECIATION THAN CLASS A COMMON STOCK
As of the date of this Prospectus, the Company has not paid and does not
intend to pay cash dividends on the Class A Common Stock, whereas dividends
will accrue on the shares of PRIDES (and thereby the Depositary Shares) at the
rate of % per annum. The opportunity for equity appreciation afforded by an
investment in shares of PRIDES is less than that afforded by an investment in
the Class A Common Stock because the Conversion Price is higher than the
purchase price of a Depositary Share and the Company may, at its option, redeem
the shares of PRIDES (and thereby the Depositary Shares) at any time on or
after November 15, 1997 and before the Mandatory Conversion Date, and may be
expected to do so if, among other circumstances, the Current Market Price of
the Class A Common Stock exceeds the Call Price per Depositary Share. In such
event, a holder of a share of PRIDES will receive fewer than 100 shares of
Class A Common Stock (comparable to less than one share of Class A Common Stock
for each Depositary Share) but not fewer than shares of Class A Common
Stock. A holder may also surrender for conversion any shares of PRIDES called
for redemption up to the close of business on the redemption date, and a holder
that so elects to convert will receive shares of Class A Common Stock per
share of PRIDES. The value of the Class A Common Stock received by the holder
of a share of PRIDES may be more or less than the per share amount paid for the
shares of PRIDES offered hereby, due to market fluctuations in the price of the
Class A Common Stock.
As a result of these provisions, holders of shares of PRIDES would be
expected not to realize any equity appreciation if the Current Market Price of
the Class A Common Stock is below the Conversion Price and less than all of
such appreciation if the Current Market Price of the Class A Common Stock is
above the Conversion Price.
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CONVERSION ADJUSTMENTS
The Common Equivalent Rate, the Minimum Redemption Rate and the Optional
Conversion Rate are each subject to adjustment as appropriate in certain
circumstances, including if the Company (a) pays a stock dividend or makes a
distribution with respect to its Class A Common Stock in shares of Class A
Common Stock; (b) subdivides or splits its outstanding Class A Common Stock;
(c) combines its outstanding Class A Common Stock into a smaller number of
shares; (d) issues by reclassification of its shares of Class A Common Stock
any shares of Class A Common Stock; (e) issues certain rights, warrants, or
options to all holders of its outstanding Class A Common Stock; or (f) pays a
dividend or distributes to all holders of its outstanding Class A Common Stock
evidences of its indebtedness, cash, or other assets (including capital stock
of the Company other than Class A Common Stock but excluding any cash dividends
or distributions, other than Extraordinary Cash Distributions (as defined
below), and dividends referred to in clause (a) above). In addition, the
Company will be entitled (but will not be required) to make upward adjustments
in the Common Equivalent Rate, the Minimum Redemption Rate, the Optional
Conversion Rate and the Call Price as the Company, in its discretion,
determines to be advisable, in order that any stock dividend, subdivision of
shares, distribution of rights to purchase stock or securities, or distribution
of securities convertible into or exchangeable for stock (or any transaction
which could be treated as any of the foregoing transactions under Section 305
of the Internal Revenue Code of 1986, as amended) hereafter made by the Company
to its stockholders will not be taxable. "Extraordinary Cash Distribution"
means, with respect to any consecutive 12-month period, all cash dividends and
cash distributions on the outstanding Class A Common Stock during such period
(other than cash dividends and cash distributions for which a prior adjustment
to the Common Equivalent Rate, the Minimum Redemption Rate, and Optional
Conversion Rate was previously made) to the extent such dividends and
distributions exceed, on a per share of Class A Common Stock basis, 10% of the
average daily closing sale price of the Class A Common Stock on the Nasdaq
National Market over such period. All adjustments to the Common Equivalent
Rate, the Minimum Redemption Rate, and the Optional Conversion Rate will be
calculated to the nearest one-hundredth of a share of Class A Common Stock. No
adjustment in the Common Equivalent Rate, the Minimum Redemption Rate, or the
Optional Conversion Rate will be required unless such adjustment would require
an increase or decrease of at least one percent therein; provided, however,
that any adjustments which, by reason of the foregoing, are not required to be
made will be carried forward and taken into account in any subsequent
adjustment. All adjustments will be made successively.
Whenever the Common Equivalent Rate, the Minimum Redemption Rate, and the
Optional Conversion Rate are adjusted as provided in the preceding paragraph,
the Company will file with the transfer agent for the shares of PRIDES a
certificate with respect to such adjustment, make a prompt public announcement
thereof and mail a notice to holders of the shares of PRIDES providing
specified information with respect to such adjustment. At least 10 business
days before taking any action that could result in certain adjustments in the
Common Equivalent Rate, the Minimum Redemption Rate, and the Optional
Conversion Rate, the Company will notify each holder of shares of PRIDES
concerning such proposed action.
ADJUSTMENT FOR CERTAIN CONSOLIDATION OR MERGERS
In case of (i) any consolidation or merger to which the Company is a party
(other than a merger or consolidation in which the Company is the surviving or
continuing corporation and in which the shares of Class A Common Stock
outstanding immediately before the merger or consolidation remain unchanged),
(ii) any sale or transfer to another corporation of the property of the Company
as an entirety or substantially as an entirety or (iii) any statutory exchange
of securities with another corporation (other than in connection with a merger
or acquisition), each share of PRIDES will, after consummation of such
transaction, be subject to (A) conversion at the option of the holder into the
kind and amount of securities, cash, or other property receivable upon
consummation of such transaction by a holder of the number of shares of Class A
Common Stock into which such share of PRIDES might have been converted
immediately before consummation of
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such transactions, (B) conversion on the Mandatory Conversion Date into the
kind and amount of securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of shares of Class A
Common Stock into which such share of PRIDES would have been converted if the
conversion on the Mandatory Conversion Date had occurred immediately before the
date of consummation of such transaction, plus the right to receive cash in an
amount equal to all accrued and unpaid dividends on such share of PRIDES (other
than previously declared dividends payable to a holder of record as of a prior
date) and (C) redemption on any redemption date in exchange for the kind and
amount of securities, cash, or other property receivable upon consummation of
such transaction by a holder of the number of shares of Class A Common Stock
that would have been issuable at the Call Price in effect on such redemption
date upon a redemption of such share of PRIDES immediately before consummation
of such transaction, assuming that, if the Notice Date for such redemption is
not before such transaction, the Notice Date had been the date of such
transaction; and assuming in each case that such holder of shares of Class A
Common Stock failed to exercise rights of election, if any, as to the kind or
amount of securities, cash, or other property receivable upon consummation of
such transaction (provided that, if the kind or amount of securities, cash, or
other property receivable upon consummation of such transaction is not the same
for each non-electing share, then the kind and amount of securities, cash, or
other property receivable upon consummation of such transaction for each non-
electing share will be deemed to be the kind and amount so receivable per share
by a plurality of the non-electing shares). The kind and amount of securities
into or for which the shares of PRIDES will be convertible or redeemable after
consummation of such transaction will be subject to adjustment as described
above under the caption "Conversion Adjustments" following the date of
consummation of such transaction. The Company may not become a party to any
such transaction unless the terms thereof are consistent with the foregoing.
FRACTIONAL SHARES
No fractional shares of Class A Common Stock will be issued upon redemption
or conversion of shares of PRIDES. In lieu of any fractional share otherwise
issuable in respect of the aggregate number of shares of PRIDES of any holder
that are redeemed or converted on any redemption date or upon mandatory
conversion or any optional conversion, such holder will be entitled to receive
an amount in cash equal to the same fraction of the (i) Current Market Price of
the Class A Common Stock, determined as of the second trading day immediately
preceding the Notice Date, in the case of redemption or (ii) Closing Price (as
defined in the Certificate of Designations) of the Class A Common Stock
determined (A) as of the fifth trading day immediately preceding the Mandatory
Conversion Date, in the case of mandatory conversion or (B) as of the second
trading day immediately preceding the effective date of conversion in the case
of an optional conversion by a holder.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution, or
winding up of the Company, and subject to the rights of holders of any other
series of Preferred Stock, the holders of outstanding shares of PRIDES are
entitled to receive for each share of PRIDES an amount equal to the Purchase
Price (equivalent to an amount equal to 100 times the per share price to public
of each Depositary Share shown on the cover page of this Prospectus), plus
accrued and unpaid dividends thereon, out of the assets of the Company
available for distribution to holders of Parity Stock, before any distribution
of assets is made to holders of Class A Common Stock, Class B Common Stock,
Class B Preferred Stock, or any other capital stock ranking junior to PRIDES
upon liquidation, dissolution, or winding up.
If, upon any voluntary or involuntary liquidation, dissolution, or winding up
of the Company, the assets of the Company are insufficient to permit the
payment of the full preferential amounts payable with respect to the shares of
PRIDES and all other series of Parity Stock, the holders of shares of PRIDES
and of all other series of Parity Stock will share ratably in any distribution
of assets of the Company in proportion to the full respective preferential
amounts to which they are entitled. After payment of the full amount of the
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liquidating distribution to which they are entitled, the holders of shares of
PRIDES will not be entitled to any further participation in any distribution of
assets by the Company. A consolidation or merger of the Company with or into
one or more corporations (whether or not the Company is the corporation
surviving such consolidation or merger), or a sale, lease or exchange of all or
substantially all of the assets of the Company, will not be deemed to be a
voluntary or involuntary liquidation, dissolution, or winding up of the
Company.
VOTING RIGHTS
The holders of shares of PRIDES will have the right with the holders of
Common Stock to vote in the election of Directors and upon each other matter
coming before any meeting of the holders of Common Stock on the basis of 80
votes for each share of PRIDES held. The holders of shares of PRIDES and the
holders of Common Stock will vote together as one class (together with the
holders of any other class or series of Preferred Stock entitled to vote with
the Common Stock as a class, as to matters submitted generally to stockholders
or as to the particular matters) on such matters except as otherwise provided
by law or by the Company's Restated Certificate of Incorporation.
In the event that dividends on the shares of PRIDES or any other series of
Parity Stock or Senior Stock are in arrears and unpaid for six quarterly
dividend periods, or if any other series of Preferred Stock is entitled for any
other reason to exercise voting rights, separate from the Common Stock, to
elect any Directors of the Company ("Preferred Stock Directors"), the holders
of the shares of PRIDES (voting separately as a class with holders of all other
series of Preferred Stock upon which like voting rights have been conferred and
are exercisable), with each share of PRIDES entitled to 100 votes on this and
other matters in which Preferred Stock votes as a group, will be entitled to
vote for the election of two Directors, such Directors to be in addition to the
number of Directors constituting the Board of Directors immediately before the
accrual of such right. Such right, when vested, will continue until all
dividends in arrears and payable on the shares of PRIDES and such other series
of Preferred Stock have been paid in full and the right of any other series of
Preferred Stock to exercise voting rights, separate from the Common Stock, to
elect Preferred Stock Directors of the Company terminates or has terminated,
and, when so paid and any such termination occurs or has occurred, such right
of the holders of the shares of PRIDES will cease. The term of office of any
Director elected by the holders of the shares of PRIDES and such other series
will terminate on the earlier of (i) the next annual meeting of stockholders at
which a successor has been elected and qualified or (ii) the termination of the
right of holders of the shares of PRIDES and such other series to vote for such
Directors.
The Company will not, without the approval of the holders of at least 66 2/3
percent of the shares of PRIDES then outstanding: (i) amend, alter, or repeal
any of the provisions of the Restated Certificate of Incorporation or Bylaws of
the Company so as to affect adversely the powers, preferences, or rights of the
holders of the shares of PRIDES then outstanding or reduce the minimum time for
any required notice to which the holders of the shares of PRIDES then
outstanding may be entitled (an amendment of the Restated Certificate of
Incorporation to authorize or create, or to increase the authorized amount of,
Common Stock or other Junior Stock or any stock of any class ranking on a
parity with the shares of PRIDES or any amendment that would increase the
number of authorized shares of Preferred Stock or the PRIDES or that would
decrease the number of authorized shares of Preferred Stock or PRIDES (but not
below the number then outstanding) being deemed not to affect adversely the
powers, preferences, or rights of the holders of the shares of PRIDES); (ii)
authorize or create or increase the authorized amount of, any stock of any
class (whether or not convertible into capital stock of any class) ranking
prior to the shares of PRIDES either as to the payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up of the
Company; or (iii) merge or consolidate with or into any other corporation,
unless each holder of shares of PRIDES immediately preceding such merger or
consolidation receives or continues to hold in the resulting corporation the
same number of shares, with substantially the same rights and preferences, as
correspond to the shares of PRIDES so held.
Notwithstanding the provisions summarized in the preceding paragraph, no such
approval described therein of the holders of the shares of PRIDES will be
required if, at or before the time when such amendment, alteration, or repeal
is to take effect or when the authorization, creation, increase or issuance of
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any such prior stock is to be made, or when such consolidation or merger,
voluntary liquidation, dissolution, or winding up, sale, lease, conveyance,
purchase, or redemption is to take effect, as the case may be, provision is
made for the redemption of all shares of PRIDES at the time outstanding.
TRANSFER AGENT AND REGISTRAR
Shawmut Bank Connecticut, National Association, 777 Main Street, Hartford,
Connecticut, will act as transfer agent and registrar for, and paying agent for
the payment of dividends on, the shares of PRIDES and the Depositary Shares.
MISCELLANEOUS
Upon issuance, the shares of PRIDES will be fully paid and nonassessable.
Holders of shares of PRIDES have no preemptive rights. The Company will at all
times reserve and keep available out of its authorized and unissued Class A
Common Stock, solely for issuance upon the conversion or redemption of shares
of PRIDES, such number of shares of Class A Common Stock as will from time to
time be issuable upon the conversion or redemption of all the shares of PRIDES
then outstanding. Shares of PRIDES redeemed for, or converted into, Class A
Common Stock or otherwise reacquired by the Company will resume the status of
authorized and unissued shares of Series Preferred Stock, undesignated as to
series, and will be available for subsequent issuance.
DESCRIPTION OF DEPOSITARY SHARES
The following summary of the terms and provisions of the Depositary Shares
does not purport to be complete and is subject to, and qualified in its
entirety by, the Deposit Agreement, as defined below (which contains the form
of the Depositary Receipt, as defined below).
Each Depositary Share represents one-hundredth of a share of PRIDES deposited
under the Deposit Agreement, dated as of November , 1994 (the "Deposit
Agreement"), among the Company, Shawmut Bank Connecticut, National Association,
as depositary (including any successor, the "Depositary"), and the holders from
time to time of depositary receipts executed and delivered thereunder (the
"Depositary Receipts"). Subject to the terms of the Deposit Agreement, each
owner of a Depositary Share is entitled, proportionately, to all the rights,
preferences and privileges of the shares of PRIDES represented thereby
(including dividend, voting, conversion, and liquidation rights), and subject
to all of the limitations of the shares of PRIDES represented thereby,
contained in the Certificate of Designations and summarized under "Description
of PRIDES." The principal executive office of Shawmut Bank Connecticut,
National Association, is located at 777 Main Street, Hartford, Connecticut.
The Depositary Shares are evidenced by Depositary Receipts. Copies of the
Deposit Agreement, the form of which is filed as an exhibit to the Registration
Statement, are available for inspection at the Corporate Office (as defined in
the Deposit Agreement) of the Depositary.
EXECUTION AND DELIVERY OF DEPOSITARY RECEIPTS
Immediately following the issuance of the shares of PRIDES by the Company,
the shares of PRIDES will be deposited by the Company with the Depositary,
which will then execute and deliver the Depositary Receipts to the
Underwriters. Depositary Receipts will be executed and delivered evidencing
only whole Depositary Shares.
WITHDRAWAL OF PRIDES
Upon surrender of Depositary Receipts at the Corporate Office of the
Depositary, the owner of the Depositary Shares evidenced thereby is entitled to
delivery at such office of certificates evidencing the number of shares of
PRIDES (but only in whole shares of PRIDES) represented by such Depositary
Receipts. If the Depositary Receipts delivered by the holders evidence a number
of Depositary Shares in excess of the number of Depositary Shares representing
the number of whole shares of PRIDES to be withdrawn, the Depositary will at
the same time deliver to such holder a new Depositary Receipt or Receipts
evidencing such excess number of Depositary Shares. The Company does not expect
that there will be any public trading market for the shares of PRIDES except as
represented by the trading market for the Depositary Shares.
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CONVERSION AND CALL PROVISIONS
Mandatory Conversion or Call. As described under "Mandatory Conversion of
PRIDES" and "Optional Redemption," under "Description of PRIDES," the shares of
PRIDES are subject to mandatory conversion into shares of Class A Common Stock
on the Mandatory Conversion Date, and to the right of the Company to call the
shares of PRIDES, at the Company's option, for redemption. The Depositary
Shares are subject to mandatory conversion or call upon substantially the same
terms and conditions (including as to notice to the owners of Depositary
Shares) as the shares of PRIDES, except that the number of shares of Class A
Common Stock received upon mandatory conversion or redemption of each
Depositary Share will be equal to one-hundredth of the number of shares of
Class A Common Stock received upon mandatory conversion or redemption of each
share of PRIDES.
If fewer than all of the Depositary Shares are to be redeemed, the Depositary
Shares to be redeemed shall be selected by lot or pro rata or by any other
equitable method determined by the Depositary to be consistent with the method
determined by the Board of Directors with respect to the shares of PRIDES. If
fewer than all of the Depositary Shares evidenced by a Receipt are called for
redemption, the Depositary will deliver to the holder of such Depositary
Receipt upon its surrender to the Depositary, together with the redemption
payment, a new Depositary Receipt evidencing the Depositary Shares evidenced by
such prior Depositary Receipt and not called for redemption.
Conversion at the Option of the Holder. As described under "Description of
PRIDES--Conversion at the Option of the Holder," the shares of PRIDES may be
converted, in whole or in part, into shares of Class A Common Stock at the
option of the holders of shares of PRIDES at any time prior to the Mandatory
Conversion Date, unless previously redeemed. The Depositary Shares may, at the
option of holders thereof, be converted into shares of Class A Common Stock
upon the same terms and conditions as the shares of PRIDES, except that the
number of shares of Class A Common Stock received upon conversion of each
Depositary Share will be equal to one-hundredth the number of shares of Class A
Common Stock received upon conversion of each share of PRIDES. To effect such
an optional conversion, a holder of Depositary Shares must deliver Depositary
Receipts evidencing the Depositary Shares to be converted, together with a
written notice of conversion and a proper assignment of the Depositary Receipts
to the Company or in blank (and, if applicable, payment in cash of an amount
equal to the dividend attributable to the current quarterly dividend period
payable on such Depositary Shares), to the Depositary or its agent. Each
optional conversion of Depositary Shares shall be deemed to have been effected
immediately prior to the close of business on the date on which all of the
foregoing requirements shall have been satisfied. The conversion shall be at
the Optional Conversion Rate in effect at such time and on such date, adjusted
to reflect the fact that the 100 Depositary Shares are the equivalent of one
share of PRIDES.
Shares of PRIDES may be converted in part so long as such shares are held by
the Depositary pursuant to the Depositary Agreement. A share of PRIDES
delivered upon surrender of Depositary Receipts may be converted in whole but
not in part. If only a portion of the Depositary Shares evidenced by a
Depositary Receipt is to be converted, a new Depositary Receipt or Receipts
will be issued for any Depositary Shares not converted. No fractional shares of
Class A Common Stock will be issued upon conversion or redemption of Depositary
Shares, and, if such conversion or redemption would otherwise result in a
fractional share of Class A Common Stock being issued, an amount will be paid
in cash as described in "Description of PRIDES--Fractional Shares" or as set
forth in the Deposit Agreement.
After the date fixed for conversion or redemption, the Depositary Shares so
converted or called for redemption will no longer be deemed to be outstanding
and all rights of the holders of such Depositary Shares will cease, except the
right to receive the Class A Common Stock and amounts payable on such
conversion or redemption and any money or other property to which the holders
of such Depositary Shares were entitled upon such conversion or redemption,
upon surrender to the Depositary of the Depositary Receipt or Receipts
evidencing such Depositary Shares.
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DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash distributions
in respect of the shares of PRIDES to the record holders of Depositary Shares
in proportion, insofar as practicable, to the number of Depositary Shares owned
by such holders.
In the event of a distribution other than cash in respect of the shares of
PRIDES, the Depositary will distribute property received by it to the record
holders of Depositary Shares in proportion, insofar as practicable, to the
number of Depositary Shares owned by such holders, unless the Depositary
determines that it is not feasible to make such distribution, in which case the
Depositary may, with the approval of the Company, adopt such method as it deems
equitable and practicable for the purpose of effecting such distribution,
including sale (at public or private sale) of such property and distribution of
the net proceeds from such sale to such holders.
The amount distributed in any of the foregoing cases will be reduced by any
amount required to be withheld by the Company or the Depositary on account of
taxes.
RECORD DATE
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall be offered with respect to the shares of
PRIDES, or (ii) the Depositary shall receive notice of any meeting at which
holders of shares of PRIDES are entitled to vote or of which holders of shares
of PRIDES are entitled to notice, or of any election on the part of the Company
to call for redemption any shares of PRIDES, the Depositary shall in each such
instance fix a record date (which shall be the same date as the record date for
the shares of PRIDES) for the determination of the holders of Depositary Shares
(x) who shall be entitled to receive such dividend, distribution, rights,
preferences, or privileges or the net proceeds of the sale thereof, (y) who
shall be entitled to give instructions for the exercise of voting rights at any
such meeting or to receive notice of such meeting or (z) who shall be subject
to such redemption, subject to the provisions of the Deposit Agreement.
VOTING OF PRIDES
Upon receipt of notice of any meeting at which holders of shares of PRIDES
are entitled to vote, the Depositary will mail the information contained in
such notice of meeting to the record holders of Depositary Shares. Each record
holder of Depositary Shares on the record date (which will be the same date as
the record date for the shares of PRIDES) will be entitled to instruct the
Depositary as to the exercise of the voting rights pertaining to the number of
shares of PRIDES represented by such holder's Depositary Shares. The Depositary
will endeavor, insofar as practicable, to vote the number of shares of PRIDES
represented by such Depositary Shares in accordance with such instructions, and
the Company has agreed to take all reasonable action which may be deemed
necessary by the Depositary in order to enable the Depositary to do so.
The Depositary will abstain from voting shares of PRIDES to the extent it
does not receive specific written voting instructions from the holders of
Depositary Shares representing such shares of PRIDES.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of Depositary Receipts and any provision of the Deposit Agreement
may at any time be amended by agreement between the Company and the Depositary.
However, any amendment that imposes any fees, taxes or other charges payable by
holders of Depositary Shares (other than taxes and other governmental charges,
fees, and other expenses payable by such holders as stated under "Charges of
Depositary"), or that otherwise prejudices any substantial existing right of
holders of Depositary Shares, will not take effect as to outstanding Depositary
Shares until the expiration of 90 days after notice of such
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amendment has been mailed to the record holders of outstanding Depositary
Shares. Every holder of Depositary Shares at the time any such amendment
becomes effective shall be deemed to consent and agree to such amendment and to
be bound by the Deposit Agreement, as so amended. In no event may any amendment
impair the right of any owner of Depositary Shares, subject to the conditions
specified in the Deposit Agreement, upon surrender of the Depositary Receipts
evidencing such Depositary Shares, to receive shares of PRIDES or, upon
conversion of the shares of PRIDES, an interest in which is represented by the
Depositary Shares, to receive shares of Class A Common Stock, and in each case
any money or other property represented thereby, except in order to comply with
mandatory provisions of applicable law.
Whenever so directed by the Company, the Depositary will terminate the
Deposit Agreement after mailing notice of such termination to the record
holders of all Depositary Shares then outstanding at least 30 days prior to the
date fixed in such notice for such termination. The Depositary may likewise
terminate the Depositary Agreement if at any time 45 days shall have expired
after the Depositary shall have delivered to the Company a written notice of
its election to resign and a successor depositary shall not have been appointed
and accepted its appointment. If any Depositary Shares remain outstanding after
the date of termination, the Depositary thereafter will discontinue the
transfer of Depositary Shares, will suspend the distribution of dividends to
the holders thereof, and will not give any further notices (other than notice
of such termination) or perform any further acts under the Deposit Agreement
except as provided below and except that the Depositary will continue (i) to
collect dividends on the shares of PRIDES and any other distributions with
respect thereto and (ii) to deliver the shares of PRIDES together with such
dividends and distributions and the net proceeds of any sales of rights,
preferences, privileges, or other property, without liability for interest
thereon, in exchange for Depositary Shares surrendered. At any time after the
expiration of two years from the date of termination, the Depositary may sell
the shares of PRIDES then held by it at public or private sale, at such place
or places and upon such terms as it deems proper and may thereafter hold the
net proceeds of any such sale, together with any money and other property then
held by it, without liability for interest thereon, for the pro rata benefit of
the holders of Depositary Shares which have not been surrendered. The Company
does not intend to terminate the Deposit Agreement or to permit the resignation
of the Depositary without appointing a successor depositary. In the event the
Deposit Agreement is terminated (whether by the Company or by the Depositary)
and a sufficient number of shares of PRIDES remain outstanding, the Company
will use its best efforts to cause the shares of PRIDES to be split 100 to 1
(so that each Depositary Share then represents one share of PRIDES) and to have
the shares of PRIDES included for quotation on the Nasdaq National Market
(unless the holders of a majority of the outstanding shares of PRIDES shall
consent to the Company not effecting such listing).
CHARGES OF DEPOSITARY
The Company will pay all charges of the Depositary, including charges in
connection with the initial deposit of the shares of PRIDES, the initial
execution and delivery of the Depositary Receipts, the distribution of
information to the holders of Depositary Shares with respect to matters on
which shares of PRIDES are entitled to vote, withdrawals of the shares of
PRIDES by the holders of Depositary Shares, or redemption or conversion of the
shares of PRIDES, except for taxes (including transfer taxes, if any) and other
governmental charges and such other charges as are provided in the Deposit
Agreement to be at the expenses of holders of Depositary Shares or persons
depositing shares of PRIDES.
GENERAL
The Depositary will make available for inspection by holders of Depositary
Receipts at its Corporate Office any reports and communications from the
Company that are delivered to the Depositary and made generally available to
the holders of the shares of PRIDES.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control from or in performing its
obligations under the Deposit Agreement.
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FEDERAL INCOME TAX CONSIDERATIONS
The Company has received an opinion from its counsel, Baker & Botts, L.L.P.,
which addresses certain federal income tax considerations described below of
the purchase, ownership, and disposition of the Depositary Shares (relating to
the shares of PRIDES). A copy of that opinion is filed as an exhibit to the
Registration Statement of which this Prospectus is a part, and the following
summary of such tax consequences is qualified in its entirety by reference
thereto, including the assumptions set forth therein. The Company does not
intend to seek a ruling from the Internal Revenue Service (the "IRS") with
respect to any of these tax consequences. The summary is presented for
informational purposes only and is primarily directed to investors who are
citizens or residents of the United States or that are U.S. corporations.
State, local and foreign tax consequences, tax consequences to special classes
of investors, including tax-exempt organizations, insurance companies, banks,
or dealers in securities, and tax consequences applicable to Depositary Shares
where the right to receive dividends has been stripped from the underlying
security have not been summarized. Tax consequences may vary depending upon the
particular status of an investor. The summary is limited to taxpayers who will
hold Depositary Shares or Class A Common Stock received upon conversion or
redemption of Depositary Shares as "capital assets" within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"). The
summary is based upon current law, applicable Treasury Regulations, judicial
authority, and current administrative rulings and practice, including certain
amendments to the Code, which have not yet been subject to definitive
interpretation by the IRS or the courts. There can be no assurance that future
changes in applicable law or administrative and judicial interpretations
thereof will not adversely affect the tax consequences summarized herein or
that there will not be differences of opinion as to the interpretation of
applicable law. Each potential investor should consult with its own tax advisor
before determining whether to purchase Depositary Shares.
DIVIDENDS
Dividends paid on Depositary Shares will be taxable as ordinary income to the
extent of the Company's current or accumulated earnings and profits. Dividends
received not out of such earnings and profits will first be treated as a return
of capital and will reduce a holder of Depositary Shares' adjusted tax basis in
its Depositary Shares. Such dividends received by any holder of Depositary
Shares in excess of its tax basis are generally treated as capital gains.
Dividends received by U.S. corporations out of such earnings and profits will
generally qualify for the 70 percent dividends-received deduction, so long as
the holder has held its Depositary Shares for a sufficient time (generally more
than 45 days) and the Depositary Shares were not acquired with borrowed funds
directly attributable to the Depositary Shares under Section 246A of the Code.
Where the dividends-received deduction is available, a portion of the amount
deducted will have to be included by a corporation in computing its possible
liability for alternative minimum tax.
Under certain circumstances, a corporation that receives an "extraordinary
dividend," as defined in Section 1059 of the Code, is required to reduce its
stock basis by the non-taxed portion of such dividend (generally, the portion
claimed as a dividends-received deduction). Quarterly dividends not in arrears
paid to an original holder of Depositary Shares generally will not constitute
extraordinary dividends under Section 1059(c). Under a special rule in Section
1059(f), any dividend with respect to "disqualified preferred stock" is treated
as an extraordinary dividend; however, while the issue is not free from doubt
due to the lack of authority directly on point, the Depositary Shares should
not constitute "disqualified preferred stock."
CONVERSION INTO CLASS A COMMON STOCK
As a general rule, no gain or loss will be recognized by a holder on the
conversion of Depositary Shares into shares of Class A Common Stock if no cash
is received. Dividend income may be recognized, however, to the extent cash is
received in payment of dividends in arrears. In addition, gain or loss may be
recognized upon the receipt by a holder of cash in lieu of a fractional share
of Class A Common Stock.
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The tax basis of the shares of Class A Common Stock received upon conversion
will generally be equal to the tax basis of the Depositary Shares converted
(adjusted to reflect any income or gain recognized on the conversion). The
holding period of the shares of such Class A Common Stock will generally
include the holding period of the Depositary Shares converted.
CALL OR CONVERSION PREMIUM
Under certain circumstances, Section 305 of the Code requires that any excess
of the redemption price of preferred stock over its issue price is includable
in income, before receipt, as a constructive dividend. While the issue is not
free from doubt due to a lack of authority directly on point, a holder of
Depositary Shares should not be required to include any call or conversion
premium in income as a redemption premium under Section 305 of the Code.
ADJUSTMENT OF CONVERSION RATE
Certain adjustments (or failures to make adjustments) to the conversion rate,
based on the Company's issuance of certain rights, warrants, options, evidences
of its indebtedness, securities, or other assets to holders of its Class A
Common Stock, which have the effect of increasing the proportionate interest of
a holder of Depositary Shares in the Company's assets or earnings and profits,
may result in constructive distributions taxable as dividends to such holder,
which may constitute (and cause other dividends to constitute) extraordinary
dividends to corporate holders.
BACKUP WITHHOLDING
Certain noncorporate U.S. holders may be subject to backup withholding at a
rate of 31 percent on dividends and certain consideration received upon the
call or conversion of the Depositary Shares. Generally, backup withholding
applies only when the taxpayer fails to furnish or certify a proper Taxpayer
Identification Number or when the taxpayer is notified by the IRS that the
taxpayer has failed to report payments of interest and dividends properly.
Holders should consult their tax advisers regarding their qualification for
exemption from backup withholding and the procedure for obtaining any
applicable exemption.
NON-U.S. HOLDERS
General
The following is a general discussion of certain United States Federal tax
consequences of the acquisition and ownership of Depositary Shares or Class A
Common Stock by a person that, for United States Federal income tax purposes,
is a foreign corporation, a nonresident alien individual, a nonresident alien
fiduciary of a foreign estate or trust or a foreign partnership (collectively
referred to hereafter as a "non-U.S. holder"). The discussion does not consider
the particular facts and circumstances of each non-U.S. holder's situation.
Each non-U.S. holder is urged to consult its own tax advisor with respect to
the United States Federal tax consequences of holding and disposing of
Depositary Shares or Class A Common Stock, as well as any tax consequences
arising under the laws of any state, municipality or other taxing jurisdiction.
United States Federal Taxes
Dividends. Dividends paid to a non-U.S. holder of Depositary Shares or Class
A Common Stock that are not effectively connected with the conduct by the non-
U.S. holder of a trade or business within the United States will be subject to
United States Federal income tax, which will be imposed and withheld at the
rate of 30 percent of the amount of the dividend, unless the rate is reduced by
any applicable income tax treaty. Certain certification and disclosure
requirements must be complied with in order to claim treaty benefits. Dividends
paid to a non-U.S. holder of Depositary Shares or Class A Common Stock that are
effectively connected with the conduct by the holder of trade or business in
the United States are taxed at the graduated rates that are applicable to U.S.
citizens, resident aliens, and domestic corporations and, in the case of a non-
U.S. holder which is a corporation, may be subject to the branch profits tax.
The Company does not anticipate paying cash dividends on its Class A Common
Stock in the foreseeable future. See "Price Range of Class A Common Stock and
Dividends."
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Gain on Disposition of Depositary Shares or Class A Common Stock. Non-U.S.
holders may be subject to United States Federal income and/or withholding tax
in respect of gain recognized on a disposition, redemption or conversion of
Depositary Shares or Class A Common Stock if the Depositary Shares or Class A
Common Stock, as the case may be, is characterized as a "United States real
property interest" (as described below). Under the Foreign Investment in Real
Property Tax Act of 1980, a non-U.S. holder who disposes of a United States
real property interest is generally required to recognize gain or loss taxable
at regular United States Federal income tax rates and any person who acquires
such an interest from a non-U.S. holder must deduct and withhold an amount
equal to 10 percent of the amount realized by the non-U.S. holder.
A "United States real property interest" includes any interest (other than an
interest solely as a creditor) in a United States corporation unless it is
established under specific procedures that the corporation is not, and was not
during the preceding five years, a "United States real property holding
corporation." The Company believes that at the date hereof it is not, and
anticipates that in the future it will not become, a United States real
property holding corporation. Nevertheless, the Company owns substantial real
property interests and it is possible that the Company is or could become a
United States real property holding corporation.
Even if the Company were or became a United States real property holding
corporation, gain realized on disposition of Depositary Shares or Class A
Common Stock by a non-U.S. holder who does not beneficially own (actually or
constructively) more than 5% of the Depositary Shares or Class A Common Stock
(as the case may be) should not be subject to United States Federal income
and/or withholding tax at the time of disposition if the Depositary Shares or
Class A Common Stock are then "regularly traded" on an established securities
market in the United States. Since the Depositary Shares and Class A Common
Stock will be traded on the Nasdaq National Market and will be regularly quoted
by brokers and dealers, the Depositary Shares and Class A Common Stock should
be considered to be "regularly traded" on an established securities market.
However, it is possible to read the applicable Temporary Treasury Regulations
to provide that neither the Depositary Shares will be "regularly traded"
because at least initially and for some time to come 50% or more of the
outstanding Depositary Shares will be owned by 100 or fewer persons. Because
the language of the Temporary Treasury Regulations is ambiguous and even
contradictory, no assurance can be given that such reading would not ultimately
be determined to be correct.
Whether or not the Depositary Shares or Class A Common Stock are regularly
traded on an established securities market in the United States, if the Company
were or became a United States real property holding corporation, a non-U.S.
holder who beneficially owns (or at any time during the five years ending on
the date of the sale or disposition of Depositary Shares or Class A Common
Stock owned), actually or constructively, more than 5% of the Depositary Shares
or Class A Common Stock (as the case may be) will be subject to United States
Federal income and/or withholding tax on the gain on such disposition.
If the Depositary Shares and Class A Common Stock are not treated as United
States real property interests, non-U.S. holders generally will not be subject
to United States Federal income or withholding tax in respect of gain
recognized on a disposition of Depositary Shares or Class A Common Stock
unless: (a) the gain from the disposition is effectively connected with a trade
or business of the non-U.S. holder in the United States, (b) in the case of a
non-U.S. holder who is an individual, such non-U.S. holder is present in the
United States for 183 or more days in the taxable year in which such
disposition of the Depositary Shares or Class A Common Stock takes place and
either (i) such gain is attributable to a United States office or other fixed
place of business of the non-U.S. holder or (ii) such non-U.S. holder has a
"tax home" (as defined in the Code) in the United States or (c) the non-U.S.
holder previously expatriated from the United States and certain Code
provisions apply. In general, however, a non-U.S. holder who is an individual
and is present in the U.S. for 183 or more days in a taxable year will, in most
circumstances, be treated as resident alien and , if so treated, will be
subject to U.S. income tax on his or her worldwide income without regard to the
foregoing discussion.
29
<PAGE>
Estate Taxes. If any individual non-U.S. holder owns, or is treated as
owning, Depositary Shares or Class A Common Stock at the time of death, such
Depositary Shares or Class A Common Stock would be subject to United States
Federal estate tax imposed on the estates of nonresident aliens, in the absence
of contrary provisions contained in any applicable estate tax treaty.
Information Reporting and Backup Withholding
Generally, dividends paid to non-U.S. holders that are subject to the 30
percent or reduced treaty rate of withholding tax previously discussed or are
not subject to such tax because a valid treaty applies that reduces or
eliminates such tax will be exempt from United States backup withholding tax.
Otherwise backup withholding of United States Federal income tax at a rate of
31 percent may apply to dividends paid with respect to the Depositary Shares
and Class A Common Stock to holders that are not "exempt recipients" and that
fail to provide certain information regarding the holder's foreign status in
the manner required by the Code and applicable U.S. Treasury Department
regulations.
Pending the issuance of further regulations by the U.S. Treasury Department,
non-U.S. holders will not be subject to backup withholding with respect to
payments of the proceeds of a sale of Depositary Shares or Class A Common Stock
outside the United States through a foreign office of a broker. The sale,
however, is subject to information reporting to the IRS if (i) the transaction
is effected through a foreign office of a broker that is a U.S. person, a
controlled foreign corporation within the meaning of Section 957(a) of the
Code, or a broker 50 percent or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year preceding the
payment (or for such part of the period that the foreign broker had been in
existence) was effectively connected with the conduct of a trade or business
within the United Sates, and (ii) the non-U.S. holder fails to supply
documentary evidence of foreign status or otherwise establish an exemption.
Payments to a non-U.S. holder by a U.S. broker or a United States office of a
foreign broker in the United States of the proceeds of sale of Depositary
Shares and Class A Common Stock are subject to both information reporting and
possible backup withholding unless the holder certifies its non-U.S. status in
accordance with applicable certification procedures or otherwise establishes an
exception.
Any amounts withheld from a payment to a non-U.S. holder under the backup
withholding provisions would be refunded (or credited against that non-U.S.
holder's United States Federal income tax liability, if any), provided that the
required information is furnished to the IRS.
Under proposed regulations issued by the U.S. Treasury Department in
September 1990, a payment of the proceeds of a sale of Depositary Shares or
Class A Common Stock through a foreign office of a broker that is subject to
information reporting would be subject to backup withholding if the payor has
actual knowledge that the payee is a United States person. As proposed, the
regulation would be effective for sales or exchanges made after December 31,
1983.
30
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement") between the Company and each of the Underwriters named
below (the "Underwriters") for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), CS First Boston Corporation and Morgan Stanley
& Co. Incorporated are acting as representatives (the "Representatives"),the
Company has agreed to sell to the Underwriters, and each of the Underwriters
severally has agreed to purchase from the Company, the number of Depositary
Shares set forth opposite each Underwriter's name.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER DEPOSITARY SHARES
----------- -----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..................................
CS First Boston Corporation............................
Morgan Stanley & Co. Incorporated......................
----------
Total............................................. 22,000,000
==========
</TABLE>
In the Purchase Agreement, the Underwriters severally have agreed, subject to
the terms and conditions set forth therein, to purchase all of the Depositary
Shares being sold pursuant to the Purchase Agreement if any of the Depositary
Shares being sold pursuant to the Purchase Agreement are purchased. Under
certain circumstances, the commitments of non-defaulting Underwriters may be
increased.
The Representatives have advised the Company that they propose initially to
offer the Depositary Shares to the public at the public offering price set
forth on the cover page of this Prospectus and to certain dealers at such price
less a concession not in excess of $ per Depositary Share. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ per Depositary Share on sales to certain other dealers. After the
initial public offering, the public offering price, concession, and discount
may be changed.
The Company has granted to the Underwriters an option, exercisable for 30
days following the date of this Prospectus, to purchase up to 3,300,000
Depositary Shares at the price to the public set forth on the cover page of
this Prospectus less the underwriting discount. The Underwriters may exercise
this option only to cover over-allotments, if any, made on the sale of
Depositary Shares offered hereby. To the extent that the Underwriters exercise
this option, each of the Underwriters will have a firm commitment, subject to
certain conditions, to purchase the same percentage of such Depositary Shares
as the number of Depositary Shares to be purchased by such Underwriter shown in
the foregoing table bears to the total number of Depositary Shares initially
offered hereby.
The Company has agreed, for a period of 90 days after the date of this
Prospectus, to not, without the prior consent of Merrill Lynch, directly or
indirectly, sell, offer to sell or grant any option for the sale of, any shares
of the capital stock of the Company or securities convertible into or
exchangeable for capital stock of the Company other than to the Underwriters
pursuant to the Purchase Agreement, subject to certain exceptions set forth in
the Purchase Agreement, and other than shares of Class A Common Stock or
options for shares of Class A Common Stock issued pursuant to or sold in
connection with qualified employee benefit, dividend reinvestment and stock
option and stock purchase plans and shares of Class A Common Stock issuable
upon conversion of securities or exercise of stock options.
31
<PAGE>
In connection with this offering, certain Underwriters or their respective
affiliates who are qualified market makers on the Nasdaq National Market may
engage in "passive market making" in the Class A Common Stock on the Nasdaq
National Market in accordance with Rule 10b-6A under the Exchange Act. Rule
10b-6A permits, upon the satisfaction of certain conditions, underwriters and
selling group members participating in a distribution that are also Nasdaq
market makers in the security being distributed to engage in limited market
making transactions during the period when Rule 10b-6A prohibits underwriters
and selling group members engaged in passive market making generally from
entering a bid or effecting a purchase at a price that exceeds the highest bid
for those securities displayed on Nasdaq by a market maker that is not
participating in the distribution. Under Rule 10b-6A, each underwriter or
selling group member engaged in passive market making is subject to a daily net
purchase limitation equal to 30% of such entity's average daily trading volume
during the two full consecutive calendar months immediately preceding the date
of filing of the registration statement under the Securities Act pertaining to
the security to be distributed.
Prior to this offering there has been no public market for the Depositary
Shares. The initial public offering price for the Depositary Shares was
determined in negotiations among the Company and the Underwriters. In
determining the terms of the Depositary Shares, including the initial public
offering price, the Company and the Underwriters considered the market price of
the Company's Class A Common Stock and also took cognizance of the Company's
recent results of operations, the future prospects of the Company and the
industry in general, market prices and terms of, and yields on, securities of
other companies considered to be comparable to the Company and prevailing
conditions in the securities market. There can be no assurance that an active
trading market will develop for the Depositary Shares or that the Depositary
Shares will trade in the public market subsequent to the offering at or above
the initial public offering price.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments that the Underwriters may be required to make in respect thereof.
Each of the Representatives and certain of the Underwriters have provided
various investment banking services to the Company and certain of its
subsidiaries. Mr. Charles A. Lewis, a Vice Chairman, Investment Banking, of
Merrill Lynch beneficially owns 233,688 shares of Class A Common Stock and
2,996 shares of Class B Preferred Stock.
LEGAL MATTERS
Certain legal matters with respect to the Depositary Shares and the shares of
PRIDES offered hereby will be passed upon for the Company by Baker & Botts,
L.L.P., New York, New York. Mr. Jerome H. Kern, a partner of Baker & Botts,
L.L.P., is a director of the Company. Mr. Kern holds options to purchase shares
of Class A Common Stock. The validity of the Depositary Shares and the shares
of PRIDES offered hereby will be passed upon for the Underwriters by Brown &
Wood, New York, New York.
EXPERTS
The consolidated balance sheets of TCI Communications, Inc. (formerly Tele-
Communications, Inc.) and subsidiaries as of December 31, 1993 and 1992, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
1993, and the related financial statement schedules, which appear in the
December 31, 1993 Annual Report on Form 10-K, as amended, of TCI
Communications, Inc., have been incorporated by reference herein in reliance
upon the reports, dated March 21, 1994, of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The report of
KPMG Peat Marwick LLP refers to a change in the method of accounting for income
taxes in 1993.
32
<PAGE>
The consolidated balance sheets of Liberty Media Corporation and subsidiaries
(Successor) as of December 31, 1993 and 1992, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the years
ended December 31, 1993 and 1992 and the period from April 1, 1991 to December
31, 1991 (Successor Periods) and the consolidated statements of operations,
stockholders' equity, and cash flows of "Liberty Media" (a combination of
certain programming interests and cable television assets of TCI
Communications, Inc. (formerly Tele-Communications, Inc.)) (Predecessor) for
the period from January 1, 1991 to March 31, 1991 (Predecessor Period), which
appear in the Form 8-K of TCI Communications, Inc. dated April 6, 1994, have
been incorporated by reference herein in reliance upon the report, dated March
18, 1994, of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing. The report of KPMG Peat Marwick LLP refers
to a change in the method of accounting for income taxes in 1993.
The financial statements of TeleCable Corporation as of December 31, 1993 and
1992 and for each of the two years in the period ended December 31, 1993,
incorporated herein by reference to TCI Communications, Inc.'s Current Report
on Form 8-K dated August 26, 1994, have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form S-
3 (together with all amendments and exhibits, referred to as the "Registration
Statement") under the Securities Act of 1933, as amended, in connection with
this offering. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement. Statements
contained herein concerning the provisions of any document are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Exchange Act,
and in accordance therewith files reports, proxy statements, information
statements and other information with the Commission. Such reports, proxy
statements, information statements and other information filed by the Company
can be inspected and copied at the public reference facilities maintained by
the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and at 7 World Trade Center, Suite 1300, New York, New York 10048; and
copies of such material can be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
33
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REP-
RESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE SPECIFICALLY
OFFERED HEREBY OR OF ANY SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR SOLICITATION IN SUCH JURIS-
DICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Documents By Reference.................................... 2
Summary.................................................................... 3
Certain Considerations..................................................... 7
The Company................................................................ 9
Recent Developments........................................................ 10
Use of Proceeds............................................................ 11
Capitalization............................................................. 11
Selected Historical and Pro Forma Financial Information.................... 12
Price Range of Class A Common Stock and Dividends.......................... 13
Description of Capital Stock............................................... 14
Description of PRIDES...................................................... 15
Description of Depositary Shares........................................... 23
Federal Income Tax Considerations.......................................... 27
Underwriting............................................................... 31
Legal Matters.............................................................. 32
Experts.................................................................... 32
Available Information...................................................... 33
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
22,000,000 DEPOSITARY SHARES
TELE-COMMUNICATIONS, INC.
LOGO
EACH REPRESENTING A ONE-HUNDREDTH INTEREST IN A SHARE OF
% PRIDES SM
CONVERTIBLE PREFERRED STOCK, SERIES F
----------------
PROSPECTUS
----------------
MERRILL LYNCH & CO.
CS FIRST BOSTON
MORGAN STANLEY & CO.
INCORPORATED
NOVEMBER , 1994
SMSERVICE MARK OF MERRILL LYNCH & CO., INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses to be borne by the Company in connection with the issuance and
distribution of the Depositary Shares are set forth below.
<TABLE>
<S> <C>
Registration Fee................................................ $198,276
Nasdaq Filing Fee............................................... $ 60,300
NASD Filing Fee................................................. $ 30,500
Blue Sky Fees and Expenses (including counsel fees)*............ $ 15,000
Legal Fees and Expenses*........................................ $100,000
Accounting Fees and Expenses*................................... $ 25,000
Printing Fees and Expenses*..................................... $130,000
Depositary Fees*................................................ $ 5,000
Miscellaneous*.................................................. $ 25,924
--------
Total....................................................... $590,000
========
</TABLE>
- --------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides, generally, that
a corporation shall have the power to indemnify any person who was or is a
party or is threatened to be made a party to any action, suit or proceeding
(except actions by or in the right of the corporation) by reason of the fact
that such person is or was a director or officer of the corporation against all
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. A corporation may similarly indemnify such person for expenses
actually and reasonably incurred by him in connection with the defense or
settlement of any action or suit by or in the right of the corporation,
provided such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, in the
case of claims, issues and matters as to which such person shall have been
adjudged liable to the corporation, provided that a court shall have
determined, upon application, that, despite the adjudication of liability but
in view of all of the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper.
Section 102(b)(7) of the Delaware General Corporation Law provides,
generally, that the certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision may not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under section 174 of Title 8, or (iv) for any transaction from which the
director derived an improper personal benefit. No such provision may eliminate
or limit the liability of a director for any act or omission occurring prior to
the date when such provision becomes effective.
Article V, Section E of the Company's Restated Certificate of Incorporation
provides as follows:
1. Limitation on Liability.
To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or may hereafter be amended, a director of the
Corporation shall not be liable to the Corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a
director. Any
II-1
<PAGE>
repeal or modification of this paragraph 1 shall be prospective only
and shall not adversely affect any limitation, right or protection of a
director of the Corporation existing at the time of such repeal or
modification.
2. Indemnification.
(a) Right to Indemnification. The Corporation shall indemnify and
hold harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was or is
made or is threatened to be made a party or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative
or investigative (a "proceeding") by reason of the fact that he, or a
person for whom he is the legal representative, is or was a director or
officer of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust, enterprise or
nonprofit entity, including service with respect to employee benefit
plans, against all liability and loss suffered and expenses (including
attorneys' fees) reasonably incurred by such person. Such right of
indemnification shall inure whether or not the claim asserted is based
on matters which antedate the adoption of this Section E. The
Corporation shall be required to indemnify a person in connection with
a proceeding (or part thereof) initiated by such person only if the
proceeding (or part thereof) was authorized by the Board of Directors
of the Corporation.
(b) Prepayment of Expenses. The Corporation shall pay the expenses
(including attorneys' fees) incurred in defending any proceeding in
advance of its final disposition, provided, however, that the payment
of expenses incurred by a director or officer in advance of the final
disposition of the proceeding shall be made only upon receipt of an
undertaking by the director or officer to repay all amounts advanced if
it should be ultimately determined that the director or officer is not
entitled to be indemnified under this paragraph or otherwise.
(c) Claims. If a claim for indemnification or payment of expenses
under this paragraph is not paid in full within 60 days after a written
claim therefor has been received by the Corporation, the claimant may
file suit to recover the unpaid amount of such claim and, if successful
in whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the Corporation shall have
the burden of proving that the claimant was not entitled to the
requested indemnification or payment of expenses under applicable law.
(d) Non-Exclusivity of Rights. The rights conferred on any person by
this paragraph shall not be exclusive of any other rights which such
person may [have] or hereafter acquire under any statute, provision of
this Certificate, the Bylaws, agreement, vote of stockholders or
disinterested directors or otherwise.
(e) Other Indemnification. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or nonprofit entity shall
be reduced by any amount such person may collect as indemnification
from such other corporation, partnership, joint venture, trust,
enterprise or nonprofit entity.
Article II, Section 2.9 of the Company's Bylaws also contains an indemnity
provision, requiring the Company to indemnify members of the Board of Directors
and officers of the Company and their respective heirs, personal
representatives and successors in interest for or on account of any action
performed on behalf of the Corporation, to the fullest extent provided by the
Delaware corporation laws and the Company's Restated Certificate of
Incorporation.
The Company has also entered into indemnification agreements with each of its
directors (each director, an "indemnitee"). The indemnification agreements
provide (i) for the prompt indemnification to the fullest extent permitted by
law against any and all expenses, including attorneys' fees and all other
costs, expenses and obligations paid or incurred in connection with
investigating, defending, being a witness or participating in (including on
appeal), or in preparing for ("Expenses"), any threatened, pending or completed
action, suit
II-2
<PAGE>
or proceeding, or any inquiry or investigation ("Claim"), related to the fact
that such indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company or is or was serving at the Company's request as a
director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by a director or officer
in any such capacity, and against any and all judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection therewith) of any Claim, unless the
Reviewing Party (one or more members of the Board of Directors or other person
appointed by the Board of Directors, who is not a party to the particular
claim, or independent legal counsel) determines that such indemnification is
not permitted under applicable law and (ii) for the prompt advancement of
Expenses, and for reimbursement to the Company if the Reviewing Party
determines that such indemnitee is not entitled to such indemnification under
applicable law. In addition, the indemnification agreements provide (i) a
mechanism through which an indemnitee may seek court relief in the event the
Reviewing Party determines that the indemnitee would not be permitted to be
indemnified under applicable law (and therefore is not entitled to
indemnification or expense advancement under the indemnification agreement) and
(ii) indemnification against all expenses (including attorneys' fees), and
advancement thereof if requested, incurred by the indemnitee in seeking to
collect an indemnity claim or advancement of expenses from the Company or
incurred in seeking to recover under a directors' and officers' liability
insurance policy, regardless of whether successful or not. Furthermore, the
indemnification agreements provide that after there has been a "change in
control" in the Company (as defined in the indemnification agreements), other
than a change in control approved by a majority of directors who were directors
prior to such change, then, with respect to all determinations regarding a
right to indemnity and the right to advancement of Expenses, the Company will
seek legal advice only from independent legal counsel selected by the
indemnitee and approved by the Company.
The indemnification agreements impose upon the Company the burden of proving
that an indemnitee is not entitled to indemnification in any particular case
and negate certain presumptions that may otherwise be drawn against an
indemnitee seeking indemnification in connection with the termination of
actions in certain circumstances. Indemnitees' rights under the indemnification
agreements are not exclusive of any other rights they may have under Delaware
law, the Company's Bylaws or otherwise. Although not requiring the maintenance
of directors' and officers' liability insurance, the indemnification agreements
require that indemnitees be provided with the maximum coverage available for
any Company director or officer if there is such a policy.
The Company may purchase liability insurance policies covering its directors
and officers.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
<C> <S> <C>
1 Form of Purchase Agreement.*
3.1 Registrant's Restated Certificate of Incorporation, as
amended.
4.1 Form of Certificate of Designations for % PRIDES, Con-
vertible Preferred Stock, Series F.
4.2 Form of Deposit Agreement including form of Depositary Re-
ceipt.
5 Opinion of Baker & Botts, L.L.P., Counsel to Registrant.*
8 Tax Opinion of Baker & Botts, L.L.P.*
12.1 Calculation of Ratios of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.
23.1 Consent of KPMG Peat Marwick LLP.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Price Waterhouse LLP.
23.4 Consent of Baker & Botts, L.L.P. (included in Exhibit 5).
24 Powers of Attorney (included on page II-6).
</TABLE>
- --------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(2) That, for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(3) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions described under Item 15 above,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF GREENWOOD VILLAGE, STATE OF COLORADO, ON
OCTOBER 31, 1994.
Tele-Communications, Inc.
/s/ Stephen M. Brett
By: _________________________________
Name: Stephen M. Brett
Title:Executive Vice President
II-5
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS STEPHEN M. BRETT, ESQ., AND ELIZABETH M.
MARKOWSKI, ESQ., AND EACH OF THEM, HIS TRUE AND LAWFUL ATTORNEYS-IN-FACT AND
AGENTS WITH FULL POWER OF SUBSTITUTION AND RE-SUBSTITUTION FOR HIM AND IN HIS
NAME, PLACE AND STEAD, IN ANY AND ALL CAPACITIES, TO SIGN ANY OR ALL AMENDMENTS
(INCLUDING POST-EFFECTIVE AMENDMENTS) TO THIS REGISTRATION STATEMENT AND TO
FILE THE SAME, WITH ALL EXHIBITS THERETO, AND OTHER DOCUMENTS IN CONNECTION
THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO SAID
ATTORNEYS-IN-FACT AND AGENTS AND EACH OF THEM FULL POWER AND AUTHORITY, TO DO
AND PERFORM EACH AND EVERY ACT AND THING REQUISITE OR NECESSARY TO BE DONE IN
AND ABOUT THE PREMISES, TO ALL INTENTS AND PURPOSES AND AS FULLY AS THEY MIGHT
OR COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEYS-
IN-FACT AND AGENTS OR THEIR SUBSTITUTES MAY LAWFULLY DO OR CAUSE TO BE DONE BY
VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Bob Magness Chairman of the Board and October 31, 1994
____________________________________ Director
(Bob Magness)
/s/ John C. Malone President and Director October 31, 1994
____________________________________ (Principal Executive
(John C. Malone) Officer)
/s/ Donne F. Fisher Executive Vice President and October 31, 1994
____________________________________ Director (Principal
(Donne F. Fisher) Financial and Accounting
Officer)
/s/ John W. Gallivan Director October 31, 1994
____________________________________
(John W. Gallivan)
/s/ Kim Magness Director October 31, 1994
____________________________________
(Kim Magness)
Director
____________________________________
(Robert A. Naify)
/s/ Jerome H. Kern Director October 31, 1994
____________________________________
(Jerome H. Kern)
Director
____________________________________
(Tony Coelho)
Director
____________________________________
(R. E. Turner)
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBITS PAGE NO.
-------- ----------
<C> <S> <C>
1 Form of Purchase Agreement.*
3.1 Registrant's Restated Certificate of Incorporation, as
amended.
4.1 Form of Certificate of Designations for % PRIDES, Con-
vertible Preferred Stock, Series F.
4.2 Form of Deposit Agreement including form of Depositary
Receipt.
5 Opinion of Baker & Botts, L.L.P., Counsel to Regis-
trant.*
8 Tax Opinion of Baker & Botts, L.L.P.*
12.1 Calculation of Ratios of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Price Waterhouse LLP.
23.4 Consent of Baker & Botts, L.L.P. (included in Exhibit 5).
24 Powers of Attorney (included on page II-6).
</TABLE>
- --------
* To be filed by amendment.
<PAGE>
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
TCI/LIBERTY HOLDING COMPANY
------------------------------------
TCI/LIBERTY HOLDING COMPANY, a corporation organized and existing
under the laws of the State of Delaware, hereby certifies as follows:
(1) The name of the Corporation is TCI/Liberty Holding Company. The
original Certificate of Incorporation of the Corporation was filed on
January 24, 1994. The name under which the Corporation was originally
incorporated is TCI/Liberty Holding Company.
(2) This Restated Certificate of Incorporation restates and amends the
Certificate of Incorporation of the Corporation.
(3) Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, the text of the Certificate of Incorporation is
hereby restated to read in its entirety as follows:
ARTICLE I
NAME
The name of the Corporation is Tele-Communications, Inc.
ARTICLE II
REGISTERED OFFICE
The location of the registered office of the Corporation in the State of
Delaware is the office of The Prentice-Hall Corporation System, Inc., 32
Loockerman Square, Suite L-100, Dover, Kent County, Delaware 19904, and the name
of the registered agent at such address is The Prentice-Hall Corporation System,
Inc.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Delaware General Corporation
Law.
<PAGE>
ARTICLE IV
AUTHORIZED STOCK
The total number of shares of capital stock which the Corporation shall
have authority to issue is one billion two hundred sixty two million three
hundred seventy five thousand ninety six (1,262,375,096) shares, of which one
billion two hundred fifty million (1,250,000,000) shares shall be common stock
("Common Stock") and twelve million three hundred seventy five thousand ninety
six (12,375,096) shares shall be preferred stock ("Preferred Stock"). Said
shares of Common Stock and Preferred Stock shall be divided into the following
classes:
(a) One billion one hundred million (1,100,000,000) shares of Common
Stock shall be of a class designated as Class A Common Stock with a par value of
$1.00 per share;
(b) One hundred fifty million (150,000,000) shares of Common Stock
shall be of a class designated as Class B Common Stock with a par value of $1.00
per share;
(c) Seven hundred thousand (700,000) shares of Preferred Stock shall
be of a class designated as Class A Preferred Stock with a par value of $.01 per
share;
(d) One million six hundred seventy five thousand and ninety six
(1,675,096) shares of Preferred Stock shall be of a class designated as Class B
6% Cumulative Redeemable Exchangeable Junior Preferred Stock with a par value of
$.01 per share; and
(e) Ten million (10,000,000) shares of Preferred Stock shall be of a
class designated as Series Preferred Stock with a par value of $.01 per share.
The description of the Common Stock and the Preferred Stock of the
Corporation, and the relative rights, preferences and limitations thereof, or
the method of fixing and establishing the same, are as hereinafter in this
Article IV set forth:
-2-
<PAGE>
SECTION A
CERTAIN DEFINITIONS
Unless the context otherwise requires, the terms defined in this Section A
shall have, for all purposes of this Article IV, the meanings herein specified:
"Board of Directors" shall mean the Board of Directors of the Corporation
and, unless the context indicates otherwise, shall also mean, to the extent
permitted by law, any committee thereof authorized, with respect to any
particular matter, to exercise the power of the Board of Directors of the
Corporation with respect to such matter.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in the City of New York, New York, are not required
to be open.
"capital stock" shall mean any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) corporate stock.
"Certificate" shall mean this Restated Certificate of Incorporation of the
Corporation, as it may from time to time hereafter be amended or restated.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or agency or political subdivision thereof, or other entity, whether
acting in an individual, fiduciary or other capacity.
SECTION B
CLASS A PREFERRED STOCK
The Class A Preferred Stock shall have the following preferences,
limitations and relative rights:
1. Certain Definitions. Unless the context otherwise requires, the
-------------------
terms defined in this paragraph 1 shall have, for all purposes of this Section
B, the meanings herein specified:
"Class A Common Stock" shall mean the Class A Common Stock, par value
$1.00 per share, of the Corporation, which term shall include, where
appropriate, in the case of any reclassification, recapitalization or other
change in the Class A Common Stock, or in the case of a consolidation or merger
of the Corporation with or into another Person affecting the Class A Common
Stock, such capital stock to which a holder of Class A Common Stock shall be
entitled upon the occurrence of such event.
-3-
<PAGE>
"Class A Preferred Stock" shall mean the Class A Preferred Stock, par
value $.01 per share, of the Corporation.
"Class B Common Stock" shall mean the Class B Common Stock, par value
$1.00 per share, of the Corporation, which term shall include, where
appropriate, in the case of any reclassification, recapitalization or other
change in the Class B Common Stock, or in the case of a consolidation or merger
of the Corporation with or into another Person affecting the Class B Common
Stock, such capital stock to which a holder of Class B Common Stock shall be
entitled upon the occurrence of such event.
"Class B Preferred Stock" shall mean the Class B 6% Cumulative
Redeemable Exchangeable Junior Preferred Stock, par value $.01 per share, of the
Corporation.
"Dividend Payment Date" shall mean, for any Dividend Period, the last
day of such Dividend Period which shall be the first day of March of each year,
commencing with March 1, 1995, or the next succeeding Business Day if any such
day is not a Business Day.
"Dividend Period" shall mean the period from the Issue Date to and
including the first Dividend Payment Date and each annual period between
consecutive Dividend Payment Dates.
"Issue Date" shall mean the date on which shares of Class A Preferred
Stock are first issued.
"Junior Stock" shall mean (i) the Class A Common Stock, (ii) the Class
B Common Stock, (iii) the Class B Preferred Stock, (iv) any other class or
series of capital stock, whether now existing or hereafter created, of the
Corporation, other than (A) the Class A Preferred Stock, (B) any class or series
of Parity Stock (except to the extent provided under clause (v) hereof) and (C)
any Senior Stock, and (v) any class or series of Parity Stock to the extent that
it ranks junior to the Class A Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation, as the case may be. For purposes of clause
(v) above, a class or series of Parity Stock shall rank junior to the Class A
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation if the holders of shares of Class A Preferred Stock shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or series.
"Liquidation Preference" measured per share of the Class A Preferred
Stock as of any date in question (the "Determination Date") shall mean an amount
equal to the sum of (a) the Stated Liquidation Value of such share, plus (b) an
amount equal to all dividends accrued on such share which pursuant to paragraph
2(b) of this Section B have been added to and remain a part of the Liquidation
Preference as of the Determination Date, plus (c) for purposes of determining
the amounts payable pursuant to paragraph 3 and paragraph 4 of this Section B
and the definition of Redemption Price, an amount equal to all unpaid dividends
accrued on such share during the period from the immediately preceding Dividend
Payment Date (or the Issue Date if the
-4-
<PAGE>
Determination Date is on or prior to the first Dividend Payment Date) through
and including the Determination Date, and, in the case of clauses (b) and (c)
hereof, whether or not such unpaid dividends have been earned or declared or
there are any unrestricted funds of the Corporation legally available for the
payment of dividends. In connection with the determination of the Liquidation
Preference of a share of Class A Preferred Stock upon redemption or upon
liquidation, dissolution or winding up of the Corporation, the Determination
Date shall be the applicable date of redemption or the date of distribution of
amounts payable to stockholders in connection with any such liquidation,
dissolution or winding up.
"Parity Stock" shall mean any class or series of capital stock,
whether now existing or hereafter created, of the Corporation ranking on a
parity basis with the Class A Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation. Capital stock of any class or series shall
rank on a parity as to dividend rights, rights of redemption or rights on
liquidation with the Class A Preferred Stock, whether or not the dividend rates,
dividend payment dates, redemption or liquidation prices per share or sinking
fund or mandatory redemption provisions, if any, are different from those of the
Class A Preferred Stock, if the holders of shares of such class or series shall
be entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in proportion to their respective accumulated and accrued and
unpaid dividends, redemption prices or liquidations prices, respectively,
without preference or priority, one over the other, as between the holders of
shares of such class or series and the holders of Class A Preferred Stock. No
class or series of capital stock that ranks junior to the Class A Preferred
Stock as to rights on liquidation shall rank or be deemed to rank on a parity
basis with the Class A Preferred Stock as to dividend rights or rights of
redemption, unless the instrument creating or evidencing such class or series of
capital stock otherwise expressly provides.
"Record Date" for the dividends payable on any Dividend Payment Date
means the fifteenth day of the month preceding the month during which such
Dividend Payment Date shall occur, or if any such day is not a Business Day,
then on the next preceding Business Day, as and if designated by the Board of
Directors.
"Redemption Date" as to any share of Class A Preferred Stock shall
mean the date fixed for redemption of such share pursuant to paragraph 4(a) or
(b) of this Section B, provided that no such date will be a Redemption Date
unless the applicable Redemption Price is actually paid in full on such date.
"Redemption Price" as to any share of Class A Preferred Stock which is
to be redeemed on any Redemption Date shall mean the Liquidation Preference
thereof on such Redemption Date.
"Senior Stock" shall mean any class or series of capital stock,
whether now existing or hereafter created, of the Corporation ranking prior to
the Class A Preferred Stock as to dividend rights, rights of redemption or
rights on liquidation. Capital stock of any class or series shall rank prior to
the Class A Preferred Stock as to dividend rights, rights of redemption or
rights on liquidation if the holders of shares of such class or series shall be
entitled to dividend
-5-
<PAGE>
payments, payments on redemption or payments of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may be,
in preference or priority to the holders of shares of Class A Preferred Stock.
No class or series of capital stock that ranks on a parity basis with or junior
to the Class A Preferred Stock as to rights on liquidation shall rank or be
deemed to rank prior to the Class A Preferred Stock as to dividend rights or
rights of redemption, notwithstanding that the dividend rate, dividend payment
dates, sinking fund provisions, if any, or mandatory redemption provisions
thereof are different from those of the Class A Preferred Stock, unless the
instrument creating or evidencing such class or series of capital stock
otherwise expressly provides.
"Special Record Date" has the meaning ascribed to such term in
paragraph 2(b) of this Section B.
"Stated Liquidation Value" of a share of Class A Preferred Stock means
$322.84.
"Subsidiary" of any Person shall mean (i) a corporation a majority of
the capital stock of which, having voting power under ordinary circumstances to
elect directors, is at the time, directly or indirectly, owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any other Person (other
than a corporation) in which such Person and/or one or more Subsidiaries of such
Person, directly or indirectly, has (x) a majority ownership interest or (y) the
power to elect or direct the election of a majority of the members of the
governing body of such first-named Person.
2. Dividends.
---------
(a) DIVIDEND RIGHTS; DIVIDEND PAYMENT DATES. Subject to the prior
preferences and other rights of any Senior Stock and the provisions of paragraph
5 hereof, the holders of Class A Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of unrestricted funds
legally available therefor, cumulative dividends, in preference to dividends on
any Junior Stock, that shall accrue on each share of Class A Preferred Stock at
the rate of 9 3/8% per annum of the Stated Liquidation Value of such share from
the Issue Date to and including the date on which the Liquidation Preference of
such share is made available (whether on liquidation, dissolution, or winding up
of the Corporation or, in the case of paragraph 4 of this Section B, upon the
applicable Redemption Date). Accrued dividends on the Class A Preferred Stock
will be payable, as provided in paragraph 2(c) below, annually on each Dividend
Payment Date to the holders of record of the Class A Preferred Stock as of the
close of business on the Record Date for such dividend payment. Dividends shall
be fully cumulative and shall accrue (without interest or compounding) on a
daily basis without regard to the occurrence of a Dividend Payment Date and
whether or not such dividends are declared and whether or not there are any
unrestricted funds of the Corporation legally available for the payment of
dividends. The amount of dividends "accrued" as of the first Dividend Payment
Date and as of any date that is not a Dividend Payment Date shall be calculated
on the basis of the foregoing rate per annum for the actual number of days
elapsed from the Issue Date (in the case of the first Dividend Payment Date and
any date prior to the first Dividend Payment Date) or the
-6-
<PAGE>
last preceding Dividend Payment Date (in the case of any other date) to and
including the date as of which such determination is to be made, based on a 365-
or 366-day year, as the case may be.
(b) SPECIAL RECORD DATE. On each Dividend Payment Date, all dividends
that have accrued on each share of Class A Preferred Stock during the
immediately preceding Dividend Period shall, to the extent not paid as provided
in paragraph 2(c) below on such Dividend Payment Date for any reason (whether or
not such unpaid dividends have been earned or declared or there are any
unrestricted funds of the Corporation legally available for the payment of
dividends), be added to the Liquidation Preference of such share and will remain
a part thereof until such dividends are paid as provided in paragraph 2(c)
below. No interest or additional dividends will accrue or be payable with
respect to any dividend payment on the Class A Preferred Stock that may be in
arrears or with respect to that portion of any other payment on the Class A
Preferred Stock that is in arrears which consists of accumulated or accrued and
unpaid dividends. Such accumulated or accrued and unpaid dividends may be
declared and paid at any time (subject to the rights of any Senior Stock and, if
applicable, to the concurrent satisfaction of any dividend arrearages then
existing with respect to any Parity Stock which ranks on a parity basis with the
Class A Preferred Stock as to the payment of dividends) without reference to any
regular Dividend Payment Date, to holders of record as of the close of business
on such date, not more than 45 days nor less than 10 days preceding the payment
date thereof, as may be fixed by the Board of Directors (the "Special Record
Date"). Notice of each Special Record Date shall be given, not more than 45
days nor less than 10 days prior thereto, to the holders of record of the shares
of Class A Preferred Stock.
(c) METHOD OF PAYMENT. All dividends payable with respect to the
shares of Class A Preferred Stock shall be declared and paid in cash. All
dividends paid with respect to the shares of Class A Preferred Stock pursuant to
this paragraph 2 shall be paid pro rata to all the holders of shares of Class A
Preferred Stock outstanding on the applicable Record Date or Special Record
Date, as the case may be.
3. Distributions Upon Liquidation, Dissolution or Winding Up.
---------------------------------------------------------
Subject to the prior payment in full of the preferential amounts to
which any Senior Stock is entitled, in the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the holders
of Class A Preferred Stock shall be entitled to receive from the assets of the
Corporation available for distribution to stockholders, before any payment or
distribution shall be made to the holders of any Junior Stock, an amount in cash
or property at its fair market value, as determined by the Board of Directors in
good faith, or a combination thereof, per share, equal to the Liquidation
Preference of a share of Class A Preferred Stock as of the date of payment or
distribution, which payment or distribution shall be made pari passu with any
such payment or distribution made to the holders of any Parity Stock ranking on
a parity basis with the Class A Preferred Stock with respect to distributions
upon liquidation, dissolution or winding up of the Corporation. The holders of
Class A Preferred Stock shall be entitled to no other or further distribution of
or participation in any remaining assets of the Corporation after receiving the
Liquidation Preference per share. If, upon distribution of the
-7-
<PAGE>
Corporation's assets in liquidation, dissolution or winding up, the assets of
the Corporation to be distributed among the holders of the Class A Preferred
Stock and to all holders of any Parity Stock ranking on a parity basis with the
Class A Preferred Stock with respect to distributions upon liquidation,
dissolution or winding up shall be insufficient to permit payment in full to
such holders of the respective preferential amounts to which they are entitled,
then the entire assets of the Corporation to be distributed to holders of the
Class A Preferred Stock and such Parity Stock shall be distributed pro rata to
such holders based upon the aggregate of the full preferential amounts to which
the shares of Class A Preferred Stock and such Parity Stock would otherwise
respectively be entitled. Neither the consolidation or merger of the
Corporation with or into any other corporation or corporations nor the sale,
transfer or lease of all or substantially all of the assets of the Corporation
shall itself be deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this paragraph 3. Notice of the liquidation,
dissolution or winding up of the Corporation shall be given, not less than 20
days prior to the date on which such liquidation, dissolution or winding up is
expected to take place or become effective, to the holders of record of the
shares of Class A Preferred Stock.
4. Redemption.
----------
(a) MANDATORY REDEMPTION. Subject to the rights of any Senior Stock
and the provisions of paragraph 5 of this Section B, the Corporation shall
redeem, out of funds legally available therefor, on the twelfth anniversary of
the Issue Date (or, if such day is not a Business Day, on the first Business Day
thereafter), all shares of Class A Preferred Stock remaining outstanding at the
Redemption Price on the Redemption Date. If the funds of the Corporation
legally available for redemption of shares of the Class A Preferred Stock or
Parity Stock then required to be redeemed are insufficient to redeem the total
number of such shares remaining outstanding, those funds which are legally
available shall, subject to the rights of any Senior Stock and the provisions of
paragraph 5, be used to redeem the maximum possible number of shares of Class A
Preferred Stock and Parity Stock. Subject to the rights of any Senior Stock and
the provisions of paragraph 5 hereof, at any time and from time to time
thereafter when additional funds of the Corporation are legally available for
such purpose, such funds shall immediately be used to redeem the shares of Class
A Preferred Stock and Parity Stock which are required to be redeemed that the
Corporation failed to redeem until the balance of such shares has been redeemed.
The selection of shares to be redeemed pursuant to the two immediately preceding
sentences shall be made on a pro rata basis as among the different classes or
series and as among the holders of shares of a particular class or series.
(b) OPTIONAL REDEMPTION. Subject to the rights of any Senior Stock
and the provisions of paragraph 5 of this Section B, the shares of Class A
Preferred Stock may be redeemed, at the option of the Corporation by the action
of the Board of Directors, in whole or from time to time in part, on any
Business Day occurring after the Issue Date, at the Redemption Price on the
Redemption Date. If less than all outstanding shares of Class A Preferred Stock
are to be redeemed on any Redemption Date, the shares of Class A Preferred Stock
to be redeemed shall be chosen pro rata among all holders of Class A Preferred
Stock. The Corporation shall not be required to register a transfer of (i) any
shares of Class A Preferred Stock for a period of 15
-8-
<PAGE>
days next preceding any selection of shares of Class A Preferred Stock to be
redeemed or (ii) any shares of Class A Preferred Stock selected or called for
redemption.
(c) NOTICE OF REDEMPTION. Notice of redemption shall be given by or
on behalf of the Corporation, not more than 60 days nor less than 30 days prior
to the Redemption Date, to the holders of record of the shares of Class A
Preferred Stock to be redeemed; but no defect in such notice or in the mailing
thereof shall affect the validity of the proceedings for the redemption of any
shares of Class A Preferred Stock. In addition to any information required by
law or by the applicable rules of any national securities exchange or national
interdealer quotation system on which the Class A Preferred Stock may be listed
or admitted to trading or quoted, such notice shall set forth the Redemption
Price, the Redemption Date, the number of shares to be redeemed and the place at
which the shares called for redemption will, upon presentation and surrender of
the stock certificates evidencing such shares, be redeemed. In the event that
fewer than the total number of shares of Class A Preferred Stock represented by
a certificate are redeemed, a new certificate representing the number of
unredeemed shares will be issued to the holder thereof without cost to such
holder.
(d) DEPOSIT OF REDEMPTION PRICE. If notice of any redemption by the
Corporation pursuant to this paragraph 4 shall have been given as provided in
paragraph 4(c) above, and if on or before the Redemption Date specified in such
notice an amount in cash sufficient to redeem in full on the Redemption Date at
the Redemption Price all shares of Class A Preferred Stock called for redemption
shall have been set apart so as to be available for such purpose and only for
such purpose, then effective as of the close of business on the Redemption Date,
the shares of Class A Preferred Stock called for redemption, notwithstanding
that any certificate therefor shall not have been surrendered for cancellation,
shall no longer be deemed outstanding, and the holders thereof shall cease to be
stockholders with respect to such shares and all rights with respect to such
shares shall forthwith cease and terminate, except the right of the holders
thereof to receive the Redemption Price of such shares, without interest, upon
the surrender of certificates representing the same.
(e) STATUS OF REDEEMED SHARES. All shares of Class A Preferred Stock
redeemed, exchanged, purchased or otherwise acquired by the Corporation shall be
retired and shall not be reissued.
5. Limitations on Dividends and Redemptions.
----------------------------------------
If at any time the Corporation shall have failed to pay, or declare
and set aside the consideration sufficient to pay, full cumulative dividends for
all prior dividend periods on any Parity Stock which by the terms of the
instrument creating or evidencing such Parity Stock is entitled to the payment
of such cumulative dividends prior to the redemption, exchange, purchase or
other acquisition of the Class A Preferred Stock, and until full cumulative
dividends on such Parity Stock for all prior dividend periods are paid, or
declared and the consideration sufficient to pay the same in full is set aside
so as to be available for such purpose and no other purpose, neither the
Corporation nor any Subsidiary thereof shall redeem, exchange, purchase or
-9-
<PAGE>
otherwise acquire any shares of Class A Preferred Stock, Parity Stock or Junior
Stock, or set aside any money or assets for any such purpose, pursuant to
paragraph 4 hereof, a sinking fund or otherwise, unless all then outstanding
shares of Class A Preferred Stock, of such Parity Stock and of any other class
of series of Parity Stock that by the terms of the instrument creating or
evidencing such Parity Stock is required to be redeemed under such circumstances
are redeemed or exchanged pursuant to the terms hereof and thereof.
If at any time the Corporation shall have failed to pay, or declare
and set aside the consideration sufficient to pay, full cumulative dividends on
the Class A Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Class A Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, neither the Corporation nor any
Subsidiary thereof shall redeem, exchange, purchase or otherwise acquire any
shares of Class A Preferred Stock, Parity Stock or Junior Stock, or set aside
any money or assets for any such purpose, pursuant to paragraph 4 hereof, a
sinking fund or otherwise, unless all then outstanding shares of Class A
Preferred Stock and of any other class or series of Parity Stock that by the
terms of the instrument creating or evidencing such Parity Stock is required to
be redeemed under such circumstances are redeemed or exchanged pursuant to the
terms hereof and thereof.
If at any time the Corporation shall have failed to pay, or declare
and set aside the consideration sufficient to pay, full cumulative dividends on
the Class A Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Class A Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside for such purpose
and no other purpose, the Corporation shall not declare or pay any dividend on
or make any distribution with respect to any Junior Stock or Parity Stock or set
aside any money or assets for any such purpose, except that the Corporation may
declare and pay a dividend on any Parity Stock ranking on a parity basis with
the Class A Preferred Stock with respect to the right to receive dividend
payments, contemporaneously with the declaration and payment of a dividend on
the Class A Preferred Stock, provided that such dividends are declared and paid
pro rata so that the amount of dividends declared and paid per share of the
Class A Preferred Stock and such Parity Stock shall in all cases bear to each
other the same ratio that accumulated and accrued and unpaid dividends per share
on the Class A Preferred Stock and such Parity Stock bear to each other.
If the Corporation shall fail to redeem on any date fixed for
redemption or exchange pursuant to paragraph 4 hereof any shares of Class A
Preferred Stock called for redemption on such date, and until such shares are
redeemed in full, the Corporation shall not redeem or exchange any Parity Stock
or Junior Stock or declare or pay any dividend on or make any distribution with
respect to any Junior Stock, or set aside any money or assets for any such
purpose, and neither the Corporation nor any Subsidiary thereof shall purchase
or otherwise acquire any Class A Preferred Stock, Parity Stock or Junior Stock,
or set aside any money or assets for any such purpose.
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Neither the Corporation nor any Subsidiary thereof shall redeem,
exchange, purchase or otherwise acquire any Parity Stock or Junior Stock, or set
aside any money or assets for any such purpose, if after giving effect to such
redemption, exchange, purchase or other acquisition, the amount (as determined
by the Board of Directors in good faith) that would be available for
distribution to the holders of the Class A Preferred Stock upon liquidation,
dissolution or winding up of the Corporation if such liquidation, dissolution or
winding up were to occur on the date fixed for such redemption, exchange,
purchase or other acquisition of such Parity Stock or Junior Stock would be less
than the aggregate Liquidation Preference as of such date of all shares of Class
A Preferred Stock then outstanding.
Nothing contained in the first, fourth or fifth paragraph of this
paragraph 5 shall prevent (i) the payment of dividends on any Junior Stock
solely in shares of Junior Stock or the redemption, purchase or other
acquisition of Junior Stock solely in exchange for (together with a cash
adjustment for fractional shares, if any), or (but only in the case of the first
and fifth paragraphs hereof) through the application of the proceeds from the
sale of, shares of Junior Stock; or (ii) the payment of dividends on any Parity
Stock solely in shares of Parity Stock and/or Junior Stock or the redemption,
exchange, purchase or other acquisition of Class A Preferred Stock or Parity
Stock solely in exchange for (together with a cash adjustment for fractional
shares, if any), or (but only in the case of the first and fifth paragraphs
hereof) through the application of the proceeds from the sale of, shares of
Parity Stock and/or Junior Stock.
The provisions of the first paragraph of this paragraph 5 are for the
sole benefit of the holders of Class A Preferred Stock and Parity Stock having
the terms described therein and accordingly, at any time when there are no
shares of any such class or series of Parity Stock outstanding or if the holders
of each such class or series of Parity Stock have, by such vote or consent of
the holders thereof as may be provided for in the instrument creating or
evidencing such class or series, waived in whole or in part the benefit of such
provisions (either generally or in the specific instance), then the provisions
of the first paragraph of this paragraph 5 shall not (to the extent waived, in
the case of any partial waiver) restrict the redemption, exchange, purchase or
other acquisition of any shares of Class A Preferred Stock, Parity Stock or
Junior Stock. All other provisions of this paragraph 5 are for the sole benefit
of the holders of Class A Preferred Stock and accordingly, if the holders of
shares of Class A Preferred Stock shall have waived (as provided in paragraph 7
of this Section B) in whole or in part the benefit of the applicable provisions,
either generally or in the specific instance, such provision shall not (to the
extent of such waiver, in the case of a partial waiver) restrict the redemption,
exchange, purchase or other acquisition of, or declaration, payment or making of
any dividends or distributions on the Class A Preferred Stock, any Parity Stock
or any Junior Stock.
6. Voting.
------
(a) VOTING RIGHTS. The holders of Class A Preferred Stock shall have
no voting rights whatsoever, except as required by law and except for the voting
rights described in this paragraph 6; provided, however, that the number of
authorized shares of Class A Preferred Stock may be increased or decreased (but
not below the number of shares of Class A Preferred Stock then outstanding) by
the affirmative vote of the holders of at least 66 2/3 of the total voting
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power of the then outstanding Voting Securities (as defined in Section C of
Article V of this Certificate), voting together as a single class as provided in
Article IX of this Certificate. Without limiting the generality of the
foregoing, no vote or consent of the holders of Class A Preferred Stock shall be
required for (a) the creation of any indebtedness of any kind of the
Corporation, (b) the creation or designation of any class or series of Senior
Stock, Parity Stock or Junior Stock, or (c) any amendment to this Certificate
that would increase the number of authorized shares of Preferred Stock or the
number of authorized shares of Class A Preferred Stock or that would decrease
the number of authorized shares of Preferred Stock or the number of authorized
shares of Class A Preferred Stock (but not below the number of shares of
Preferred Stock or Class A Preferred Stock, as the case may be, then
outstanding).
(b) ELECTION OF DIRECTORS. The holders of the Class A Preferred Stock
shall have the right to vote at any annual or special meeting of stockholders
for the purpose of electing directors. Each share of Class A Preferred Stock
shall have one vote for such purpose, and shall vote as a single class with any
other class or series of capital stock of the Corporation entitled to vote in
any general election of directors, unless the instrument creating or evidencing
such class or series of capital stock otherwise expressly provides.
7. Waiver.
------
Any provision of this Section B which, for the benefit of the holders
of Class A Preferred Stock, prohibits, limits or restricts actions by the
Corporation, or imposes obligations on the Corporation, may be waived in whole
or in part, or the application of all or any part of such provision in any
particular circumstance or generally may be waived, in each case with the
consent of the holders of at least a majority of the number of shares of Class A
Preferred Stock then outstanding (or such greater percentage thereof as may be
required by applicable law or any applicable rules of any national securities
exchange or national interdealer quotation system), either in writing or by vote
at an annual meeting or a meeting called for such purpose at which the holders
of Class A Preferred Stock shall vote as a separate class.
8. Method of Giving Notices.
------------------------
Any notice required or permitted by the provisions of this Section B
to be given to the holders of shares of Class A Preferred Stock shall be deemed
duly given if deposited in the United States mail, first class mail, postage
prepaid, and addressed to each holder of record at his address appearing on the
books of the Corporation or supplied by him in writing to the Corporation for
the purpose of such notice.
9. Exclusion of Other Rights.
-------------------------
Except as may otherwise be required by law and except for the
equitable rights and remedies which may otherwise be available to holders of
Class A Preferred Stock, the shares of Class A Preferred Stock shall not have
any designations, preferences, limitations or relative rights other than those
specifically set forth in this Certificate.
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10. Heading of Subdivisions.
-----------------------
The headings of the various subdivisions of this Section are for
convenience of reference only and shall not affect the interpretation of any of
the provisions of this Section.
SECTION C
CLASS B 6% CUMULATIVE REDEEMABLE EXCHANGEABLE
JUNIOR PREFERRED STOCK
The Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock
shall have the following preferences, limitations and relative rights:
1. Certain Definitions. Unless the context otherwise requires, the
-------------------
terms defined in this paragraph 1 shall have, for all purposes of this Section
C, the meanings herein specified:
"Average Market Price" as of any Record Date or Special Record Date
for a dividend payment declared by the Board of Directors means the average of
the daily Current Market Prices of the Class A Common Stock for a period of 20
consecutive trading days ending on the tenth trading day prior to such Record
Date or Special Record Date, appropriately adjusted to take into account any
stock dividends on the Class A Common Stock, or any stock splits,
reclassifications or combinations of the Class A Common Stock, during the period
following the first of such 20 trading days and ending on the last full trading
day immediately preceding the Dividend Payment Date or other date fixed for the
payment of dividends to which such Record Date or Special Record Date, as the
case may be, relates.
"Class A Common Stock" shall mean the Class A Common Stock, par value
$1.00 per share, of the Corporation, which term shall include, where
appropriate, in the case of any reclassification, recapitalization or other
change in the Class A Common Stock, or in the case of a consolidation or merger
of the Corporation with or into another Person affecting the Class A Common
Stock, such capital stock to which a holder of Class A Common Stock shall be
entitled upon the occurrence of such event.
"Class A Preferred Stock" shall mean the Class A Preferred Stock, par
value $.01 per share, of the Corporation.
"Class B Common Stock" shall mean the Class B Common Stock, par value
$1.00 per share, of the Corporation, which term shall include, where
appropriate, in the case of any reclassification, recapitalization or other
change in the Class B Common Stock, or in the case of a consolidation or merger
of the Corporation with or into another Person affecting the Class B Common
Stock, such capital stock to which a holder of Class B Common Stock shall be
entitled upon the occurrence of such event.
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<PAGE>
"Class B Preferred Stock" shall mean the Class B 6% Cumulative
Redeemable Exchangeable Junior Preferred Stock, par value $.01 per share, of the
Corporation.
"Current Market Price" of a share of Class A Common Stock on any day
means the last reported per share sale price (or, if no sale price is reported,
the average of the high and low bid prices) of the Class A Common Stock on such
day on the Nasdaq National Market or as quoted by the National Quotation Bureau
Incorporated, or if the Class A Common Stock is listed on an exchange, on the
principal exchange on which the Class A Common Stock is listed. In the event
that no such quotation is available for any day, the Board of Directors shall be
entitled to determine the Current Market Price on the basis of such quotations
as it considers appropriate.
"Dividend Payment Date" shall mean, for any Dividend Period, the last
day of such Dividend Period which shall be the first day of March of each year,
commencing with March 1, 1995, or the next succeeding Business Day if any such
day is not a Business Day.
"Dividend Period" shall mean the period from the Initial Accrual Date
to and including the first Dividend Payment Date and each annual period between
consecutive Dividend Payment Dates.
"Initial Accrual Date", when used with respect to the shares of Class
B Preferred Stock, shall mean March 2, 1994.
"Issue Date" shall mean the date on which shares of Class B Preferred
Stock are first issued.
"Junior Exchange Notes" shall mean junior subordinated debt securities
of the Corporation of a series to be issued under the Junior Exchange Note
Indenture in exchange for shares of Class B Preferred Stock as contemplated by
paragraphs 4(d) and (f) of this Section C.
"Junior Exchange Note Indenture" shall mean an indenture substantially
in the form annexed as Exhibit 4.5 to the S-4 Registration Statement, as
supplemented by a supplemental indenture substantially in the form annexed as
Exhibit 1 to such form of indenture, as said indenture and supplemental
indenture may be amended or further supplemented from time to time (subject to
any applicable restrictions of this Certificate) and, unless the context
indicates otherwise, shall include the form and terms of the Junior Exchange
Notes established as contemplated thereunder.
"Junior Stock" shall mean (i) the Class A Common Stock, (ii) the Class
B Common Stock, (iii) any other class or series of capital stock, whether now
existing or hereafter created, of the Corporation, other than (A) the Class B
Preferred Stock, (B) the Class A Preferred Stock, (C) any class or series of
Parity Stock (except to the extent provided under clause (iv) hereof) and (D)
any Senior Stock, and (iv) any class or series of Parity Stock to the extent
that it ranks junior to the Class B Preferred Stock as to dividend rights,
rights of redemption or rights on liquidation, as the case may be. For purposes
of clause (iv) above, a class or series of Parity
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<PAGE>
Stock shall rank junior to the Class B Preferred Stock as to dividend rights,
rights of redemption or rights on liquidation if the holders of shares of Class
B Preferred Stock shall be entitled to dividend payments, payments on redemption
or payments of amounts distributable upon dissolution, liquidation or winding up
of the Corporation, as the case may be, in preference or priority to the holders
of shares of such class or series.
"Liquidation Preference" measured per share of the Class B Preferred
Stock as of any date in question (the "Determination Date") shall mean an amount
equal to the sum of (a) the Stated Liquidation Value of such share, plus (b) an
amount equal to all dividends accrued on such share which pursuant to paragraph
2(b) of this Section C have been added to and remain a part of the Liquidation
Preference as of the Determination Date, plus (c) for purposes of determining
the amounts payable pursuant to paragraph 3 and paragraph 4 of this Section C
and the definition of Redemption Price, an amount equal to all unpaid dividends
accrued on such share during the period from the immediately preceding Dividend
Payment Date (or the Initial Accrual Date if the Determination Date is on or
prior to the first Dividend Payment Date) through and including the
Determination Date, and, in the case of clauses (b) and (c) hereof, whether or
not such unpaid dividends have been earned or declared or there are any
unrestricted funds of the Corporation legally available for the payment of
dividends. In connection with the determination of the Liquidation Preference
of a share of Class B Preferred Stock upon redemption or upon liquidation,
dissolution or winding up of the Corporation, the Determination Date shall be
the applicable date of redemption or the date of distribution of amounts payable
to stockholders in connection with any such liquidation, dissolution or winding
up.
"1933 Act" shall mean the Securities Act of 1933, as amended from time
to time, or any successor statute, and the rules and regulations promulgated
thereunder.
"Optional Exchange Date" shall mean the date fixed for the exchange of
shares of Class B Preferred Stock pursuant to paragraph 4(d) of this Section C,
provided that such date will not be the Optional Exchange Date unless on or
before such date all conditions to the issuance and delivery of Junior Exchange
Notes upon such exchange contained in paragraph 4(f) of this Section C have been
satisfied.
"Parity Stock" shall mean any class or series of capital stock,
whether now existing or hereafter created, of the Corporation ranking on a
parity basis with the Class B Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation. Capital stock of any class or series shall
rank on a parity as to dividend rights, rights of redemption or rights on
liquidation with the Class B Preferred Stock, whether or not the dividend rates,
dividend payment dates, redemption or liquidation prices per share or sinking
fund or mandatory redemption provisions, if any, are different from those of the
Class B Preferred Stock, if the holders of shares of such class or series shall
be entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in proportion to their respective accumulated and accrued and
unpaid dividends, redemption prices or liquidations prices, respectively,
without preference or priority, one over the other, as between the holders of
shares of such class or series and the holders of Class B Preferred Stock. No
class or series of capital stock that ranks junior to the Class B Preferred
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<PAGE>
Stock as to rights on liquidation shall rank or be deemed to rank on a parity
basis with the Class B Preferred Stock as to dividend rights or rights of
redemption, unless the instrument creating or evidencing such class or series of
capital stock otherwise expressly provides.
"Record Date" for the dividends payable on any Dividend Payment Date
means the fifteenth day of the month preceding the month during which such
Dividend Payment Date shall occur, or if any such day is not a Business Day,
then on the next preceding Business Day, as and if designated by the Board of
Directors.
"Redemption Agent" has the meaning ascribed to such term in paragraph
4(c) of this Section C.
"Redemption Date" as to any share of Class B Preferred Stock shall
mean the date fixed for redemption of such share pursuant to paragraph 4(a) of
this Section C, provided that no such date will be a Redemption Date unless the
applicable Redemption Price is actually paid in full on such date or the
consideration sufficient for the payment thereof, and for no other purpose, has
been set apart or deposited in trust as contemplated by paragraph 4(c) of this
Section C.
"Redemption Price" as to any share of Class B Preferred Stock which is
to be redeemed on any Redemption Date shall mean the Liquidation Preference
thereof on such Redemption Date.
"S-4 Registration Statement" shall mean the Corporation's Registration
Statement on Form S-4 (Reg. No. 33-54263) filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 and declared effective on June
28, 1994.
"Senior Stock" shall mean (i) the Class A Preferred Stock and (ii) any
other class or series of capital stock, whether now existing or hereafter
created, of the Corporation ranking prior to the Class B Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation. Capital stock
of any class or series shall rank prior to the Class B Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation if the holders of
shares of such class or series shall be entitled to dividend payments, payments
on redemption or payments of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or priority
to the holders of shares of Class B Preferred Stock. No class or series of
capital stock that ranks on a parity basis with or junior to the Class B
Preferred Stock as to rights on liquidation shall rank or be deemed to rank
prior to the Class B Preferred Stock as to dividend rights or rights of
redemption, notwithstanding that the dividend rate, dividend payment dates,
sinking fund provisions, if any, or mandatory redemption provisions thereof are
different from those of the Class B Preferred Stock, unless the instrument
creating or evidencing such class or series of capital stock otherwise expressly
provides.
"Special Record Date" has the meaning ascribed to such term in
paragraph 2(b) of this Section C.
"Stated Liquidation Value" of a share of Class B Preferred Stock means
$100.
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"Subsidiary" of any Person shall mean (i) a corporation a majority of
the capital stock of which, having voting power under ordinary circumstances to
elect directors, is at the time, directly or indirectly, owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any other Person (other
than a corporation) in which such Person and/or one or more Subsidiaries of such
Person, directly or indirectly, has (x) a majority ownership interest or (y) the
power to elect or direct the election of a majority of the members of the
governing body of such first-named Person.
"TIA" shall mean the Trust Indenture Act of 1939 (or any successor
statute) as in effect on the date the Junior Exchange Note Indenture is or is
required to be qualified thereunder in accordance with paragraph 4 of this
Section C.
2. Dividends.
---------
(a) DIVIDEND RIGHTS; DIVIDEND PAYMENT DATES. Subject to the prior
preferences and other rights of any Senior Stock and the provisions of paragraph
5 hereof, the holders of Class B Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of unrestricted funds
legally available therefor, cumulative dividends, in preference to dividends on
any Junior Stock, that shall accrue on each share of Class B Preferred Stock at
the rate of 6.0% per annum of the Stated Liquidation Value of such share from
the Initial Accrual Date to and including the date on which the Liquidation
Preference of such share is made available (whether on liquidation, dissolution,
or winding up of the Corporation or, in the case of paragraph 4 of this Section
C, upon the applicable Redemption Date or Optional Exchange Date. Accrued
dividends on the Class B Preferred Stock will be payable, as provided in
paragraph 2(c) below, annually on each Dividend Payment Date to the holders of
record of the Class B Preferred Stock as of the close of business on the Record
Date for such dividend payment. Dividends shall be fully cumulative and shall
accrue (without interest or compounding) on a daily basis without regard to the
occurrence of a Dividend Payment Date and whether or not such dividends are
declared and whether or not there are any unrestricted funds of the Corporation
legally available for the payment of dividends. The amount of dividends
"accrued" as of the first Dividend Payment Date and as of any date that is not a
Dividend Payment Date shall be calculated on the basis of the foregoing rate per
annum for the actual number of days elapsed from the Initial Accrual Date (in
the case of the first Dividend Payment Date and any date prior to the first
Dividend Payment Date) or the last preceding Dividend Payment Date (in the case
of any other date) to and including the date as of which such determination is
to be made, based on a 365- or 366-day year, as the case may be.
(b) SPECIAL RECORD DATE. On each Dividend Payment Date, all dividends
that have accrued on each share of Class B Preferred Stock during the
immediately preceding Dividend Period shall, to the extent not paid as provided
in paragraph 2(c) below on such Dividend Payment Date for any reason (whether or
not such unpaid dividends have been earned or declared or there are any
unrestricted funds of the Corporation legally available for the payment of
dividends), be added to the Liquidation Preference of such share and will remain
a part thereof until such dividends are paid as provided in paragraph 2(c)
below. No interest or additional dividends will accrue or be payable (whether
in cash, shares of Class A Common Stock
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or otherwise) with respect to any dividend payment on the Class B Preferred
Stock that may be in arrears or with respect to that portion of any other
payment on the Class B Preferred Stock that is in arrears which consists of
accumulated or accrued and unpaid dividends. Such accumulated or accrued and
unpaid dividends may be declared and paid at any time (subject to the rights of
any Senior Stock and, if applicable, to the concurrent satisfaction of any
dividend arrearages then existing with respect to any Parity Stock which ranks
on a parity basis with the Class B Preferred Stock as to the payment of
dividends) without reference to any regular Dividend Payment Date, to holders of
record as of the close of business on such date, not more than 45 days nor less
than 10 days preceding the payment date thereof, as may be fixed by the Board of
Directors (the "Special Record Date"). Notice of each Special Record Date shall
be given, not more than 45 days nor less than 10 days prior thereto, to the
holders of record of the shares of Class B Preferred Stock.
(c) METHOD OF PAYMENT. All dividends payable with respect to the
shares of Class B Preferred Stock may be declared and paid, in the sole
discretion of the Board of Directors, in cash, through the issuance of shares of
Class A Common Stock or in any combination of the foregoing, provided, however,
that if on any Dividend Payment Date or other date fixed for the payment of
dividends declared by the Board of Directors, the Corporation pursuant to
applicable law or otherwise is prohibited or restricted from paying in cash the
full amount of dividends declared payable to the holders of Class B Preferred
Stock on such date, then the portion of such dividends the payment of which in
cash is so prohibited or restricted (or such greater portion of such dividends
as the Board of Directors may determine) shall be paid through the issuance of
shares of Class A Common Stock. If any dividend payment declared by the Board
of Directors with respect to the shares of Class B Preferred Stock is to be paid
in whole or in part through the issuance of shares of Class A Common Stock, the
amount of such dividend payment to be paid per share of Class B Preferred Stock
in shares of Class A Common Stock (the "Stock Dividend Amount") shall be
satisfied and paid by the delivery to the holders of record of such shares of
Class B Preferred Stock on the Record Date or Special Record Date, as the case
may be, for such dividend payment, of a number of shares of Class A Common Stock
determined by dividing the Stock Dividend Amount by the Average Market Price of
a share of Class A Common Stock as of such Record Date or Special Record Date.
The Corporation shall not be required to issue any fractional share of Class A
Common Stock to which any holder of Class B Preferred Stock may become entitled
pursuant to this paragraph 2(c). The Board of Directors may elect to settle any
final fraction of a share of Class A Common Stock which a holder of one or more
shares of Class B Preferred Stock would otherwise be entitled to receive
pursuant to this paragraph 2(c) by having the Corporation pay to such holder, in
lieu of issuing such fractional share, cash in an amount (rounded upward to the
nearest whole cent) equal to the same fraction of the Average Market Price of a
share of Class A Common Stock as of the Record Date or Special Record Date, as
the case may be, for the dividend payment with respect to which such shares of
Class A Common Stock are being delivered. Such election, if made, shall be made
as to all holders of Class B Preferred Stock who would otherwise be entitled to
receive a fractional share of Class A Common Stock on the Dividend Payment Date
or other date fixed for the payment of such dividend.
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All dividends paid with respect to the shares of Class B Preferred
Stock pursuant to this paragraph 2 shall be paid pro rata to all the holders of
shares of Class B Preferred Stock outstanding on the applicable Record Date or
Special Record Date, as the case may be.
3. Distributions Upon Liquidation, Dissolution or Winding Up.
---------------------------------------------------------
Subject to the prior payment in full of the preferential amounts to
which any Senior Stock is entitled, in the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or involuntary, the holders
of Class B Preferred Stock shall be entitled to receive from the assets of the
Corporation available for distribution to stockholders, before any payment or
distribution shall be made to the holders of any Junior Stock, an amount in cash
or property at its fair market value, as determined by the Board of Directors in
good faith, or a combination thereof, per share, equal to the Liquidation
Preference of a share of Class B Preferred Stock as of the date of payment or
distribution, which payment or distribution shall be made pari passu with any
such payment or distribution made to the holders of any Parity Stock ranking on
a parity basis with the Class B Preferred Stock with respect to distributions
upon liquidation, dissolution or winding up of the Corporation. The holders of
Class B Preferred Stock shall be entitled to no other or further distribution of
or participation in any remaining assets of the Corporation after receiving the
Liquidation Preference per share. If, upon distribution of the Corporation's
assets in liquidation, dissolution or winding up, the assets of the Corporation
to be distributed among the holders of the Class B Preferred Stock and to all
holders of any Parity Stock ranking on a parity basis with the Class B Preferred
Stock with respect to distributions upon liquidation, dissolution or winding up
shall be insufficient to permit payment in full to such holders of the
respective preferential amounts to which they are entitled, then the entire
assets of the Corporation to be distributed to holders of the Class B Preferred
Stock and such Parity Stock shall be distributed pro rata to such holders based
upon the aggregate of the full preferential amounts to which the shares of Class
B Preferred Stock and such Parity Stock would otherwise respectively be
entitled. Neither the consolidation or merger of the Corporation with or into
any other corporation or corporations nor the sale, transfer or lease of all or
substantially all of the assets of the Corporation shall itself be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this paragraph 3. Notice of the liquidation, dissolution or winding up of
the Corporation shall be given, not less than 20 days prior to the date on which
such liquidation, dissolution or winding up is expected to take place or become
effective, to the holders of record of the shares of Class B Preferred Stock.
4. Redemption or Exchange.
----------------------
(a) OPTIONAL REDEMPTION. Subject to the rights of any Senior Stock
and the provisions of paragraph 5 of this Section C, the shares of Class B
Preferred Stock may be redeemed, at the option of the Corporation by the action
of the Board of Directors, in whole or from time to time in part, on any
Business Day occurring after the Issue Date, at the Redemption Price on the
Redemption Date. If less than all outstanding shares of Class B Preferred Stock
are to be redeemed on any Redemption Date, the shares of Class B Preferred Stock
to be redeemed shall be chosen by lot or by such other method as the Board of
Directors
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considers fair and appropriate (and which complies with the requirements, if
any, of any national securities exchange or national interdealer quotation
system on which the Class B Preferred Stock may be listed or admitted to trading
or quoted). The Corporation shall not be required to register a transfer of (i)
any shares of Class B Preferred Stock for a period of 15 days next preceding any
selection of shares of Class B Preferred Stock to be redeemed or (ii) any shares
of Class B Preferred Stock selected or called for redemption.
(b) NOTICE OF REDEMPTION. Notice of redemption shall be given by or
on behalf of the Corporation, not more than 60 days nor less than 30 days prior
to the Redemption Date, to the holders of record of the shares of Class B
Preferred Stock to be redeemed; but no defect in such notice or in the mailing
thereof shall affect the validity of the proceedings for the redemption of any
shares of Class B Preferred Stock. In addition to any information required by
law or by the applicable rules of any national securities exchange or national
interdealer quotation system on which the Class B Preferred Stock may be listed
or admitted to trading or quoted, such notice shall set forth the Redemption
Price, the Redemption Date, the number of shares to be redeemed and the place at
which the shares called for redemption will, upon presentation and surrender of
the stock certificates evidencing such shares, be redeemed, and if the
Corporation has elected to deposit the Redemption Price with a Redemption Agent
in accordance with paragraph 4(c) below, shall state the name and address of the
Redemption Agent and the date on which such deposit was or will be made. In the
event that fewer than the total number of shares of Class B Preferred Stock
represented by a certificate are redeemed, a new certificate representing the
number of unredeemed shares will be issued to the holder thereof without cost to
such holder.
(c) DEPOSIT OF REDEMPTION PRICE. If notice of any redemption by the
Corporation pursuant to this paragraph 4 shall have been given as provided in
paragraph 4(b) above, and if on or before the Redemption Date specified in such
notice an amount in cash sufficient to redeem in full on the Redemption Date at
the Redemption Price all shares of Class B Preferred Stock called for redemption
shall have been set apart so as to be available for such purpose and only for
such purpose, then effective as of the close of business on the Redemption Date,
the shares of Class B Preferred Stock called for redemption, notwithstanding
that any certificate therefor shall not have been surrendered for cancellation,
shall no longer be deemed outstanding, and the holders thereof shall cease to be
stockholders with respect to such shares and all rights with respect to such
shares shall forthwith cease and terminate, except the right of the holders
thereof to receive the Redemption Price of such shares, without interest, upon
the surrender of certificates representing the same.
At its election, the Corporation on or prior to the Redemption Date
(but no more than 60 days prior to the Redemption Date) may deposit immediately
available funds in an amount equal to the aggregate Redemption Price of the
shares of Class B Preferred Stock called for redemption in trust for the holders
thereof with any bank or trust company organized under the laws of the United
States of America or any state thereof having capital, undivided profits and
surplus aggregating at least $50 million (the "Redemption Agent"), with
irrevocable instructions and authority to the Redemption Agent, on behalf and at
the expense of the Corporation, to mail the notice of redemption as soon as
practicable after receipt of such
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irrevocable instructions (or to complete such mailing previously commenced, if
it has not already been completed) and to pay, on and after the Redemption Date
or prior thereto, the Redemption Price of the shares of Class B Preferred Stock
to be redeemed to their respective holders upon the surrender of the
certificates therefor. A deposit made in compliance with the immediately
preceding sentence shall be deemed to constitute full payment for the shares of
Class B Preferred Stock to be redeemed and from and after the close of business
on the date of such deposit (although prior to the Redemption Date), the shares
of Class B Preferred Stock to be redeemed shall no longer be deemed outstanding
and the holders thereof shall cease to be stockholders with respect to such
shares and shall have no rights with respect to such shares except the right of
the holders thereof to receive the Redemption Price of such shares (calculated
through the Redemption Date), without interest, upon surrender of the
certificates therefor. Any interest accrued on the funds so deposited shall be
paid to the Corporation from time to time. Any funds so deposited with the
Redemption Agent which shall remain unclaimed by the holders of such shares of
Class B Preferred Stock at the end of one year after the Redemption Date shall
be returned by the Redemption Agent to the Corporation, after which repayment
the holders of such shares of Class B Preferred Stock called for redemption
shall look only to the Corporation for the payment thereof, without interest,
unless an applicable escheat or abandoned property law designates another
Person.
(d) OPTIONAL EXCHANGE FOR JUNIOR EXCHANGE NOTES. Subject to the
rights of any Senior Stock and the provisions of paragraph 5 of this Section C,
the shares of Class B Preferred Stock may be exchanged, out of funds legally
available therefor, at the option of the Corporation by action of the Board of
Directors, in whole but not in part, on any Business Day occurring after the
Issue Date, for Junior Exchange Notes. Each holder of outstanding shares of
Class B Preferred Stock shall be entitled to receive, in exchange for his shares
of Class B Preferred Stock pursuant to this paragraph 4(d), newly issued Junior
Exchange Notes of a series authorized and established for the purpose of such
exchange, the aggregate principal amount of which shall be equal to the
aggregate Liquidation Preference on the Optional Exchange Date of the shares of
Class B Preferred Stock so exchanged by such holder, provided that the Junior
Exchange Notes will be issuable only in principal amounts of $100 or any
integral multiple thereof and an adjustment will be paid by the Corporation, in
cash or by its check, in an amount equal to any excess principal amount
otherwise issuable.
(e) NOTICE OF EXCHANGE. Notice of the Corporation's election to
exercise its optional exchange right pursuant to paragraph 4(d) (an "Optional
Exchange Notice") shall be given by or on behalf of the Corporation, not more
than 60 days nor less than 30 days prior to the Optional Exchange Date, to the
holders of record of the shares of Class B Preferred Stock; but no defect in
such notice or in the mailing thereof shall affect the validity of the
proceedings for the exchange of any shares of Class B Preferred Stock. In
addition to any information required by law or by the applicable rules of any
national securities exchange or national interdealer quotation system on which
the shares of Class B Preferred Stock may be listed or admitted to trading or
quoted, such notice shall set forth the Optional Exchange Date, the place at
which shares of Class B Preferred Stock will, upon presentation and surrender of
the stock certificates evidencing such shares, be exchanged for Junior Exchange
Notes, and the material terms (or, as to the rate per annum at which the Junior
Exchange Notes will bear
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interest, and, if applicable, as to any other of such terms, the method of
determining the same), consistent with the provisions hereof and of the Junior
Exchange Note Indenture, of the series of Junior Exchange Notes to be issued
upon such exchange.
Upon determination of the rate per annum at which the Junior Exchange
Notes to be issued upon such exchange will bear interest and any other terms of
such Junior Exchange Notes, the method of determining which was set forth in the
Optional Exchange Notice, the Corporation shall promptly give notice of such
determination to the holders of shares of Class B Preferred Stock, which notice
may be given by (or, if required by applicable law, shall be given by)
publication of such determination in a daily newspaper of national circulation.
(f) CONDITIONS TO EXCHANGE FOR JUNIOR EXCHANGE NOTE. Prior to the
giving of an Optional Exchange Notice, the Corporation shall execute and
deliver, with a bank or trust company selected by the Corporation, the Junior
Exchange Note Indenture, substantially in the form annexed to the S-4
Registration Statement with only such changes as (i) are necessary to comply
with law, any applicable rules of any securities exchange or usage, (ii) are
requested by the Corporation and which would make any provisions of the Junior
Exchange Note Indenture, or of the Junior Exchange Notes of the series
established thereunder for the purpose of such exchange, more restrictive to the
Corporation or beneficial to the holders of the Junior Exchange Notes of such
series, as determined by the Board of Directors in good faith, such
determination to be conclusive, (iii) are requested by the Corporation to add to
the covenants and agreements of the Corporation contained in the Junior Exchange
Note Indenture or to remove any right or power therein reserved to or conferred
upon the Corporation, (iv) are requested by the Corporation in the event of any
amendment to this Certificate that effects a change in the terms of the Class B
Preferred Stock, to conform (as nearly as may be taking into account the
differences between debt securities and equity securities) the provisions of the
Junior Exchange Note Indenture (including, without limitation, the provisions
relating to the establishment of the terms of any series of Junior Exchange
Notes authorized to be issued thereunder) to the terms of the Class B Preferred
Stock as so changed, (v) are consented to by the holders of at least a majority
of the number of shares of Class B Preferred Stock then outstanding (or such
greater percentage thereof as may be required by applicable law or any
applicable rules of any national securities exchange or national interdealer
quotation system), either in writing or by vote at a meeting called for that
purpose at which the holders of Class B Preferred Stock shall vote as a separate
class, or (vi) would not adversely affect the rights of the holders of Junior
Exchange Notes of such series issuable thereunder.
Prior to the Optional Exchange Date, the Corporation shall (i)
establish in the manner contemplated by the Junior Exchange Note Indenture the
terms of the series of Junior Exchange Notes to be issued thereunder on the
Optional Exchange Date, and (ii) file at the office of the exchange agent for
the Class B Preferred Stock (or with the books of the Corporation if there is no
exchange agent) an opinion of counsel to the effect that (A) the Junior Exchange
Note Indenture has been duly authorized, executed and delivered by the
Corporation, and constitutes a valid and binding instrument enforceable against
the Corporation in accordance with its terms (subject, as to enforceability, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general principles of equity
and
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except that the Corporation may be prohibited from making payments on the Junior
Exchange Notes of the series to be issued if and to the extent it would at the
time be prohibited from redeeming capital stock and subject to other
qualifications as are then customarily contained in opinions of counsel
experienced in such matters); (B) that the Junior Exchange Notes of such series
have been duly authorized and, when executed and authenticated in accordance
with the provisions of the Junior Exchange Note Indenture and delivered in
exchange for the shares of Class B Preferred Stock, will constitute valid and
binding obligations of the Corporation entitled to the benefits of the Junior
Exchange Note Indenture (subject as aforesaid); (C) that the issuance and
delivery of the Junior Exchange Notes of such series in exchange for the shares
of Class B Preferred Stock will not violate the laws of the state of
incorporation of the Corporation; and (D) that (x) the Junior Exchange Note
Indenture has been duly qualified under the TIA (or that such qualification is
not necessary) and (y) that the issuance and delivery of the Junior Exchange
Notes of such series in exchange for the shares of Class B Preferred Stock is
exempt from the registration or qualification requirements of the 1933 Act and
applicable state securities laws or, if no such exemption is available, that the
Junior Exchange Notes of such series have been duly registered or qualified for
such exchange under the 1933 Act and such applicable state securities laws.
(g) METHOD OF EXCHANGE. If an Optional Exchange Notice shall have
been given by the Corporation pursuant to paragraph 4(e) of this Section C, and
if the Corporation shall have satisfied the conditions to such exchange
contained in paragraph 4(f), then effective as of the close of business on the
Optional Exchange Date, the shares of Class B Preferred Stock, notwithstanding
that any certificate therefor shall not have been surrendered for cancellation,
shall no longer be deemed outstanding, and the holders thereof shall cease to be
stockholders with respect to such shares and all rights with respect to such
shares shall forthwith cease and terminate, except the right of the holders
thereof upon the surrender of certificates evidencing the same to receive the
Junior Exchange Notes exchangeable therefor, and the cash adjustment, if any, in
lieu of Junior Exchange Notes in other than authorized denominations, without
interest.
Before any holder of shares of Class B Preferred Stock called for
exchange shall be entitled to receive the Junior Exchange Notes deliverable in
exchange therefor, such holder shall surrender the certificate or certificates
representing the shares to be exchanged at such place as the Corporation shall
have specified in the Optional Exchange Notice, which certificate or
certificates shall be duly endorsed to the Corporation or in blank (or
accompanied by duly executed instruments to transfer to the Corporation or in
blank) with signatures guaranteed (such endorsements or instruments of transfer
to be in form satisfactory to the Corporation), together with a written notice
to the Corporation, specifying the name or names (with addresses) in which the
Junior Exchange Notes are to be issued. If any transfer is involved in the
issuance or delivery of any Junior Exchange Notes in a name other than that of
the registered holder of the shares of Class B Preferred Stock surrendered for
exchange, such holder shall also deliver to the Corporation a sum sufficient for
all taxes payable in respect of such transfer or evidence satisfactory to the
Corporation that such taxes have been paid. Except as provided in the
immediately preceding sentence, the Corporation shall pay any issue, stamp or
other similar tax in respect of such issuance or delivery.
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As soon as practicable after the later of the Optional Exchange Date
and the proper surrender of the certificate(s) for such shares of Class B
Preferred Stock as provided above, the Corporation shall deliver at the place
specified in the Optional Exchange Notice, to the holder of the shares of Class
B Preferred Stock so surrendered, or to his nominee(s) or, subject to compliance
with applicable law, transferee(s), a Junior Exchange Note or Notes (of
authorized denominations) in the principal amount to which he shall be entitled
upon such exchange, together with a check in the amount of any cash adjustment
as provided in paragraph 4(d). The Person in whose name any Junior Exchange
Note is issued upon an exchange pursuant to paragraph 4(d) shall be treated for
all purposes as the holder of record thereof as of the close of business on the
Optional Exchange Date.
(h) STATUS OF REDEEMED SHARES. All shares of Class B Preferred Stock
redeemed, exchanged, purchased or otherwise acquired by the Corporation shall be
retired and shall not be reissued.
5. Limitations on Dividends and Redemptions.
----------------------------------------
If at any time the Corporation shall have failed to pay, or declare
and set aside the consideration sufficient to pay, full cumulative dividends for
all prior dividend periods on any Parity Stock which by the terms of the
instrument creating or evidencing such Parity Stock is entitled to the payment
of such cumulative dividends prior to the redemption, exchange, purchase or
other acquisition of the Class B Preferred Stock, and until full cumulative
dividends on such Parity Stock for all prior dividend periods are paid, or
declared and the consideration sufficient to pay the same in full is set aside
so as to be available for such purpose and no other purpose, neither the
Corporation nor any Subsidiary thereof shall redeem, exchange, purchase or
otherwise acquire any shares of Class B Preferred Stock, Parity Stock or Junior
Stock, or set aside any money or assets for any such purpose, pursuant to
paragraph 4 hereof, a sinking fund or otherwise, unless all then outstanding
shares of Class B Preferred Stock, of such Parity Stock and of any other class
of series of Parity Stock that by the terms of the instrument creating or
evidencing such Parity Stock is required to be redeemed under such circumstances
are redeemed or exchanged pursuant to the terms hereof and thereof.
If at any time the Corporation shall have failed to pay, or declare
and set aside the consideration sufficient to pay, full cumulative dividends on
the Class B Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Class B Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, neither the Corporation nor any
Subsidiary thereof shall redeem, exchange, purchase or otherwise acquire any
shares of Class B Preferred Stock, Parity Stock or Junior Stock, or set aside
any money or assets for any such purpose, pursuant to paragraph 4 hereof, a
sinking fund or otherwise, unless all then outstanding shares of Class B
Preferred Stock and of any other class or series of Parity Stock that by the
terms of the instrument creating or evidencing such Parity Stock is required to
be redeemed under such circumstances are redeemed or exchanged pursuant to the
terms hereof and thereof.
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If at any time the Corporation shall have failed to pay, or declare
and set aside the consideration sufficient to pay, full cumulative dividends on
the Class B Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Class B Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside for such purpose
and no other purpose, the Corporation shall not declare or pay any dividend on
or make any distribution with respect to any Junior Stock or Parity Stock or set
aside any money or assets for any such purpose, except that the Corporation may
declare and pay a dividend on any Parity Stock ranking on a parity basis with
the Class B Preferred Stock with respect to the right to receive dividend
payments, contemporaneously with the declaration and payment of a dividend on
the Class B Preferred Stock, provided that such dividends are declared and paid
pro rata so that the amount of dividends declared and paid per share of the
Class B Preferred Stock and such Parity Stock shall in all cases bear to each
other the same ratio that accumulated and accrued and unpaid dividends per share
on the Class B Preferred Stock and such Parity Stock bear to each other.
If the Corporation shall fail to redeem or exchange on any date fixed
for redemption or exchange pursuant to paragraph 4(a) or 4(d) hereof any shares
of Class B Preferred Stock called for redemption or exchange on such date, and
until such shares are redeemed or exchanged in full, the Corporation shall not
redeem or exchange any Parity Stock or Junior Stock or declare or pay any
dividend on or make any distribution with respect to any Junior Stock, or set
aside any money or assets for any such purpose, and neither the Corporation nor
any Subsidiary thereof shall purchase or otherwise acquire any Class B Preferred
Stock, Parity Stock or Junior Stock, or set aside any money or assets for any
such purpose.
Neither the Corporation nor any Subsidiary thereof shall redeem,
exchange, purchase or otherwise acquire any Parity Stock or Junior Stock, or set
aside any money or assets for any such purpose, if after giving effect to such
redemption, exchange, purchase or other acquisition, the amount (as determined
by the Board of Directors in good faith) that would be available for
distribution to the holders of the Class B Preferred Stock upon liquidation,
dissolution or winding up of the Corporation if such liquidation, dissolution or
winding up were to occur on the date fixed for such redemption, exchange,
purchase or other acquisition of such Parity Stock or Junior Stock would be less
than the aggregate Liquidation Preference as of such date of all shares of Class
B Preferred Stock then outstanding.
Nothing contained in the first, fourth or fifth paragraph of this
paragraph 5 shall prevent (i) the payment of dividends on any Junior Stock
solely in shares of Junior Stock or the redemption, purchase or other
acquisition of Junior Stock solely in exchange for (together with a cash
adjustment for fractional shares, if any), or (but only in the case of the first
and fifth paragraphs hereof) through the application of the proceeds from the
sale of, shares of Junior Stock; or (ii) the payment of dividends on any Parity
Stock solely in shares of Parity Stock and/or Junior Stock or the redemption,
exchange, purchase or other acquisition of Class B Preferred Stock or Parity
Stock solely in exchange for (together with a cash adjustment for fractional
shares, if any), or (but only in the case of the first and fifth paragraphs
hereof) through the application of the proceeds from the sale of, shares of
Parity Stock and/or Junior Stock.
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The provisions of the first paragraph of this paragraph 5 are for the
sole benefit of the holders of Class B Preferred Stock and Parity Stock having
the terms described therein and accordingly, at any time when there are no
shares of any such class or series of Parity Stock outstanding or if the holders
of each such class or series of Parity Stock have, by such vote or consent of
the holders thereof as may be provided for in the instrument creating or
evidencing such class or series, waived in whole or in part the benefit of such
provisions (either generally or in the specific instance), then the provisions
of the first paragraph of this paragraph 5 shall not (to the extent waived, in
the case of any partial waiver) restrict the redemption, exchange, purchase or
other acquisition of any shares of Class B Preferred Stock, Parity Stock or
Junior Stock. All other provisions of this paragraph 5 are for the sole benefit
of the holders of Class B Preferred Stock and accordingly, if the holders of
shares of Class B Preferred Stock shall have waived (as provided in paragraph 7
of this Section C) in whole or in part the benefit of the applicable provisions,
either generally or in the specific instance, such provision shall not (to the
extent of such waiver, in the case of a partial waiver) restrict the redemption,
exchange, purchase or other acquisition of, or declaration, payment or making of
any dividends or distributions on the Class B Preferred Stock, any Parity Stock
or any Junior Stock.
6. Voting.
------
(a) VOTING RIGHTS. The holders of Class B Preferred Stock shall have
no voting rights whatsoever, except as required by law and except for the voting
rights described in this paragraph 6; provided, however, that the number of
authorized shares of Class B Preferred Stock may be increased or decreased (but
not below the number of shares of Class B Preferred Stock then outstanding) by
the affirmative vote of the holders of at least 66 2/3% of the total voting
power of the then outstanding Voting Securities (as defined in Section C of
Article V of this Certificate), voting together as a single class as provided in
Article IX of this Certificate. Without limiting the generality of the
foregoing, no vote or consent of the holders of Class B Preferred Stock shall be
required for (a) the creation of any indebtedness of any kind of the
Corporation, (b) the creation or designation of any class or series of Senior
Stock, Parity Stock or Junior Stock, or (c) any amendment to this Certificate
that would increase the number of authorized shares of Preferred Stock or the
number of authorized shares of Class B Preferred Stock or that would decrease
the number of authorized shares of Preferred Stock or the number of authorized
shares of Class B Preferred Stock (but not below the number of shares of
Preferred Stock or Class B Preferred Stock, as the case may be, then
outstanding).
(b) ELECTION OF DIRECTORS. The holders of the Class B Preferred Stock
shall have the right to vote at any annual or special meeting of stockholders
for the purpose of electing directors. Each share of Class B Preferred Stock
shall have one vote for such purpose, and shall vote as a single class with any
other class or series of capital stock of the Corporation entitled to vote in
any general election of directors, unless the instrument creating or evidencing
such class or series of capital stock otherwise expressly provides.
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7. Waiver.
------
Any provision of this Section C which, for the benefit of the holders
of Class B Preferred Stock, prohibits, limits or restricts actions by the
Corporation, or imposes obligations on the Corporation, may be waived in whole
or in part, or the application of all or any part of such provision in any
particular circumstance or generally may be waived, in each case with the
consent of the holders of at least a majority of the number of shares of Class B
Preferred Stock then outstanding (or such greater percentage thereof as may be
required by applicable law or any applicable rules of any national securities
exchange or national interdealer quotation system), either in writing or by vote
at an annual meeting or a meeting called for such purpose at which the holders
of Class B Preferred Stock shall vote as a separate class.
8. Method of Giving Notices.
------------------------
Any notice required or permitted by the provisions of this Section C
to be given to the holders of shares of Class B Preferred Stock shall be deemed
duly given if deposited in the United States mail, first class mail, postage
prepaid, and addressed to each holder of record at his address appearing on the
books of the Corporation or supplied by him in writing to the Corporation for
the purpose of such notice.
9. Exclusion of Other Rights.
-------------------------
Except as may otherwise be required by law and except for the
equitable rights and remedies which may otherwise be available to holders of
Class B Preferred Stock, the shares of Class B Preferred Stock shall not have
any designations, preferences, limitations or relative rights other than those
specifically set forth in this Certificate.
10. Heading of Subdivisions.
-----------------------
The headings of the various subdivisions of this Section C are for
convenience of reference only and shall not affect the interpretation of any of
the provisions of this Section C.
SECTION D
SERIES PREFERRED STOCK
The Series Preferred Stock may be issued, from time to time, in one or
more series, with such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as shall be stated and expressed in a resolution or
resolutions providing for the issue of such series adopted by the Board of
Directors. The Board of Directors, in such resolution or resolutions (a copy of
which shall be filed and recorded as required by law), is also expressly
authorized to fix:
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(i) the distinctive serial designations and the division of such
shares into series and the number of shares of a particular series,
which may be increased or decreased, but not below the number of
shares thereof then outstanding, by a certificate made, signed, filed
and recorded as required by law;
(ii) the annual dividend rate, if any, for the particular series,
and the date or dates from which dividends on all shares of such
series shall be cumulative, if dividends on stock of the particular
series shall be cumulative;
(iii) the redemption price or prices for the particular series;
(iv) the right, if any, of the holders of a particular series to
convert or exchange such stock into or for other classes of stock or
indebtedness of the Corporation, and the terms and conditions of such
conversion;
(v) the voting rights, if any, of the holders of a particular
series; and
(vi) the obligation, if any, of the Corporation to purchase and
retire and redeem shares of a particular series as a sinking fund or
redemption or purchase account, the terms thereof and the redemption
price or prices per share for such series redeemed pursuant to the
sinking fund or redemption account.
All shares of any one series of the Series Preferred Stock shall be
alike in every particular and all series shall rank equally and be identical in
all respects except insofar as they may vary with respect to the matters which
the Board of Directors is hereby expressly authorized to determine in the
resolution or resolutions providing for the issue of any series of the Series
Preferred Stock.
SECTION E
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
Each share of the Class A Common Stock, par value $1.00 per share (the
"Class A Common Stock"), and each share of the Class B Common Stock, par value
$1.00 per share (the "Class B Common Stock"), of the Corporation shall, except
as otherwise provided in this Section E, be identical in all respects and shall
have equal rights and privileges.
1. Voting Rights.
-------------
Holders of Class A Common Stock shall be entitled to one vote for each
share of such stock held, and holders of Class B Common Stock shall be entitled
to ten votes for each share of such stock held, on all matters presented to such
stockholders. Except as may otherwise be required by the laws of the State of
Delaware or in the instrument creating or evidencing any class or series of
Preferred Stock the holders of shares of Class A Common Stock
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and the holders of shares of Class B Common Stock shall vote with the holders of
Preferred Stock, if any, as one class with respect to the election of directors
and with respect to all other matters to be voted on by stockholders of the
Corporation (including, without limitation, any proposed amendment to this
Certificate that would increase the number of authorized shares of Class A
Common Stock, of Class B Common Stock or of any class or series of Preferred
Stock or decrease the number of authorized shares of any such class or series of
stock (but not below the number of shares thereof then outstanding)), and no
separate vote or consent of the holders of shares of Class A Common Stock, the
holders of shares of Class B Common Stock or the holders of shares of Preferred
Stock shall be required for the approval of any such matter.
2. Conversion Rights.
-----------------
Each share of Class B Common Stock shall be convertible, at the option
of the holder thereof, into one share of Class A Common Stock. Any such
conversion may be effected by any holder of Class B Common Stock by surrendering
such holder's certificate or certificates for the Class B Common Stock to be
converted, duly endorsed, at the office of the Corporation or any transfer agent
for the Class B Common Stock, together with a written notice to the Corporation
at such office that such holder elects to convert all or a specified number of
shares of Class B Common Stock represented by such certificate and stating the
name or names in which such holder desires the certificate or certificates for
Class A Common Stock to be issued. If so required by the Corporation, any
certificate for shares surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder of such shares or the duly authorized representative of such
holder. Promptly thereafter, the Corporation shall issue and deliver to such
holder or such holder's nominee or nominees, a certificate or certificates for
the number of shares of Class A Common Stock to which such holder shall be
entitled as herein provided. Such conversion shall be deemed to have been made
at the close of business on the date of receipt by the Corporation or any such
transfer agent of the certificate or certificates, notice and, if required,
instruments of transfer referred to above, and the person or persons entitled to
receive the Class A Common Stock issuable on such conversion shall be treated
for all purposes as the record holder or holders of such Class A Common Stock on
that date. A number of shares of Class A Common Stock equal to the number of
shares of Class B Common Stock outstanding from time to time shall be set aside
and reserved for issuance upon conversion of shares of Class B Common Stock.
Shares of Class B Common Stock that have been converted hereunder shall remain
treasury shares to be disposed of by resolution of the Board of Directors.
Shares of Class A Common Stock shall not be convertible into shares of Class B
Common Stock.
3. Dividends. Subject to paragraph 4 of this Section E, whenever a
---------
dividend is paid to the holders of Class A Common Stock, the Corporation also
shall pay to the holders of Class B Common Stock a dividend per share at least
equal to the dividend per share paid to the holders of the Class A Common Stock.
Subject to paragraph 4 of this Section E, whenever a dividend is paid to the
holders of Class B Common Stock, the Corporation shall also pay to the holders
of the Class A Common Stock a dividend per share at least equal to the dividend
per share paid to the holders of the Class B Common Stock. Dividends shall be
payable only as and when declared by the Board of Directors.
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4. Share Distributions. If at any time a distribution on the Class A
-------------------
Common Stock or Class B Common Stock is to be paid in Class A Common Stock,
Class B Common Stock or any other securities of the Corporation (hereinafter
sometimes called a "share distribution"), such share distribution may be
declared and paid only as follows:
(a) a share distribution consisting of Class A Common Stock to holders
of Class A Common Stock and Class B Common Stock, on an equal per share basis;
or to holders of Class A Common Stock only, but in such event there shall also
be a simultaneous share distribution to holders of Class B Common Stock
consisting of shares of Class B Common Stock on an equal per share basis;
(b) a share distribution consisting of Class B Common Stock to holders
of Class B Common Stock and Class A Common Stock, on an equal per share basis;
or to holders of Class B Common Stock only, but in such event there shall also
be a simultaneous share distribution to holders of Class A Common Stock
consisting of shares of Class A Common Stock on an equal per share basis; and
(c) a share distribution consisting of any class of securities of the
Corporation other than Common Stock, to the holders of Class A Common Stock and
the holders of Class B Common Stock on an equal per share basis.
The Corporation shall not reclassify, subdivide or combine one class
of its Common Stock without reclassifying, subdividing or combining the other
class of Common Stock, on an equal per share basis.
5. Liquidation and Mergers. Subject to the prior payment in full of
-----------------------
the preferential amounts to which any Preferred Stock is entitled, the holders
of Class A Common Stock and the holders of Class B Common Stock shall share
equally, on a share for share basis, in any distribution of the Corporation's
assets upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after payment or provisions for payment of the
debts and other liabilities of the Corporation. Neither the consolidation or
merger of the Corporation with or into any other corporation or corporations nor
the sale, transfer or lease of all or substantially all of the assets of the
Corporation shall itself be deemed to be a liquidation, dissolution or winding
up of the Corporation within the meaning of this paragraph 5.
SECTION F
UNCLAIMED DIVIDENDS
Any and all right, title, interest and claim in or to any dividends
declared by the Corporation, whether in cash, stock or otherwise, which are
unclaimed for a period of four years after the close of business on the payment
date, shall be and be deemed extinguished and abandoned; and such unclaimed
dividends in the possession of the Corporation, its transfer agent
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<PAGE>
or other agents or depositories, shall at such time become the absolute property
of the Corporation, free and clear of any and all claims of any Persons
whatsoever.
ARTICLE V
DIRECTORS
SECTION A
NUMBER OF DIRECTORS
The governing body of the Corporation shall be a Board of Directors.
Subject to any rights of the holders of any class or series of Preferred Stock
to elect additional directors, the number of directors shall not be less than
three (3) and the exact number of directors shall be fixed by the Board of
Directors by resolution. Election of directors need not be by written ballot.
SECTION B
CLASSIFICATION OF THE BOARD
Except as otherwise fixed by or pursuant to the provisions of Article IV
hereof relating to the rights of the holders of any class or series of Preferred
Stock to separately elect additional directors, which additional directors are
not required to be classified pursuant to the terms of such class or series of
Preferred Stock, the Board of Directors of the Corporation shall be divided into
three classes: Class I, Class II and Class III. Each class shall consist, as
nearly as possible, of a number of directors equal to one-third (33 1/3%) of the
then authorized number of members of the Board of Directors. The term of office
of the initial Class I directors shall expire at the annual meeting of
stockholders in 1995; the term of office of the initial Class II directors shall
expire at the annual meeting of stockholders in 1996; and the term of office of
the initial Class III directors shall expire at the annual meeting of
stockholders in 1997. At each annual meeting of stockholders of the Corporation
the successors of that class of directors whose term expires at that meeting
shall be elected to hold office for a term expiring at the annual meeting of
stockholders held in the third year following the year of their election. The
directors of each class will hold office until their respective successors are
elected and qualified.
SECTION C
REMOVAL OF DIRECTORS
Subject to the rights of the holders of any class or series of Preferred
Stock, directors may be removed from office only for cause (as hereinafter
defined) upon the affirmative vote of the
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holders of at least 66 2/3% of the total voting power of the then outstanding
Voting Securities (as hereinafter defined), voting together as a single class.
Except as may otherwise be provided by law, "cause" for removal, for purposes of
this Section C, shall exist only if: (i) the director whose removal is proposed
has been convicted of a felony, or has been granted immunity to testify in an
action where another has been convicted of a felony, by a court of competent
jurisdiction and such conviction is no longer subject to direct appeal; (ii)
such director has become mentally incompetent, whether or not so adjudicated,
which mental incompetence directly affects his ability as a director of the
Corporation, as determined by at least 66 2/3% of the members of the Board of
Directors then in office (other than such director); or (iii) such director's
actions or failure to act have been determined by at least 66 2/3% of the
members of the Board of Directors then in office (other than such director) to
be in derogation of the director's duties. The term "Voting Securities" shall
include the Class A Common Stock, the Class B Common Stock and any class or
series of Preferred Stock entitled to vote with the holders of Common Stock
generally upon all matters which may be submitted to a vote of stockholders at
any annual meeting or special meeting thereof.
SECTION D
NEWLY CREATED DIRECTORSHIPS AND VACANCIES
Subject to the rights of the holders of any class or series of Preferred
Stock, vacancies on the Board of Directors resulting from death, resignation,
removal, disqualification or other cause, and newly created directorships
resulting from any increase in the number of directors on the Board of
Directors, shall be filled by the affirmative vote of a majority of the
remaining directors then in office (even though less than a quorum) or by the
sole remaining director. Any director elected in accordance with the preceding
sentence shall hold office for the remainder of the full term of the class of
directors in which the vacancy occurred or to which the new directorship is
apportioned, and until such director's successor shall have been elected and
qualified. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director, except as may be
provided in the terms of any class or series of Preferred Stock with respect to
any additional director elected by the holders of such class or series of
Preferred Stock.
SECTION E
LIMITATION ON LIABILITY AND INDEMNIFICATION
1. Limitation On Liability.
-----------------------
To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or may hereafter be amended, a director of the
Corporation shall not be liable to the Corporation or any of its stockholders
for monetary damages for breach of fiduciary duty as a director. Any repeal or
modification of this paragraph 1 shall be prospective only and shall not
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<PAGE>
adversely affect any limitation, right or protection of a director of the
Corporation existing at the time of such repeal or modification.
2. Indemnification.
---------------
(a) RIGHT TO INDEMNIFICATION. The Corporation shall indemnify and
hold harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he, or a person for whom he is the
legal representative, is or was a director or officer of the Corporation or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
(including attorneys' fees) reasonably incurred by such person. Such right of
indemnification shall inure whether or not the claim asserted is based on
matters which antedate the adoption of this Section E. The Corporation shall be
required to indemnify a person in connection with a proceeding (or part thereof)
initiated by such person only if the proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation.
(b) PREPAYMENT OF EXPENSES. The Corporation shall pay the expenses
(including attorneys' fees) incurred in defending any proceeding in advance of
its final disposition, provided, however, that the payment of expenses incurred
by a director or officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the director or officer to
repay all amounts advanced if it should be ultimately determined that the
director or officer is not entitled to be indemnified under this paragraph or
otherwise.
(c) CLAIMS. If a claim for indemnification or payment of expenses
under this paragraph is not paid in full within 60 days after a written claim
therefor has been received by the Corporation, the claimant may file suit to
recover the unpaid amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of prosecuting such claim. In any such
action the Corporation shall have the burden of proving that the claimant was
not entitled to the requested indemnification or payment of expenses under
applicable law.
(d) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by
this paragraph shall not be exclusive of any other rights which such person may
or hereafter acquire under any statute, provision of this Certificate, the
Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
(e) OTHER INDEMNIFICATION. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, enterprise or nonprofit entity shall be reduced by any amount such person
may collect as indemnification from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit entity.
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<PAGE>
3. Amendment or Repeal.
-------------------
Any repeal or modification of the foregoing provisions of this Section
E shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
SECTION F
AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers conferred by the laws of
the State of Delaware, the Board of Directors, by action taken by the
affirmative vote of not less than 75% of the members of the Board of Directors
then in office, is hereby expressly authorized and empowered to adopt, amend or
repeal any provision of the Bylaws of this Corporation.
ARTICLE VI
TERM
The term of existence of this Corporation shall be perpetual.
ARTICLE VII
STOCK NOT ASSESSABLE
The capital stock of this Corporation shall not be assessable. It shall be
issued as fully paid, and the private property of the stockholders shall not be
liable for the debts, obligations or liabilities of this Corporation. This
Certificate shall not be subject to amendment in this respect.
ARTICLE VIII
MEETINGS OF STOCKHOLDERS
SECTION A
ANNUAL AND SPECIAL MEETINGS
Subject to the rights of the holders of any class or series of Preferred
Stock, stockholder action may be taken only at an annual or special meeting.
Except as otherwise provided in the
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<PAGE>
terms of any class or series of Preferred Stock or unless otherwise prescribed
by law or by another provision of this Certificate, special meetings of the
stockholders of the Corporation, for any purpose or purposes, shall be called by
the Secretary of the Corporation (i) upon the written request of the holders of
not less than 66 2/3% of the total voting power of the outstanding Voting
Securities (as defined in Section C of Article V of this Certificate) or (ii) at
the request of at least 75% of the members of the Board of Directors then in
office.
SECTION B
ANNUAL AND SPECIAL MEETINGS
Except as otherwise provided in the terms of any class or series of
Preferred Stock, no action required to be taken or which may be taken at any
annual meeting or special meeting of stockholders may be taken without a
meeting, and the power of stockholders to consent in writing, without a meeting,
is specifically denied.
ARTICLE IX
ACTIONS REQUIRING SUPERMAJORITY STOCKHOLDER VOTE
Subject to the rights of the holders of any class or series of Preferred
Stock, the affirmative vote of the holders of at least 66 2/3% of the total
voting power of the then outstanding Voting Securities (as defined in Section C
of Article V of this Certificate), voting together as a single class at a
meeting specifically called for such purpose, shall be required in order for the
Corporation to take any action to authorize:
(a) the amendment, alteration or repeal of any provision of this
Certificate or the addition or insertion of other provisions herein;
(b) the adoption, amendment or repeal of any provision of the Bylaws
of the Corporation; provided, however, that this clause (b) shall not apply to,
and no vote of the stockholders of the Corporation shall be required to
authorize, the adoption, amendment or repeal of any provision of the Bylaws of
the Corporation by the Board of Directors in accordance with the power conferred
upon it pursuant to Section F of Article V of this Certificate;
(c) the merger or consolidation of this Corporation with or into any
other corporation; provided, however, that this clause (c) shall not apply to
any merger or consolidation (i) as to which the laws of the State of Delaware,
as then in effect, do not require the consent of this Corporation's
stockholders, or (ii) which at least 75% of the members of the Board of
Directors then in office have approved;
(d) the sale, lease or exchange of all, or substantially all, of the
property and assets of the Corporation; or
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<PAGE>
(e) the dissolution of the Corporation.
All rights at any time conferred upon the stockholders of the Corporation
pursuant to this Certificate are granted subject to the provisions of this
Article IX.
# # # #
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<PAGE>
IN WITNESS WHEREOF, the undersigned has signed this Restated Certificate of
Incorporation this 4th day of August, 1994.
TCI/LIBERTY HOLDING COMPANY
By: /s/ Brendan R. Clouston
--------------------------------
Title: Executive Vice President
ATTEST:
By: /s/ Stephen M. Brett
---------------------------------
Title:
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<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 08/22/1994
944156379--2371729
CERTIFICATE OF CORRECTION
Filed pursuant to Section 103(f)
of the Delaware General Corporation Law
with respect to a
CERTIFICATE OF DESIGNATION
of
TELE-COMMUNICATIONS, INC.
Whereas, on August 4, 1994, Tele-Communications, Inc. (the
"Corporation") filed with the Delaware Secretary of State a Certificate of
Designation (the "Certificate of Designation") authorizing the issuance of a
series of preferred stock of the Corporation designated "Convertible Preferred
Stock, Series C:"
Whereas, such Certificate of Designation inaccurately stated that the
par value of the Convertible Preferred Stock, Series C, is $1.00 per share, when
in fact the par value of the Convertible Preferred Stock, Series C, is $.01 per
share;
Therefore, the Certificate of Designation is hereby corrected in
accordance with the provisions of Section 103(f) of the Delaware General
Corporation Law as follows:
1. The words "par value $1.00 per share" shall be deleted from the
third line of the second (unnumbered) paragraph of the Certificate of
Designation and the words "par value $.01 per share" shall be substituted in
their place.
2. The words "par value $1.00 per share" shall be deleted from paragraph
number 1 of the Certificate of Designation and the words "par value $.01 per
share" shall be substituted in their place.
Executed on the date set forth below by the undersigned duly authorized
officer of the Corporation.
Date: August 16, 1994 Signature: /s/ Stephen M. Brett
--------------- --------------------------
Stephen M. Brett
Title: Executive Vice President
--------------------------
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:18 PM 08/04/1994
944145672 - 2371729
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION
--------------
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED
AS "CONVERTIBLE PREFERRED STOCK,
SERIES C" ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
--------------
The undersigned Executive Vice President of Tele-Communications, Inc.,
a Delaware corporation (the "Corporation"), hereby certifies that the Board of
Directors duly adopted the following resolutions creating a series preferred
stock designated as "Convertible Preferred Stock, Series C":
"BE IT RESOLVED, that, pursuant to authority expressly granted by the
provisions of the Restated Certificate of Incorporation of this Corporation,
thc Board of Directors hereby creates and authorizes the issuance of a series
of preferred stock, par value $1 00 per share, of this Corporation, to
consist of 80,000 shares, and hereby fixes the designations, dividend rights,
voting powers, rights on liquidation and other preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereof of the shares of such series (in addition
to the designations, preferences and relative, participating, limitations or
restrictions thereof set forth in the Restated Certificate of Incorporation
that are applicable to preferred stock of all series) as follows:
1. Designation. The designation of the series of preferred stock,
-----------
par value $1.00 per share, of this Corporation authorized hereby is
"Convertible Preferred Stock, Series C" (the "Convertible Preferred Stock").
2. Certain Definitions. Unless the context otherwise requires, the terms
-------------------
defined in this Section 2 shall have the meanings herein specified:
Affiliate: As defined in Section 7(b).
---------
<PAGE>
Board of Directors: The Board of Directors of this Corporation and any
------------------
authorized committee thereof.
Capital Stock: Any and all shares, interests, participations or other
-------------
equivalents (however designated) of corporate stock of this Corporation.
Class A Common Stock: The Class A Common Stock, par value $1.00 per
--------------------
share, of this Corporation as such exists on the date of this Certificate of
Designations, and Capital Stock of any other class into which such Class A
Common Stock may thereafter have been changed.
Class B Common Stock: The Class B Common Stock, par value $1.00 per
--------------------
share, of this Corporation as such exists on the date of this Certificate of
Designations, and Capital Stock of any other class into which such Class B
Common Stock may thereafter have been changed.
Conversion Rate: As defined in Section 5(b).
---------------
Convertible Preferred Holder: As defined in Section 7(a).
----------------------------
Convertible Securities: Securities, other than the Class B Common
----------------------
Stock that are convertible into Class A Common Stock.
Debt Instrument: Any bond, debenture, note, indenture, guarantee or
---------------
other instrument or agreement evidencing any Indebtedness, whether existing at
the Issue Date or thereafter created, incurred, assumed or guaranteed.
Dividend Payment Date: As defined in Section 3(b).
---------------------
Dividend Period: The period from but excluding the First Accrual Date
---------------
to and including the first Dividend Payment Date and each three-month period
from but excluding the Dividend Payment Date for the preceding Dividend Period
to and including the Dividend Payment Date for such Dividend Period.
First Accrual Date: August 8, 1994.
------------------
Indebtedness: Any (i) liability, contingent or otherwise of this
------------
Corporation (x) for borrowed money whether or not the recourse of the lender is
to the whole of the assets of this Corporation or only to a portion thereof, (y)
evidenced by a note, debenture or similar instrument (including a purchase money
obligation) given other than in connection with the acquisition of inventory or
similar property in the ordinary course of business, or (z) for the payment of
money relating to an obligation under a lease that is required to be capitalized
for financial accounting purposes in accordance with generally accepted
accounting principles; (ii) liability of others described in the preceding
clause (i) which this Corporation has guaranteed or which is otherwise its legal
liability; (iii) obligations secured by a mortgage, pledge, lien, charge or
other encumbrance
2
<PAGE>
to which the property or assets of this Corporation are subject whether or not
the obligations secured thereby shall have been assumed by or shall otherwise
be this Corporation's legal liability; and (iv) any amendment, renewal,
extension or refunding of any liability of the types referred to in clauses
(i), (ii) and (iii) above.
Issue Date: The first date on which any shares of the Convertible
----------
Preferred Stock are first issued or deemed to have been issued.
Junior Securities: All shares of Class A Common Stock, Class B Common
-----------------
Stock, and any other class or series of stock of this Corporation not entitled
to receive any dividends unless all dividends required to have been paid or
declared and set apart for payment on the Convertible Preferred Stock shall have
been so paid or declared and set apart for payment and, for purposes of Section
4 hereof, any class or series of stock of this Corporation not entitled to
receive any assets upon liquidation, dissolution or winding up of the affairs of
this Corporation until the Convertible Preferred Stock shall have received the
entire amount to which such stock is entitled upon such liquidation, dissolution
or winding up.
Liquidation Value: Measured per Share of the Convertible Preferred Stock
-----------------
as of any particular date, the sum of (i) $2.375 plus (ii) an amount equal to
all dividends accrued on such Share through the Dividend Payment Date
immediately preceding the date on which the Liquidation Value is being
determined, which pursuant to section 3(c) have been added to and remain a part
of the Liquidation Value as of such date, plus (iii), for purposes of
determining amounts payable pursuant to Section 4 and 6 hereof, an amount equal
to all unpaid dividends accrued on the sum of the amounts specified in clauses
(i) and (ii) above to the date as of which the Liquidation Value is being
determined.
Original Holder: As defined in Section 7(a).
---------------
Parity Securities: Any class or series of stock of this Corporation
-----------------
entitled to receive payment of dividends on a parity with the Convertible
Preferred Stock or entitled to receive assets upon liquidation, dissolution or
winding up of the affairs of this Corporation on a parity with the Convertible
Preferred Stock.
Permitted Transferee: As defined in section 7(a).
--------------------
Record Date: For dividends payable on any Dividend Payment Date, the
-----------
fifteenth day of the month preceding the month during which such Dividend
Payment Date shall occur.
Redemption Date: As to any Share, the date fixed for redemption of such
---------------
Share as specified in the notice of redemption given in accordance with section
6(c), provided that no such date will be a Redemption Date unless the applicable
--------
Redemption Price is actually paid on such date or the consideration sufficient
for the payment thereof, and for no other purposes, has been set apart, and if
the Redemption Price is not so paid in full or the consideration sufficient
therefor so set apart.
3
<PAGE>
then the Redemption Date will be the date on which such Redemption Price is
fully paid or the consideration sufficient for the payment thereof, and for no
other purpose, has been set apart.
Redemption Price: As to any Share that is to be redeemed on any
----------------
Redemption Date, the Liquidation Value as in effect on such Redemption Date.
Senior Securities: Any class or series of stock of this Corporation
-----------------
ranking senior to the Convertible Preferred Stock in respect of the right to
receive payment of dividends or the right to participate in any distribution
upon liquidation, dissolution or winding up of the affairs of this Corporation.
Share: As defined in Section 3(a).
-----
Special Record Date: As defined in Section 3(C).
-------------------
3 Dividends.
---------
(a) Subject to the rights of any Parity Securities with respect to
dividends, the holders of the Convertible Preferred Stock shall be entitled to
receive, and, subject to any prohibition or restriction contained in any Debt
Instrument, this Corporation shall be obligated to pay, but only out of funds
legally available therefor, preferential cumulative cash dividends which shall
accrue as provided herein. Except as otherwise provided in Sections 3(c) or
3(d) hereof, dividends on each share of Convertible Preferred Stock (hereinafter
referred to as a "Share") shall accrue on a daily basis at the rate of 5 1/2%
per annum of the Liquidation Value to and including the date of conversion
thereof pursuant to Section 5 or the date on which the Liquidation Value or
Redemption Price of such Share is made available pursuant to Section 4 or 6
hereof, respectively. Dividends on the Convertible Preferred Stock shall accrue
as provided herein, whether or not such dividends have been declared and whether
or not there are profits, surplus or other funds of the Corporation legally or
contractually available for the payment of dividends.
(b) Accrued dividends on the Convertible Preferred Stock shall be
payable quarterly on the first day of each January, April, July and October, or
the immediately preceding business day if such first day is a Saturday, Sunday
or legal holiday (each such payment date being hereinafter referred to as a
"Dividend Payment Date"), commencing on October 1, 1994 to the holders of record
of the Convertible Preferred Stock as of the close of business on the applicable
Record Date. For purposes of determining the amount of dividends "accrued" as of
any date that is not a Dividend Payment Date, such amount shall be calculated on
the basis of the rate per annum specified in Section 3(a) for actual days
elapsed from but excluding the First Accrual Date (in the case of any date prior
to the first Dividend Payment Date) or the last preceding Dividend Payment Date
(in the case of any other date) to and including the date as of which such
determination is to be made, based on a 365-day year.
4
<PAGE>
(c) If on any Dividend Payment Date this Corporation pursuant to
applicable law or the terms of any Debt Instrument shall be prohibited or
restricted from paying in cash the full dividends to which holders of the
Convertible Preferred Stock and any Parity Securities shall be entitled, the
amount available for such payment pursuant to applicable law and which is not
restricted by the terms of any Debt Instrument shall be distributed among the
holders of the Convertible Preferred Stock and such Parity Securities ratably in
proportion to the full amounts to which they would otherwise be entitled. To the
extent not paid on each Dividend Payment Date, all dividends which have accrued
on each Share during the Dividend Period ending on such Dividend Payment Date
will be added cumulatively to the Liquidation Value of such Share and will
remain a part thereof until such dividends are paid. In the event that dividends
are not paid in full on two consecutive Dividend Payment Dates, dividends on
that portion of the Liquidation Value of each Share which consists of accrued
dividends that have theretofore been or thereafter are added to, and remain a
part of, the Liquidation Value in accordance with the preceding sentence shall
accrue cumulatively on a daily basis at the rate of fifteen percent (15%) per
annum, from and after such second consecutive Dividend Payment Date to and
including the date of conversion of such Share pursuant to Section 5 or the date
on which the Liquidation Value or Redemption Price of such Share is made
available pursuant to section 4 or 6 hereof, respectively, unless such portion
of the Liquidation Value that consists of accrued unpaid dividends shall be
earlier paid in full. Such portion of the Liquidation Value as consists of
accrued unpaid dividends, may be declared and paid at any time without reference
to any regular Dividend Payment Date, to holders of record as of the close of
business on such date, not more than 50 days nor less than 10 days preceding the
payment date thereof, as may be fixed by the Board of Directors of this
Corporation (the "Special Record Date").
(d) In the event that on any date fixed for redemption of Shares
pursuant to Section 6 (other than on any date fixed for a redemption of Shares
pursuant to Section 6(a)), this Corporation shall fail to pay the Redemption
Price due and payable upon presentation and surrender of the stock certificates
evidencing Shares to be redeemed, then dividends on such Shares shall accrue
cumulatively on a daily basis at the rate of fifteen percent (15%) per annum of
the Liquidation Value thereof from and after such Redemption date to and
including the date of conversion of such Shares pursuant to Section 5 or the
date on which the Liquidation Value or Redemption Price of such Shares is made
available pursuant to Section 4 or 6 hereof, respectively.
(c) Notice of each Special Record Date shall be mailed, in the manner
provided in Section 6(c), to the holders of record of the Convertible Preferred
Stock not less than 15 days prior thereto.
(f) As long as any Convertible Preferred Stock shall be outstanding, no
dividend, whether in cash or property, shall be paid or declared, nor shall any
other distribution be made, on any Junior Security, nor shall any shares of any
Junior Security be purchased, redeemed, or otherwise acquired for value by the
Corporation, unless the holders of the Convertible Preferred Stock shall have
received all dividends to which they are entitled pursuant to Section 3(a)
hereof for all the Dividend Periods preceding the date on which such dividend on
the Junior Securities is to
5
<PAGE>
occur, or such dividends shall have been declared and the consideration
sufficient for the payment thereof set apart so as to be available for the
payment in full thereof and for no other purpose. The provisions of this Section
3(f) shall not apply (i) to a dividend payable in any Junior Security, or (ii)
to the repurchase, redemption or other acquisition of shares other than any
Junior Security solely through the issuance of Junior Securities (together with
a case adjustment for fractional shares, if any) or through the application of
the proceeds from the sale of Junior Securities.
4. Liquidation. Upon any liquidation, dissolution or winding up
-----------
of this Corporation, whether voluntary or involuntary, the holders of
Convertible Preferred Stock shall be entitled to be paid an amount in cash equal
to the aggregate Liquidation Value at the date fixed for liquidation of all
Shares outstanding before any distribution or payment is made upon any Junior
Securities, which payment shall be made pari passu with any such payment made to
---- -----
the holders of any Parity Securities. The holders of Convertible Preferred
Stock shall be entitled to no other or further distribution of or participation
in any remaining assets of this Corporation after receiving the Liquidation
Value per Share. If upon such liquidation, dissolution or winding up, the
assets of this Corporation to be distributed among the holders of Convertible
Preferred Stock and to all holders of Parity Securities are insufficient to
permit payment in full to such holders of the aggregate preferential amounts
which they are entitled to be paid, then the entire assets of this Corporation
to be distributed to such holders shall be distributed ratably among them based
upon the full preferential amounts to which the shares of Convertible Preferred
Stock and such Parity Securities would otherwise respectively be entitled. Upon
any such liquidation, dissolution or winding up, after the holders of
Convertible Preferred Stock and Parity Securities have been paid in full the
amounts to which they are entitled, the remaining assets of this Corporation may
be distributed to the holders of Junior Securities. This Corporation shall mail
written notice of such liquidation, dissolution or winding up to each record
holder of Convertible Preferred Stock not less than 30 days prior to the date
stated in such written notice. Neither the consolidation or merger of this
Corporation into or with any other corporation or corporations, nor the sale,
transfer or lease by this Corporation of all or any part of its assets, shall be
deemed to be a liquidation, dissolution or winding up of this Corporation within
the meaning of this Section 4.
5. Conversion
----------
(a) Unless previously called for redemption as provided in Section 6
hereof, the Convertible Preferred Stock may be converted at any time or from
time to time, in such manner an upon such terms and conditions as hereinafter
provided in the Section 5 into fully paid and non-assessable full shares of
Class A Common Stock. In the case of Shares called for redemption by this
Corporation pursuant to Section 6(a) hereof, the conversion right provided by
this Section 5 shall terminate at the close of business on the fifteenth day
preceding the date fixed for redemption. In the case of Shares required to be
redeemed pursuant to Section 6(b), the conversion right provided by this Section
5 shall terminate immediately upon receipt by this Corporation of a notice given
pursuant to said Section. In case cash, securities or property other than Class
A Common Stock shall be payable, deliverable or issuable upon conversion as
provided herein, then all references to Class A
6
<PAGE>
Common Stock in this Section 5 shall be deemed to apply, so far as appropriate
and as nearly as may be, to such cash, property or other securities.
(b) Subject to the provisions for adjustment hereinafter set forth
in this Section 5, the Convertible Preferred Stock may be converted into Class A
Common Stock at the initial conversion rate of 100 fully paid and non-assessable
shares of Class A Common Stock for one share of the Convertible Preferred Stock.
(This conversion rate as from time to time adjusted cumulatively pursuant to the
provisions of this Section is hereinafter referred to as "Conversion Rate").
(c) In case this Corporation shall (i) pay a dividend or make a
distribution on its outstanding shares of Class A Common Stock in shares of its
Capital Stock, (ii) subdivide the then outstanding shares of Class A Common
Stock into a greater number of shares of Class A Common Stock, (iii) combine the
then outstanding shares of Class A Common Stock into a smaller number of shares
of Class A Common Stock, or (iv) issue by reclassification of its shares of
Class A Common Stock any shares of any other class of Capital Stock of this
Corporation (including any such reclassification in connection with a merger in
which this Corporation is the continuing corporation), then the Conversation
Rate in effect immediately prior to the opening of business on the record date
for such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted so that the holder of each
share of the Convertible Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number and kind of shares of Capital Stock of
this Corporation that such holder would have owned or been entitled to receive
immediately following such action had such shares of Convertible Preferred Stock
been converted immediately prior to such time. An adjustment made pursuant to
this Section 5(c) for a dividend or distribution shall become effective
immediately after the record date for the dividend or distribution and an
adjustment made pursuant to this Section 5(c) for a subdivision, combination or
reclassification shall become effective immediately after the effective date of
the subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any action listed above shall be taken.
(d) In case this Corporation shall issue any rights or warrants to
all holders of shares of Class A Common Stock entitling them (for a period
expiring within 45 days after the record date for the determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Class A Common Stock (or Convertible Securities) at a price
per share of Class A Common Stock (or having an initial exercise price or
conversion price per share of Class A Common Stock) less than the then current
market price per share of Class A Common Stock (as determined in accordance with
the provisions of Section 5(f) below) on such record date, the number of shares
of Class A Common Stock into which each Share shall thereafter be convertible
shall be determined by multiplying the number of shares of Class A Common Stock
into which such Share was theretofore convertible immediately prior to such
record date by a fraction of which the numerator shall be the number of shares
of Class A Common Stock outstanding on such record date plus the number of
additional shares of Class A Common Stock offered for subscription or purchase
(or into which the Convertible Securities so offered are initially convertible)
and of
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<PAGE>
which the denominator shall be the number of shares of Class A Common Stock
outstanding on such record date plus the number of shares of Class A Common
Stock which the aggregate offering price of the total number of shares of Class
A Common Stock so offered (or the aggregate initial conversion or exercise price
of the Convertible Securities so offered) would purchase at the then current
market price per share of Class A Common Stock (as determined in accordance with
the provision of Section 5(f) below) on such record date. Such adjustment shall
be made successively whenever any such rights or warrants are issued and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. In the event that all
of the shares of Class A Common Stock (or all of the Convertible Securities)
subject to such rights or warrants have not been issued when such rights or
warrants expire (or, in the case of rights or warrants to purchase Convertible
Securities which have been exercised, all of the shares of Class A Common Stock
issuable upon conversion of such Convertible Securities have not been issued
prior to the expiration of the conversion right thereof), then the Conversion
Rate shall be readjusted retroactively to be the Conversion Rate which would
then be in effect had the adjustment upon the issuance of such rights or
warrants been made on the basis of the actual number of shares of Class A Common
Stock (or Convertible Securities) issued upon the exercise of such rights or
warrants (or the conversion of such Convertible Securities); but such subsequent
adjustment shall not affect the number of shares of Class A Common Stock issued
upon the conversion of any Share prior to the date such subsequent adjustment is
made.
(e) In case this Corporation shall distribute to all holders of shares
of Class A Common Stock (including any such distribution made in connection with
a merger in which this Corporation is the continuing corporation, other than a
merger to which Section 5(g) is applicable) any evidences of its indebtedness or
assets (other than cash dividends of Capital Stock) or rights or warrants to
purchase shares of Class A Common Stock or Class B Common Stock or securities
convertible into shares of Class A Common Stock or Class B Common Stock
(excluding those referred to in Section 5(d) above), then in each such case the
number of shares of Class A Common Stock into which each Share shall thereafter
be convertible shall be determined by multiplying the number of shares of Class
A Common Stock into which such Share was theretofore convertible immediately
prior to the record date for the determination of stockholders entitled to
receive the distribution by a fraction of which the numerator shall be the then
current market price per share of Class A Common Stock (as determined in
accordance with the provisions of Section 5(f) below) on such record date and of
which the denominator shall be such current market price per share of Class A
Common Stock less the fair market value on such record date (as determined by
the Board of Directors of this Corporation, whose determination shall be
conclusive) of the portion of the assets or evidences of indebtedness or rights
and warrants so to be distributed to one share of Class A Common Stock. Such
adjustment shall be made successively whenever any such distribution is made and
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such distribution.
(f) For the purpose of any computation under Section 5(d), (e) or (k),
the current market price per share of Class A Common Stock at any date shall be
deemed to be the average of the daily closing prices for a share of Class A
Common Stock for the ten (10) consecutive trading
8
<PAGE>
days before the day in question. The closing price for each day shall be the
last reported sale price regular way, or, in case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices
regular way, in either case on the composite tape, or if the shares of Class A
Common Stock are not quoted on the composite tape, on the principal United
States securities exchange registered under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), on which the shares of Class A Common Stock are
listed or admitted to trading, or if they are not listed or admitted to trading
on any such exchange, the last reported sale price (or the average of the quoted
closing bid and asked prices if there were no reported sales) as reported by the
National Association of Securities Dealers Automated Quotation system ("NASDAQ")
or any comparable system, or if the Class A Common Stock is not quoted on NASDAQ
or any comparable system, the average of the closing bid and asked prices as
furnished by any member of the National Association of Securities Dealers, Inc,
selected from time to time by this Corporation for that purpose or, in the
absence of such quotations, such other method of determining market value as the
Board of Directors shall from time to time deem to be fair.
(g) In case of any reclassification or change in the Class A Common
Stock (other than any reclassification or change referred to in Section 5(c) and
other than a change in par value) or in case of any consolidation of this
Corporation with any other corporation or any merger of this Corporation into
another corporation or of another corporation into this Corporation (other than
a merger in which this Corporation is the continuing corporation and which does
not result in any reclassification or change (other than a change in par value
or reclassification or change to which Section 5(c) is applicable) in the
outstanding Class A Common Stock), or in case of any sale or transfer to another
corporation or entity (other than by mortgage or pledge) of all or substantially
all of the properties and assets of this Corporation, this Corporation (or its
successor in such consolidation or merger) or the purchaser of such properties
and assets shall make appropriate provision so that the holder of a Share shall
have the right thereafter to convert such Share into the kind and amount of
shares of stock and other securities and property that such holder would have
owned immediately after such reclassifications change, consolidation, merger,
sale or transfer if such holder had converted such Share into Class A Common
Stock immediately prior to the effective date of such reclassification, change,
consolidation, merger, sale or transfer (assuming for this purpose (to the
extent applicable) that such holder failed to exercise any rights of election
and received per share of Class A Common Stock the kind and amount of shares of
stock and other securities and property received per share by a plurality of the
non-electing shares), and the holders of the Convertible Preferred Stock shall
have no other conversion rights under these provisions; provided, that the
effective provision shall be made, in the Articles or Certificate of
Incorporation of the resulting or surviving corporation or otherwise or in any
contracts of sale or transfer, so that the provisions set forth herein for the
protection of the conversion rights of the Convertible Preferred Stock shall
thereafter be made applicable, as nearly as reasonably may be to any such other
shares of stock and other securities and property deliverable upon conversion of
the Convertible Preferred Stock remaining outstanding or other convertible
preferred stock or other Convertible Securities received by the holders of
convertible Preferred Stock in place thereof; and provided, further, that any
such resulting or surviving corporation or purchaser shall expressly assume the
obligation to deliver, upon the exercise of the conversion privilege, such
share, securities or property as the holders of the
9
<PAGE>
Convertible Preferred Stock remaining outstanding, or other convertible
preferred stock or other convertible securities received by the holders in place
thereof, shall be entitled to receive pursuant to the provisions hereof, and to
make provisions for the protection of the conversion rights as above provided.
(h) Whenever the Conversion Rate or the conversion privilege shall
be adjusted as provided in Sections 5(c), (d), (e) or (g), this Corporation
shall promptly cause a notice to be mailed to the holders of record of the
Convertible Preferred Stock describing the nature of the event requiring such
adjustment, the Conversion Rate in effect immediately thereafter and the kind
and amount of stock or other securities or property into which the Convertible
Preferred Stock shall be convertible after such event. Where appropriate, such
notice may be given in advance and included as a part of a notice required to be
mailed under the provisions of Section 5(j).
(i) This Corporation may, but shall not be required to, make any
adjustment of the Conversion Rate if such adjustment would require an increase
or decrease of less than 1% in such Conversion Rate; provided, however, that any
adjustments which by reason of this Section 5(i) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 5 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. In any case in which this
Section 5(i) shall require than an adjustment shall become effective immediately
after a record date for such event, the Corporation may defer until the
occurrence of such event (x) issuing to the holder of any shares of Convertible
Preferred Stock converted after such record date and before the occurrence of
such event the additional shares of Class A Common Stock or other Capital Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the shares of Class A Common Stock, or other Capital Stock
issuable upon such conversion before giving effect to such adjustment and (y)
paying to such holder cash in lieu of any fractional interest to which such
holder is entitled pursuant to Section 5(n); provided, however, that, if
requested by such holder, this Corporation shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to receive
such additional shares of Class A Common Stock or other Capital Stock, and such
cash, upon the occurrence of the event requiring such adjustment.
(j) In case at any time:
(i) this Corporation shall take any action which would
require an adjustment in the Conversion Rate pursuant to this Section;
(ii) there shall be any capital reorganization or
reclassification of the Class A Common Stock (other than a change in par
value), or any consolidation or merger to which the Corporation is a
party and for which approval of any shareholders of the Corporation is
required, or any sale, transfer or lease of all or substantially all of
the properties and assets of the Corporation, or a tender offer for
shares of Class A Common Stock representing,
10
<PAGE>
together with any shares of Class B Common Stock tendered for in such
tender offer, at least a majority of the total voting power represented
by the outstanding shares of Class A Common Stock and Class B Common
Stock which has been recommended by the Board of Directors as being in
the best interests of the holders of Class A Common Stock; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of this Corporation;
then, in any such event, this Corporation shall give written notice, in the
manner provided in Section 6(c) hereof, to the holders of the Convertible
preferred Stock at their respective addresses as the same appear on the books of
the Corporation, at least twenty days (or ten days in the case of a recommended
tender offer as specified in clause (ii) above) prior to any record date for
such action, dividend or distribution or the date as of which it is expected
that holders of Class A Common Stock of record shall be entitled to exchange
their shares of Class A Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, transfer, lease, tender offer, dissolution, liquidation or winding up;
provided, however, that any notice required by any event described in clause
(ii) of this Section 5(j) shall be given in the manner and at the time that such
notice is given to the holders of Class A Common Stock. Without limiting the
obligations of this Corporation to provide notice of corporate actions
hereunder, the failure to give the notice required by this Section 5(j) or any
defect therein shall not affect the legality or validity of any such corporate
action of the Corporation or the vote upon such action.
(k) Before any holder of Convertible Preferred Stock shall be
entitled to convert the same into Class A Common Stock, such holder shall
surrender the certificate or certificates for such Convertible Preferred Stock
at the office of this Corporation or at the office of the transfer agent for the
Convertible Preferred Stock, which certificate or certificates, if this
Corporation shall so request, shall be duly endorsed to this Corporation or in
blank or accompanied by proper instruments of transfer to this Corporation or in
blank (such endorsements or instruments of transfer to be in form satisfactory
to this Corporation), and shall given written notice to this Corporation at said
office that it elects to convert all or a part of the Shares represented by said
certificate or certificates in accordance with the terms of this Section 5, and
shall state in writing therein the name or names in which such holder wishes the
certificates for Class A Common Stock to be issued. Every such notice of
election to convert shall constitute a contract between the holder of such
Convertible Preferred Stock and the Corporation, whereby the holder of such
Convertible Preferred Stock shall be deemed to subscribe for the amount of Class
A Common Stock which such holder shall be entitled to receive upon conversion of
the number of shares of Convertible Preferred Stock to be converted, and, in
satisfaction of such subscription, to deposit the shares of Convertible
Preferred Stock to be converted, and thereby this Corporation shall be deemed to
agree that the surrender of the shares of Convertible Preferred Stock to be
converted shall constitute full payment of such subscription for Class A Common
Stock to be issued upon such conversion. This Corporation will as soon as
practicable after such deposit of a certificate or certificates for Convertible
Preferred
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<PAGE>
Stock, accompanied by the written notice and the statement above prescribed,
issue and deliver at the office of this Corporation or of said transfer agent to
the person for whose account such Convertible Preferred Stock was so
surrendered, or to his nominees(s) or, subject to compliance with applicable
law, transferee(s), a certificate or certificates for the number of full shares
of Class A Common Stock to which such holder shall be entitled, together with
cash in lieu of any fraction of a share as hereinafter provided. If surrendered
certificates for Convertible Preferred Stock are converted only in part, this
Corporation will issue and deliver to the holder, or to his nominee(s), without
charge therefor, a new certificate or certificates representing the aggregate of
the unconverted Shares. Such conversion shall be deemed to have been made as of
the date of such surrender of the Convertible Preferred Stock to be converted;
and the person or persons entitled to receive the Class A Common Stock issuable
upon conversion of such Convertible Preferred Stock shall be treated for all
purpose as the record holder or holders of such Class A Common Stock on such
date.
Upon the conversion of any Share, this Corporation shall pay, to the
holder of record of such Share on the immediately preceding Record Date, all
accrued but unpaid dividends on such Share to the date of the surrender of such
Share for conversion. Such payment shall be made in cash or, to the election of
this Corporation, the issuance of certificates representing such number of
shares of Class A Common Stock as have an aggregate current market price (as
determined in accordance with Section 5(f) on the date of issuance equal to the
amount of such accrued but unpaid dividends. Upon the making of such payment of
the person entitled thereto as determined pursuant to the first sentence of this
paragraph, no further dividends shall accrue on such Share or be payable to any
other person.
The issuance of certificates for shares of Class A Common Stock upon
conversion of shares of Convertible Preferred Stock shall be made without charge
for any issue, stamp or other similar tax in respect of such issuance, provided,
however, if any such certificate is to be issued in a name other than that of
the registered holder of the share or shares of Convertible Preferred Stock
converted, the person or persons requesting the issuance thereof shall pay to
this Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of
this Corporation that such tax has been paid.
This Corporation shall not be required to convert any shares of
Convertible Preferred Stock, and no surrender of Convertible Preferred Stock
shall be effective for that purpose, while the stock transfer books of this
Corporation are closed for any purpose; but the surrender of Convertible
Preferred stock for conversion during any period while such books are so closed
shall become effective for conversion immediately upon the reopening of such
books, as if the conversion had been made on the date such Convertible Preferred
Stock was surrendered.
(l) This Corporation shall at all times reserve and keep available,
solely for the purpose of issuance upon conversion of the outstanding shares of
Convertible Preferred Stock, such number of shares of Class A Common Stock as
shall be issuable upon the conversion of all outstanding Shares, provided that
nothing contained herein shall be construed to preclude this
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<PAGE>
Corporation from satisfying its obligations in respect of the conversion of the
outstanding shares of Convertible Preferred Stock by delivery of shares of Class
A Common Stock which are held in the treasury of this Corporation. This
Corporation shall take all such corporate and other actions as from time to time
may be necessary to insure that all shares of Class A Common Stock issuable upon
conversion of shares of Convertible Preferred Stock at the Conversion Rate in
effect from time to time will, upon issue, be duly and validly authorized and
issued, fully paid and nonassessable and free of any preemptive or similar
rights.
(m) All shares of Convertible Preferred Stock received by this
Corporation upon conversion thereof into Class A Common Stock shall be retired
and shall be restored to the status of authorized and unissued shares of
preferred stock (and may be reissued as part of another series of the preferred
stock of this Corporation, but such shares shall not be reissued as Convertible
Preferred Stock).
(n) This Corporation shall not be required to issue fractional
shares of Class A Common Stock or scrip upon conversion of the Convertible
Preferred Stock. As to any final fraction of a share of Class A Common Stock
which a holder of one or more Shares would otherwise be entitled to receive upon
conversion of such Shares in the same transaction, this Corporation shall pay a
cash adjustment in respect of such final fraction in an amount equal to the same
fraction of the market value of a full share of Class A Common Stock. For
purposes of this Section 5(n), the market value of a share of Class A Common
Stock shall be the last reported sale price regular way on the business day
immediately preceding the date of conversion, or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices regular way on such day, in either case on the composite tape, or if the
shares of Class A Common Stock are not quoted on the composite tape, on the
principal United States securities exchange registered under the Exchange Act on
which the shares of Class A Common Stock are listed or admitted to trading, or
if the shares of Class A Common Stock are not listed or admitted to trading on
any such exchange, the last reported sale price (or the average of the quoted
last reported bid and asked prices if there were no reported sales) as reported
by NASDAQ or any compatible system, or if the Class A Common Stock is not quoted
on NASDAQ or any compatible system, the average of the closing bid and asked
prices as furnished by any member of the National Association of Securities
Dealers, Inc. selected from time to time by this Corporation for that purpose
or, in the absence of such quotations, such other method of determining market
value as the Board of Directors shall from time to time deem to be fair.
6. Redemption.
----------
(a) Subject to the provisions of Section 6(f), the shares of
Convertible Preferred Stock may be redeemed out of funds legally available
therefor, at the option of this Corporation by action of the Board of Directors,
in whole or from time to time in part, at any time after August 8, 2001 at the
Redemption Price per share as of the application Redemption Date. If less than
all outstanding Shares are to be redeemed, Shares shall be redeemed ratably
among the holders thereof.
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<PAGE>
(b) Subject to the rights of any Parity Securities and the provisions of
Section 6(f) and subject to any prohibitions or restrictions contained in any
Debt Instrument, at any time on or after August 8, 2001, any holder shall have
the right, at such holder's option, to require redemption by this Corporation at
the Redemption Price per Share as of the applicable Redemption Date of all or
any portion of his Shares having an aggregate Liquidation Value in excess of
$1,000,000 by written notice to this Corporation stating the number of Shares to
be redeemed. This Corporation shall redeem, out of funds legally available
therefor and not restricted in accordance with the first sentence of this
Section 6(b), the Shares so requested to be redeemed on such date within 60 days
following this Corporation's receipt of such notice as this Corporation shall
state in its notice given pursuant to Section 6(c). If the funds of the
Corporation legally available for redemption of Shares and not restricted in
accordance with the first sentence of this Section 6(b) are insufficient to
redeem the total number of shares required to be redeemed pursuant to this
Section 6(b), those funds which are legally available for redemption of such
Shares and not so restricted will be used to redeem the maximum possible number
of such Shares ratably among the holders who have required Shares to be redeemed
under this Section 6(b). At any time thereafter when additional funds of this
Corporation are legally available and not so restricted for such purpose, such
funds will immediately be used to redeem the Shares this Corporation failed to
redeem on such Redemption Date until the balance of such Shares are redeemed.
(c) Notice of any redemption pursuant to this Section shall be
mailed, first class, postage prepaid, not less than 30 days nor more than 60
days prior to the Redemption Date, to the holders of record of the shares of
Convertible Preferred Stock to be redeemed, at their respective addresses as the
same appear upon the books of this Corporation or are supplied by them in
writing to this Corporation for the purpose of such notice (with telephonic or
facsimile confirmation of notice to Bill Daniels so long as he is a holder of
record): but no failure to mail such notice or any defect therein or in the
mailing thereof shall affect the validity of the proceedings for the redemption
of any shares of the Convertible Preferred Stock. Such notice shall set forth
the Redemption Price, the Redemption Date, the number of Shares to be redeemed
and the place at which the Shares called for redemption will, upon presentation
and surrender of the stock certificates evidencing such Shares, be redeemed. In
case fewer than the total number of shares of Convertible Preferred Stock
represented by any certificate are redeemed, a new certificate representing the
number of unredeemed Shares will be issued to the holder thereof without cost to
such holder.
(d) If notice of any redemption by this Corporation pursuant to this
Section 6 shall have been mailed as provided in Section 6(c) and if on or before
the Redemption Date specified in such notice the consideration necessary for
such redemption shall have been set apart so as to be available therefor and
other therefor, then on and after the close of business on the Redemption Date,
the Shares called for redemption, notwithstanding that any certificate therefor
shall not have been surrendered for cancellation, shall no longer be deemed
outstanding, and all rights with respect to such Shares shall forthwith cease
and terminate, except the right of the holders thereof to receive upon
surrender of their certificates the consideration payable upon redemption
thereof.
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<PAGE>
(e) All shares of Convertible Preferred Stock redeemed, retired,
purchased or otherwise acquired by this Corporation shall be retired and shall
be restored to the status of authorized and unissued shares of preferred stock
(and may be reissued as part of another series of the preferred stock of this
Corporation, but such shares shall not be reissued as Convertible Preferred
Stock).
(f) If at any time this Corporation shall have failed to pay, or
declare and set apart the consideration sufficient to pay, all dividends accrued
up to and including the immediately preceding Dividend Payment Date on the
Convertible Preferred Stock, and until all dividends accrued up to and including
the immediately preceding Dividend Payment Date on the Convertible Preferred
Stock shall have been paid or declared and set apart so as to be available for
the payment in full thereof and for no other purpose, this Corporation shall not
redeem, pursuant to a sinking fund or otherwise, any shares of Convertible
Preferred Stock or Junior Securities, unless all then outstanding shares of
Convertible Preferred Stock are redeemed, and shall not purchase or otherwise
acquire any shares of Convertible Preferred Stock of Junior Securities. If and
so long as this Corporation shall fail to redeem on a Redemption Date pursuant
to Section 6(b) all shares of Convertible Preferred Stock required to be
redeemed on such date, this Corporation shall not redeem, or discharge any
sinking fund obligation with respect to, any Junior Securities, unless all then
outstanding shares of Convertible Preferred Stock are redeemed, and shall not
purchase or otherwise acquire any shares of Convertible Preferred Stock or
Junior Securities. Nothing contained in this Section 6(f) are for the benefit of
holders of Convertible Preferred Stock and accordingly the provisions of this
Section 6(f) shall prevent the purchase or acquisition of shares of Convertible
Preferred Stock pursuant to a purchase or exchange offer or offers made to
holders of all outstanding shares of Convertible Preferred Stock, provided that
--------
as to holders of all outstanding shares of Convertible Preferred Stock, the
terms of the purchase or exchange offer for all such shares are identical. The
provisions of this Section 6(f) are for the benefit of holders of Convertible
Preferred Stock and accordingly the provisions of this Section 6(f) shall not
restrict any redemption by this Corporation of Shares held by any holder,
provided that all other holders of Shares shall have waived in writing the
benefits of this provision with respect to such redemption.
7. Transfer.
--------
(a) Without the prior written consent of this Corporation, no person
holding shares of Convertible Preferred Stock of record (hereinafter called a
"Convertible Preferred Holder") may transfer, and this Corporation shall not
register the transfer of, such shares of Convertible Preferred Stock, whether by
sale, assignment, or otherwise, except to a Permitted Transferee.
(i) In case of a Convertible Preferred Holder acquiring
record and beneficial ownership of the shares of Convertible Preferred
Stock in question upon initial issuance by this Corporation (an
"Original Holder"), a "Permitted Transferee" shall mean:
(x) any Affiliate (as defined in Section 7(b)) of
such Original Holder.
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<PAGE>
(y) any other Original Holder (or any Affiliate of
any such other Original Holder), or
(z) any person or entity to whom Shares are
transferred by an Original Holder pursuant
to a gift or bequest or pursuant to
the laws of intestacy.
(ii) In the case of a Convertible Preferred Holder which is a
Permitted Transferee of an Original Holder, a "Permitted Transferee"
shall mean:
(x) any Original Holder.
(y) any Permitted Transferee of an Original Holder,
except any transferee referred to in clause
(i)(z) above, or
(z) any person or entity to whom Shares are
transferred by a Permitted Transferee pursuant
to a gift or bequest or pursuant to the laws
of intestacy.
(b) For purposes of this Section 7, the term "Affiliate" shall mean (i)
any person or corporation that owns beneficially and of record at least a
majority of the outstanding securities representing the right, other than as
affected by events of default, to vote for the election of directors ("voting
securities") of an Original Holder or (ii) any person or corporation at least a
majority of the voting securities of which are owned beneficially and of record
by an Original Holder, where in the case of both (i) and (ii), voting securities
will be deemed "owned" by a person or corporation if either owned directly or if
owned indirectly through one or more intermediary corporations at least a
majority of the voting securities of which are owned beneficially and of record
by that person or corporation or by an intermediary corporation in such a
majority or more chain of ownership.
(c) This Corporation may, in connection with preparing a list of
stockholders entitled to vote at any meeting of stockholders, or as a condition
to the transfer or the registration of shares of Convertible Preferred Stock on
this Corporation's books, require the furnishing of such affidavits or other
proof as it deems necessary to establish that any person is the beneficial owner
of shares of Convertible Preferred Stock or is a Permitted Transferee.
(d) Shares of Convertible Preferred Stock shall be registered in the
name of the beneficial owners thereof and not in "street" or "nominee" name. For
this purpose, a "beneficial owner" of any shares of Convertible Preferred Stock
shall mean a person who, or any entity which, possesses the power, either singly
or jointly, to direct the voting or disposition of such shares. Certificates for
shares of Convertible Preferred Stock shall bear a legend referencing the
restrictions on transfer imposed by this Section 7.
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<PAGE>
8. Voting Rights. The holders of the Convertible Preferred Stock
-------------
shall be entitled to vote on all matters submitted to a vote of the holders of
the Capital Stock of this Corporation which is entitled to vote generally on the
election of directors. Each Share shall entitle the registered holder thereof
to such number of votes as is equal to the number of shares of Class A Common
stock into which such Share is then convertible. Holders of Convertible
Preferred Stock shall vote together with holders of common stock and shall not
be entitled to vote as a class except as otherwise required by law or this
Corporation's Restated Certificate of Incorporation.
9. Amendment. No amendment or modification of the designation,
---------
rights, preferences, and limitations of the Shares set forth herein shall be
binding or effective without the prior consent of the holders of record of
Shares representing 66 2/3% of the Liquidation Value of all Shares outstanding
at the time such action is taken.
10. Preemptive Rights. The holders of the Convertible Preferred
-----------------
Stock will not have any preemptive right to subscribe for or purchase any shares
of stock or any other securities which may be issued by this Corporation.
11. Senior Securities. The Convertible Preferred Stock shall not
-----------------
rank junior to any other classes or series of stock of this Corporation in
respect of the right to receive dividends or the right to participate in any
distribution upon liquidation, dissolution or winding up of this Corporation.
Without the prior consent of the holders of record of Shares representing 66
2/3% of the Liquidation Value of all Shares then outstanding, this Corporation
shall not issue any Senior Securities.
12. Exclusion of Other Rights. Except as may otherwise be required
-------------------------
by law and for the equitable rights and remedies that may otherwise be available
to holders of Convertible Preferred Stock, the shares of Convertible Preferred
Stock shall not have any designations, preferences, limitations or relative
rights, other than those specifically set forth in these resolutions (as such
resolutions may, subject to Section 9, be amended from time to time) and in the
Restated Certificate of Incorporation of this Corporation.
13. Headings. The headings of the various sections and subsections
--------
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
17
<PAGE>
FURTHER RESOLVED, that the appropriate officers of the Corporation are
hereby authorized to execute and acknowledge a certificate setting forth these
resolutions and to cause such certificate to be filed and recorded, in
accordance with the requirements of Section 151(g) of the General Corporation
Law of the State of Delaware."
/s/ Fred A. Vierra
------------------
Fred A. Vierra
Executive Vice President
18
<PAGE>
CERTIFICATE OF CORRECTION
Filed pursuant to Section 103(f)
of the Delaware General Corporation Law
with respect to a
CERTIFICATE OF DESIGNATION
of
TELE-COMMUNICATIONS, INC.
Whereas, on October 11, 1994, Tele-Communications, Inc. (the
"Corporation") filed with the Delaware Secretary of State a Certificate of
Designation (the "Certificate of Designation") authorizing the issuance of a
series of preferred stock of the Corporation designated "Redeemable Convertible
Preferred Stock, Series E;"
Whereas, such Certificate of Designation inaccurately stated that the
par value of the Redeemable Convertible Preferred Stock, Series E, is $1.00 per
share, when in fact the par value of the Redeemable Convertible Preferred Stock,
Series E, is $.01 per share;
Therefore, the Certificate of Designation is hereby corrected in
accordance with the provisions of Section 103(f) of the Delaware General
Corporation Law as follows:
1. The words "par value $1.00 per share" shall be deleted from
paragraph number 1 of the Certificate of Designation and the words "par value
$.01 per share" shall be substituted in their place.
Executed on the date set forth below by the
undersigned duly authorized officer of the Corporation.
Date: October 21, 1994 Signature: /s/ Stephen M. Brett
----------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
and General Counsel
<PAGE>
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION
_____________________
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED
AS "REDEEMABLE CONVERTIBLE PREFERRED STOCK,
SERIES E" ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
_____________________
The undersigned Executive Vice President of Tele-Communications, Inc., a
Delaware corporation (the "Corporation"), hereby certifies that the Board of
Directors duly adopted the following resolutions creating a series of preferred
stock designated as "Redeemable Convertible Preferred Stock, Series E":
BE IT RESOLVED, that pursuant to authority expressly granted by the
provisions of Article IV, Section D of the Restated Certificate of Incorporation
of the Corporation, the Board of Directors hereby creates and authorizes the
issuance of a series of preferred stock, par value $.01 per share, of the
Corporation, to consist of 400,000 shares, and hereby fixes the designations,
dividend rights, voting powers, rights on liquidation, conversion rights,
redemption rights and other preferences and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions of the
shares of such series (in addition to the designations, preferences and
relative, participating, limitations or restrictions thereof set forth in the
Restated Certificate of Incorporation that are applicable to preferred stock of
all series) as follows:
1. Designation. The designation of the series of preferred stock, par
-----------
value $.01 per share, of the Corporation authorized hereby is "Redeemable
Convertible Preferred Stock, Series E" (the "Series E Preferred Stock").
2. Certain Definitions. Unless the context otherwise requires, the terms
-------------------
defined in this paragraph 2 shall have, for all purposes, the meanings herein
specified:
<PAGE>
"Amendment Date" shall mean the date of the effectiveness under applicable
law of a duly approved amendment to the Corporation's Restated Certificate of
Incorporation increasing the number of shares of capital stock and the number of
shares of capital stock designated as "Class A Common Stock" to an amount which,
after giving effect to the exercise, exchange or conversion of all Convertible
Securities then outstanding and the conversion of all shares of Class B Common
Stock then outstanding into shares of Class A Common Stock, would be sufficient
to permit the conversion, at the then applicable Conversion Rate, of all shares
of Series E Preferred Stock then outstanding into shares of Class A Common
Stock.
"Average Quoted Price", when used with respect to the Class A Common Stock,
shall mean the average of the Quoted Prices of the Class A Common Stock for the
most recent period of five trading days on which shares of such class trade
ending three Business Days prior to the Redemption Date, appropriately adjusted
to take into account the actual occurrence, during the period following the
first of such five trading days and ending on the Business Day immediately
preceding such Special Redemption Date, of any event of a type described in
paragraph 7. The "Quoted Price" of a share of Class A Common Stock on any day
means the last sale price (or, if no sale price is reported, the average of the
high and low bid prices) of the Class A Common Stock, on such day as reported on
the National Association of Securities Dealers, Inc. Automated Quotation System,
or if the Class A Common Stock is listed on an exchange, as reported in the
composite transactions for the principal exchange on which such stock is listed.
"Board of Directors" shall mean the Board of Directors of the Corporation
and, unless the context indicates otherwise, shall also mean, to the extent
permitted by law, any committee thereof authorized, with respect to any
particular matter, to exercise the power of the Board of Directors of the
Corporation with respect to such matter.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in Denver, Colorado are not required to be open.
"capital stock" shall mean any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) corporate stock.
"Certificate" shall mean the Restated Certificate of Incorporation of the
Corporation, as it may from time to time hereafter be amended or restated.
"Class A Common Stock" shall mean the Class A Common Stock, par value $1.00
per share, of the Corporation, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Class
A Common Stock, or in the case of a consolidation or merger of the Corporation
with or into another Person affecting the Class A Common Stock, such capital
stock to which a holder of Class A Common Stock shall be entitled upon the
occurrence of such event.
"Class A Preferred Stock" shall mean the Class A Preferred Stock, par value
$.01 per share, of the Corporation.
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<PAGE>
"Class B Common Stock" shall mean the Class B Common Stock, par value $1.00
per share, of the Corporation, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Class
B Common Stock, or in the case of a consolidation or merger of the Corporation
with or into another Person affecting the Class B Common Stock, such capital
stock to which a holder of Class B Common Stock shall be entitled upon the
occurrence of such event.
"Class B Preferred Stock" shall mean the Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock, par value $.01 per share, of the
Corporation.
"Convertible Securities" shall mean securities, other than the Class B
Common Stock, that are convertible into or exchangeable for Class A Common
Stock.
"Dividend Payment Date" shall mean, for any Dividend Period, the last day
of such Dividend Period which shall be the first day of March of each year,
commencing with March 1, 1995, or the next succeeding Business Day if any such
day is not a Business Day.
"Dividend Period" shall mean the period from the Issue Date to and
including the first Dividend Payment Date and each annual period between
consecutive Dividend Payment Dates.
"Issue Date" shall mean the date on which shares of Series E Preferred
Stock are first issued.
"Junior Stock" shall mean (i) the Class A Common Stock, (ii) the Class B
Common Stock, (iii) the Class B Preferred Stock, (iv) any other class or series
of capital stock, whether now existing or hereafter created, of the Corporation,
other than (A) the Series E Preferred Stock, (B) any class or series of Parity
Stock (except to the extent provided under clause (v) hereof) and (C) any Senior
Stock, and (v) any class or series of Parity Stock to the extent that it ranks
junior to the Series E Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation, as the case may be. For purposes of clause
(v) above, a class or series of Parity Stock shall rank junior to the Series E
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation if the holders of shares of Series E Preferred Stock shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or series.
"Liquidation Preference" measured per share of the Series E Preferred Stock
as of any date in question (the "Determination Date") shall mean an amount equal
to the sum of (a) the Stated Liquidation Value of such share, plus (b) an amount
equal to all dividends accrued on such share which pursuant to paragraph 3(b)
have been added to and remain a part of the Liquidation Preference as of the
Determination Date, plus (c) for purposes of determining the amounts payable
pursuant to paragraph 4 and paragraph 5 and the definition of Redemption Price,
an amount equal to all unpaid dividends accrued on such share during the period
from the immediately preceding Dividend Payment Date (or the Issue Date if the
Determination Date is
-3-
<PAGE>
on or prior to the first Dividend Payment Date) through and including the
Determination Date, and, in the case of clauses (b) and (c) hereof, whether or
not such unpaid dividends have been earned or declared or there are any
unrestricted funds of the Corporation legally available for the payment of
dividends. In connection with the determination of the Liquidation Preference
of a share of Series E Preferred Stock upon redemption or upon liquidation,
dissolution or winding up of the Corporation, the Determination Date shall be
the applicable date of redemption or the date of distribution of amounts payable
to stockholders in connection with any such liquidation, dissolution or winding
up.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"Officers' Certificate" shall mean a certificate signed by the Chairman of
the Board or the President of the Corporation and by the Treasurer of the
Corporation.
"Opinion of Counsel" shall mean a written opinion from legal counsel
selected by the Corporation. The counsel may be an employee of or counsel to
the Corporation.
"Parity Stock" shall mean any class or series of capital stock, whether now
existing or hereafter created, of the Corporation ranking on a parity basis with
the Series E Preferred Stock as to dividend rights, rights of redemption or
rights on liquidation. Capital stock of any class or series shall rank on a
parity as to dividend rights, rights of redemption or rights on liquidation with
the Series E Preferred Stock, whether or not the dividend rates, dividend
payment dates, redemption or liquidation prices per share or sinking fund or
mandatory redemption provisions, if any, are different from those of the Series
E Preferred Stock, if the holders of shares of such class or series shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in proportion to their respective accumulated and accrued and
unpaid dividends, redemption prices or liquidations prices, respectively,
without preference or priority, one over the other, as between the holders of
shares of such class or series and the holders of Series E Preferred Stock. No
class or series of capital stock that ranks junior to the Series E Preferred
Stock as to rights on liquidation shall rank or be deemed to rank on a parity
basis with the Series E Preferred Stock as to dividend rights or rights of
redemption, unless the instrument creating or evidencing such class or series of
capital stock otherwise expressly provides.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or agency or political subdivision thereof, or other entity, whether
acting in an individual, fiduciary or other capacity.
"Record Date" for the dividends payable on any Dividend Payment Date means
the fifteenth day of the month preceding the month during which such Dividend
Payment Date shall occur, or if any such day is not a Business Day, then on the
next preceding Business Day, as and if designated by the Board of Directors.
-4-
<PAGE>
"Redemption Date" as to any share of Series E Preferred Stock shall mean
the date fixed for redemption of such share pursuant to paragraph 5(a), provided
that no such date will be a Redemption Date unless the applicable Redemption
Price is actually paid in full on such date.
"Redemption Price" as to any share of Series E Preferred Stock which is to
be redeemed on any Redemption Date shall mean the Liquidation Preference thereof
on such Redemption Date.
"Senior Stock" shall mean any class or series of capital stock, whether now
existing or hereafter created, of the Corporation ranking prior to the Series E
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation. Capital stock of any class or series shall rank prior to the
Series E Preferred Stock as to dividend rights, rights of redemption or rights
on liquidation if the holders of shares of such class or series shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of Series E
Preferred Stock. No class or series of capital stock that ranks on a parity
basis with or junior to the Series E Preferred Stock as to rights on liquidation
shall rank or be deemed to rank prior to the Series E Preferred Stock as to
dividend rights or rights of redemption, notwithstanding that the dividend rate,
dividend payment dates, sinking fund provisions, if any, or mandatory redemption
provisions thereof are different from those of the Series E Preferred Stock,
unless the instrument creating or evidencing such class or series of capital
stock otherwise expressly provides.
"Share" shall mean one share of Series E Preferred Stock of the
Corporation.
"Special Record Date" has the meaning ascribed to such term in paragraph
3(b).
"Stated Liquidation Value" of a share of Series E Preferred Stock means
$22,303.
"Subsidiary" of any Person shall mean (i) a corporation a majority of the
capital stock of which, having voting power under ordinary circumstances to
elect directors, is at the time, directly or indirectly, owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any other Person (other
than a corporation) in which such Person and/or one or more Subsidiaries of such
Person, directly or indirectly, has (x) a majority ownership interest or (y) the
power to elect or direct the election of a majority of the members of the
governing body of such first-named Person.
"TCI Holder" shall mean the Corporation and each Subsidiary of the
Corporation.
3. Dividends.
---------
(a) DIVIDEND RIGHTS; DIVIDEND PAYMENT DATES. Subject to the prior
preferences and other rights of any Senior Stock and the provisions of paragraph
6 hereof, the holders of Series E Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of unrestricted funds
legally available therefor, cumulative dividends, in
-5-
<PAGE>
preference to dividends on any Junior Stock, that shall accrue on each share of
Series E Preferred Stock at the rate of 5.0% per annum of the Stated Liquidation
Value of such share from the Issue Date to and including the date on which the
Liquidation Preference of such share is made available (whether on liquidation,
dissolution, or winding up of the Corporation or, in the case of paragraph 5,
upon the applicable Redemption Date). Accrued dividends on the Series E
Preferred Stock will be payable, as provided in paragraph 3(c) below, annually
on each Dividend Payment Date to the holders of record of the Series E Preferred
Stock as of the close of business on the Record Date for such dividend payment.
Dividends shall be fully cumulative and shall accrue (without interest or
compounding) on a daily basis without regard to the occurrence of a Dividend
Payment Date and whether or not such dividends are declared and whether or not
there are any unrestricted funds of the Corporation legally available for the
payment of dividends. The amount of dividends "accrued" as of the first
Dividend Payment Date and as of any date that is not a Dividend Payment Date
shall be calculated on the basis of the foregoing rate per annum for the actual
number of days elapsed from the Issue Date (in the case of the first Dividend
Payment Date and any date prior to the first Dividend Payment Date) or the last
preceding Dividend Payment Date (in the case of any other date) to and including
the date as of which such determination is to be made, based on a 365- or 366-
day year, as the case may be.
(b) SPECIAL RECORD DATE. On each Dividend Payment Date, all dividends that
have accrued on each share of Series E Preferred Stock during the immediately
preceding Dividend Period shall, to the extent not paid as provided in paragraph
3(c) below on such Dividend Payment Date for any reason (whether or not such
unpaid dividends have been earned or declared or there are any unrestricted
funds of the Corporation legally available for the payment of dividends), be
added to the Liquidation Preference of such share and will remain a part thereof
until such dividends are paid as provided in paragraph 3(c) below. No interest
or additional dividends will accrue or be payable with respect to any dividend
payment on the Series E Preferred Stock that may be in arrears or with respect
to that portion of any other payment on the Series E Preferred Stock that is in
arrears which consists of accumulated or accrued and unpaid dividends. Such
accumulated or accrued and unpaid dividends may be declared and paid at any time
(subject to the rights of any Senior Stock and, if applicable, to the concurrent
satisfaction of any dividend arrearages then existing with respect to any Parity
Stock which ranks on a parity basis with the Series E Preferred Stock as to the
payment of dividends) without reference to any regular Dividend Payment Date, to
holders of record as of the close of business on such date, not more than 45
days nor less than 10 days preceding the payment date thereof, as may be fixed
by the Board of Directors (the "Special Record Date"). Notice of each Special
Record Date shall be given, not more than 45 days nor less than 10 days prior
thereto, to the holders of record of the shares of Series E Preferred Stock.
(c) METHOD OF PAYMENT. All dividends payable with respect to the shares of
Series E Preferred Stock shall be declared and paid in cash. All dividends paid
with respect to the shares of Series E Preferred Stock pursuant to this
paragraph 3 shall be paid pro rata to all the holders of shares of Series E
Preferred Stock outstanding on the applicable Record Date or Special Record
Date, as the case may be.
4. Distributions Upon Liquidation, Dissolution or Winding Up.
---------------------------------------------------------
-6-
<PAGE>
Subject to the prior payment in full of the preferential amounts to which
any Senior Stock is entitled, in the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
Series E Preferred Stock shall be entitled to receive from the assets of the
Corporation available for distribution to stockholders, before any payment or
distribution shall be made to the holders of any Junior Stock, an amount in cash
or property at its fair market value, as determined by the Board of Directors in
good faith, or a combination thereof, per share, equal to the Liquidation
Preference of a share of Series E Preferred Stock as of the date of payment or
distribution, which payment or distribution shall be made pari passu with any
such payment or distribution made to the holders of any Parity Stock ranking on
a parity basis with the Series E Preferred Stock with respect to distributions
upon liquidation, dissolution or winding up of the Corporation. The holders of
Series E Preferred Stock shall be entitled to no other or further distribution
of or participation in any remaining assets of the Corporation after receiving
the Liquidation Preference per share. If, upon distribution of the
Corporation's assets in liquidation, dissolution or winding up, the assets of
the Corporation to be distributed among the holders of the Series E Preferred
Stock and to all holders of any Parity Stock ranking on a parity basis with the
Series E Preferred Stock with respect to distributions upon liquidation,
dissolution or winding up shall be insufficient to permit payment in full to
such holders of the respective preferential amounts to which they are entitled,
then the entire assets of the Corporation to be distributed to holders of the
Series E Preferred Stock and such Parity Stock shall be distributed pro rata to
such holders based upon the aggregate of the full preferential amounts to which
the shares of Series E Preferred Stock and such Parity Stock would otherwise
respectively be entitled. Neither the consolidation or merger of the
Corporation with or into any other corporation or corporations nor the sale,
transfer or lease of all or substantially all of the assets of the Corporation
shall itself be deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this paragraph 4. Notice of the liquidation,
dissolution or winding up of the Corporation shall be given, not less than 20
days prior to the date on which such liquidation, dissolution or winding up is
expected to take place or become effective, to the holders of record of the
shares of Series E Preferred Stock.
5. Redemption.
----------
(a) OPTIONAL REDEMPTION. Subject to the rights of any Senior Stock and the
provisions of paragraph 6, the shares of Series E Preferred Stock may be
redeemed, at the option of the Corporation by the action of the Board of
Directors, in whole or from time to time in part, on any Business Day occurring
after the Issue Date, at the Redemption Price on the Redemption Date. If less
than all outstanding shares of Series E Preferred Stock are to be redeemed on
any Redemption Date, the shares of Series E Preferred Stock to be redeemed shall
be chosen pro rata among all holders of Series E Preferred Stock. The
Corporation shall not be required to register a transfer of (i) any shares of
Series E Preferred Stock for a period of 15 days next preceding any selection of
shares of Series E Preferred Stock to be redeemed or (ii) any shares of Series E
Preferred Stock selected or called for redemption.
(b) NOTICE OF REDEMPTION. Notice of redemption shall be given by or on
behalf of the Corporation, not more than 60 days nor less than 30 days prior to
the Redemption Date, to the holders of record of the shares of Series E
Preferred Stock to be
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<PAGE>
redeemed; but no defect in such notice or in the mailing thereof shall affect
the validity of the proceedings for the redemption of any shares of Series E
Preferred Stock. In addition to any information required by law or by the
applicable rules of any national securities exchange or national interdealer
quotation system on which the Series E Preferred Stock may be listed or admitted
to trading or quoted, such notice shall set forth the Redemption Price, the
Redemption Date, the number of shares to be redeemed, the portion of the
Redemption Price, if any, which the Corporation has elected to pay through the
issuance of Class A Common Stock and the place at which the shares called for
redemption will, upon presentation and surrender of the stock certificates
evidencing such shares, be redeemed. In the event that fewer than the total
number of shares of Series E Preferred Stock represented by a certificate are
redeemed, a new certificate representing the number of unredeemed shares will be
issued to the holder thereof without cost to such holder.
(c) DEPOSIT OF REDEMPTION PRICE. If notice of any redemption by the
Corporation pursuant to this paragraph 5 shall have been given as provided in
paragraph 5(b) above, and if on or before the Redemption Date specified in such
notice an amount in cash sufficient to redeem in full on the Redemption Date at
the Redemption Price all shares of Series E Preferred Stock called for
redemption shall have been set apart so as to be available for such purpose and
only for such purpose, then effective as of the close of business on the
Redemption Date, the shares of Series E Preferred Stock called for redemption,
notwithstanding that any certificate therefor shall not have been surrendered
for cancellation, shall no longer be deemed outstanding, and the holders thereof
shall cease to be stockholders with respect to such shares and all rights with
respect to such shares shall forthwith cease and terminate, except the right of
the holders thereof to receive the Redemption Price of such shares, without
interest, upon the surrender of certificates representing the same.
(d) REDEMPTION BY ISSUANCE OF CLASS A COMMON STOCK. Subject to compliance
with the conditions contained in this paragraph 5(d), the Corporation may elect
to pay the Redemption Price (or designated portion thereof) of the shares of
Series E Preferred Stock called for redemption by issuing to the holder thereof,
in respect of his shares to be redeemed, a number of shares of Class A Common
Stock equal to the aggregate Redemption Price (or designated portion thereof) of
such shares divided by the Average Quoted Price of a share of Class A Common
Stock. No fractional shares of Class A Common Stock or scrip shall be issued
upon such redemption. As to any final fraction of a share of Class A Common
Stock that would otherwise be issuable to a holder upon redemption of his shares
of Series E Preferred Stock (determined on the basis of the total number of such
holder's shares of Series E Preferred Stock in respect of which shares of Class
A Common Stock are issuable), the Corporation shall pay an amount in cash or by
its check equal to the same fraction of the Average Quoted Price of a share of
Class A Common Stock.
The Corporation's right to elect to pay the Redemption Price (or designated
portion thereof) of the shares of Series E Preferred Stock through the issuance
of shares of Class A Common Stock shall be conditioned upon: (i) the
Corporation's having timely given a Redemption Notice setting forth such
election as provided in paragraph 5(b), (ii) the Corporation's having obtained
and filed, on or before the Redemption Date, at the office of the
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<PAGE>
redemption agent for the Series E Preferred Stock (or with the books of the
Corporation if there is no redemption agent) an Opinion of Counsel to the effect
that (A) the shares of Class A Common Stock to be issued upon such redemption
have been duly authorized and, when issued and delivered in payment of the
Redemption Price (or designated portion thereof) of the shares of Series E
Preferred Stock to be redeemed, will be validly issued, fully paid and non-
assessable and free from preemptive rights, (B) that the issuance and delivery
of such shares of Class A Common Stock upon such redemption of shares of Series
E Preferred Stock will not violate the laws of the state of incorporation of the
Corporation and (C), unless at the time the Redemption Notice is given all
shares of the Series E Preferred Stock are owned by one or more TCI Holders,
that the issuance and delivery of the shares of Class A Common Stock upon such
redemption of shares of Series E Preferred Stock is exempt from the registration
or qualification requirements of the 1933 Act and applicable state securities
laws or, if no such exemption is available, that the shares of Class A Common
Stock to be issued have been duly registered or qualified under the 1933 Act and
such applicable state securities laws, and (iii) the Corporation's having filed,
on or before the Redemption Date, at the office of such redemption agent (or
with the books of the Corporation if there is no redemption agent), an Officers'
Certificate setting forth the number of shares of Class A Common Stock to be
issued in payment of the Redemption Price (or designated portion thereof) of
each share of Series E Preferred Stock and the method of determining the same
(consistent with the provisions hereof). If the foregoing conditions have not
been satisfied prior to or on the Redemption Date, the Redemption Price for the
shares of Series E Preferred Stock (or portion thereof designated to be paid in
Class A Common Stock) shall be paid in cash.
(e) STATUS OF REDEEMED SHARES. All shares of Series E Preferred Stock
redeemed, exchanged, purchased or otherwise acquired by the Corporation shall be
retired and shall be restored to the status of authorized and unissued shares of
Series Preferred Stock (and may be reissued as part of another series of the
preferred stock of the Corporation, but such shares shall not be reissued as
Series E Preferred Stock).
6. Limitations on Dividends and Redemptions.
----------------------------------------
If at any time the Corporation shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends for all
prior dividend periods on any Parity Stock which by the terms of the instrument
creating or evidencing such Parity Stock is entitled to the payment of such
cumulative dividends prior to the redemption, exchange, purchase or other
acquisition of the Series E Preferred Stock, and until full cumulative dividends
on such Parity Stock for all prior dividend periods are paid, or declared and
the consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, neither the Corporation nor any
Subsidiary thereof shall redeem, exchange, purchase or otherwise acquire any
shares of Series E Preferred Stock, Parity Stock or Junior Stock, or set aside
any money or assets for any such purpose, pursuant to paragraph 5 hereof, a
sinking fund or otherwise, unless all then outstanding shares of Series E
Preferred Stock, of such Parity Stock and of any other class of series of Parity
Stock that by the terms of the instrument creating or evidencing such Parity
Stock is required to be redeemed under such circumstances are redeemed or
exchanged pursuant to the terms hereof and thereof.
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<PAGE>
If at any time the Corporation shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends on the
Series E Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Series E Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, neither the Corporation nor any
Subsidiary thereof shall redeem, exchange, purchase or otherwise acquire any
shares of Series E Preferred Stock, Parity Stock or Junior Stock, or set aside
any money or assets for any such purpose, pursuant to paragraph 5 hereof, a
sinking fund or otherwise, unless all then outstanding shares of Series E
Preferred Stock and of any other class or series of Parity Stock that by the
terms of the instrument creating or evidencing such Parity Stock is required to
be redeemed under such circumstances are redeemed or exchanged pursuant to the
terms hereof and thereof.
If at any time the Corporation shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends on the
Series E Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Series E Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside for such purpose
and no other purpose, the Corporation shall not declare or pay any dividend on
or make any distribution with respect to any Junior Stock or Parity Stock or set
aside any money or assets for any such purpose, except that the Corporation may
declare and pay a dividend on any Parity Stock ranking on a parity basis with
the Series E Preferred Stock with respect to the right to receive dividend
payments, contemporaneously with the declaration and payment of a dividend on
the Series E Preferred Stock, provided that such dividends are declared and paid
pro rata so that the amount of dividends declared and paid per share of the
Series E Preferred Stock and such Parity Stock shall in all cases bear to each
other the same ratio that accumulated and accrued and unpaid dividends per share
on the Series E Preferred Stock and such Parity Stock bear to each other.
If the Corporation shall fail to redeem on any date fixed for redemption or
exchange pursuant to paragraph 5 hereof any shares of Series E Preferred Stock
called for redemption on such date, and until such shares are redeemed in full,
the Corporation shall not redeem or exchange any Parity Stock or Junior Stock or
declare or pay any dividend on or make any distribution with respect to any
Junior Stock, or set aside any money or assets for any such purpose, and neither
the Corporation nor any Subsidiary thereof shall purchase or otherwise acquire
any Series E Preferred Stock, Parity Stock or Junior Stock, or set aside any
money or assets for any such purpose.
Neither the Corporation nor any Subsidiary thereof shall redeem, exchange,
purchase or otherwise acquire any Parity Stock or Junior Stock, or set aside any
money or assets for any such purpose, if after giving effect to such redemption,
exchange, purchase or other acquisition, the amount (as determined by the Board
of Directors in good faith) that would be available for distribution to the
holders of the Series E Preferred Stock upon liquidation, dissolution or winding
up of the Corporation if such liquidation, dissolution or winding up were
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<PAGE>
to occur on the date fixed for such redemption, exchange, purchase or other
acquisition of such Parity Stock or Junior Stock would be less than the
aggregate Liquidation Preference as of such date of all shares of Series E
Preferred Stock then outstanding.
Nothing contained in the first, fourth or fifth paragraph of this paragraph
6 shall prevent (i) the payment of dividends on any Junior Stock solely in
shares of Junior Stock or the redemption, purchase or other acquisition of
Junior Stock solely in exchange for (together with a cash adjustment for
fractional shares, if any), or (but only in the case of the first and fifth
paragraphs hereof) through the application of the proceeds from the sale of,
shares of Junior Stock; or (ii) the payment of dividends on any Parity Stock
solely in shares of Parity Stock and/or Junior Stock or the redemption,
exchange, purchase or other acquisition of Series E Preferred Stock or Parity
Stock solely in exchange for (together with a cash adjustment for fractional
shares, if any), or (but only in the case of the first and fifth paragraphs
hereof) through the application of the proceeds from the sale of, shares of
Parity Stock and/or Junior Stock.
The provisions of the first paragraph of this paragraph 6 are for the sole
benefit of the holders of Series E Preferred Stock and Parity Stock having the
terms described therein and accordingly, at any time when there are no shares of
any such class or series of Parity Stock outstanding or if the holders of each
such class or series of Parity Stock have, by such vote or consent of the
holders thereof as may be provided for in the instrument creating or evidencing
such class or series, waived in whole or in part the benefit of such provisions
(either generally or in the specific instance), then the provisions of the first
paragraph of this paragraph 6 shall not (to the extent waived, in the case of
any partial waiver) restrict the redemption, exchange, purchase or other
acquisition of any shares of Series E Preferred Stock, Parity Stock or Junior
Stock. All other provisions of this paragraph 6 are for the sole benefit of the
holders of Series E Preferred Stock and accordingly, if the holders of shares of
Series E Preferred Stock shall have waived (as provided in paragraph 9) in whole
or in part the benefit of the applicable provisions, either generally or in the
specific instance, such provision shall not (to the extent of such waiver, in
the case of a partial waiver) restrict the redemption, exchange, purchase or
other acquisition of, or declaration, payment or making of any dividends or
distributions on the Series E Preferred Stock, any Parity Stock or any Junior
Stock.
7. Conversion.
----------
(a) Unless previously called for redemption as provided in Section 5
hereof, shares of Series E Preferred Stock shall be convertible, at the option
of the holder thereof, at any time subsequent to the Amendment Date in such
manner and upon such terms and conditions as hereinafter provided in this
paragraph 7, into fully paid and non-assessable full shares of Class A Common
Stock. No shares of Class A Common Stock shall be issued in respect of the
conversion of the Series E Preferred Stock after the fifteenth Business Day (the
"Cut-off Date") preceding the date fixed for redemption; provided that the
--------
conversion of Shares surrendered for conversion in accordance with paragraph 7
after the Cut-off Date shall be given effect as of the date of such surrender if
the Redemption Price to be paid, or to be irrevocably set apart in trust for the
benefit of the holders of Shares to be so redeemed, has not been paid or so set
apart on or before such date fixed for redemption. In case cash, securities or
property
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<PAGE>
other than Class A Common Stock shall be payable, deliverable or issuable upon
conversion as provided herein, then all references to Class A Common Stock in
this paragraph 7 shall be deemed to apply, so far as appropriate and as nearly
as may be, to such cash, property or other securities.
(b) Subject to the provisions for adjustment hereinafter set forth in this
paragraph 7, the Series E Preferred Stock may be converted into Class A Common
Stock at the initial conversion rate of 1,000 fully paid and non-assessable
shares of Class A Common Stock for one share of the Series E Preferred Stock.
(This conversion rate as from time to time adjusted cumulatively pursuant to the
provisions of this paragraph is hereinafter referred to as the "Conversion
Rate").
(c) In case after the Issue Date the Corporation shall (i) pay a dividend
or make a distribution on its outstanding shares of Class A Common Stock in
shares of its capital stock or capital stock of any Subsidiary, (ii) subdivide
the then outstanding shares of Class A Common Stock into a greater number of
shares of Class A Common Stock, (iii) combine the then outstanding shares of
Class A Common Stock into a smaller number of shares of Class A Common Stock, or
(iv) issue by reclassification of its shares of Class A Common Stock any shares
of any other class of capital stock of the Corporation (including any such
reclassification in connection with a merger in which the Corporation is the
continuing corporation), then the Conversation Rate in effect immediately prior
to the opening of business on the record date for such dividend or distribution
or the effective date of such subdivision, combination or reclassification shall
be adjusted so that the holder of each share of the Series E Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number
and kind of shares of capital stock of the Corporation (or capital stock of a
Subsidiary) that such holder would have owned or been entitled to receive
immediately following such action had such shares of Series E Preferred Stock
been converted immediately prior to such time. An adjustment made pursuant to
this paragraph 7(c) for a dividend or distribution shall become effective
immediately after the record date for the dividend or distribution and an
adjustment made pursuant to this paragraph 7(c) for a subdivision, combination
or reclassification shall become effective immediately after the effective date
of the subdivision, combination or reclassification. Such adjustment shall be
made successively whenever any action listed above shall be taken.
(d) In case the Corporation shall after the Issue Date issue any rights or
warrants to all holders of shares of Class A Common Stock entitling them (for a
period expiring within 45 days after the record date for the determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Class A Common Stock (or Convertible Securities) at a price
per share of Class A Common Stock (or having an initial exercise price or
conversion price per share of Class A Common Stock) less than the then current
market price per share of Class A Common Stock (as determined in accordance with
the provisions of paragraph 7(f) below) on such record date, the number of
shares of Class A Common Stock into which each Share shall thereafter be
convertible shall be determined by multiplying the number of shares of Class A
Common Stock into which such Share was theretofore convertible immediately prior
to such record date by a fraction of which the numerator shall be the number of
shares of Class A Common Stock outstanding on such record
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<PAGE>
date plus the number of additional shares of Class A Common Stock offered for
subscription or purchase (or into which the Convertible Securities so offered
are initially convertible) and of which the denominator shall be the number of
shares of Class A Common Stock outstanding on such record date plus the number
of shares of Class A Common Stock which the aggregate offering price of the
total number of shares of Class A Common Stock so offered (or the aggregate
initial conversion or exercise price of the Convertible Securities so offered)
would purchase at the then current market price per share of Class A Common
Stock (as determined in accordance with the provisions of paragraph 7(f) below)
on such record date. Such adjustment shall be made successively whenever any
such rights or warrants are issued and shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
rights or warrants. In the event that all of the shares of Class A Common Stock
(or all of the Convertible Securities) subject to such rights or warrants have
not been issued when such rights or warrants expire (or, in the case of rights
or warrants to purchase Convertible Securities which have been exercised, all of
the shares of Class A Common Stock issuable upon conversion of such Convertible
Securities have not been issued prior to the expiration of the conversion right
thereof), then the Conversion Rate shall be readjusted retroactively to be the
Conversion Rate which would then be in effect had the adjustment upon the
issuance of such rights or warrants been made on the basis of the actual number
of shares of Class A Common Stock (or Convertible Securities) issued upon the
exercise of such rights or warrants (or the conversion of such Convertible
Securities); but such subsequent adjustment shall not affect the number of
shares of Class A Common Stock issued upon the conversion of any Share prior to
the date such subsequent adjustment is made.
(e) In case the Corporation shall distribute after the Issue Date to all
holders of shares of Class A Common Stock (including any such distribution made
in connection with a merger in which the Corporation is the continuing
corporation, other than a merger to which paragraph 7(g) is applicable) any
securities, evidences of its indebtedness or assets (other than cash dividends
out of earnings since the Issue Date (determined without regard to gains on the
sale of significant capital assets) or capital stock in respect of which an
adjustment is made pursuant to paragraph 7(c) hereof) or rights or warrants to
purchase shares of Class A Common Stock or Class B Common Stock or securities
convertible into shares of Class A Common Stock or Class B Common Stock
(excluding those referred to in paragraph 7(d) above), then in each such case
the number of shares of Class A Common Stock into which each Share shall
thereafter be convertible shall be determined by multiplying the number of
shares of Class A Common Stock into which such Share was theretofore convertible
immediately prior to the record date for the determination of stockholders
entitled to receive the distribution by a fraction of which the numerator shall
be the then current market price per share of Class A Common Stock (as
determined accordance with the provisions of paragraph 7(f) below) on such
record date and of which the denominator shall be such current market price per
share of Class A Common Stock less the fair market value on such record date (as
determined by the Board of Directors of the Corporation, whose determination
shall be conclusive) of the portion of the securities, assets or evidences of
indebtedness or rights and warrants so to be distributed applicable to one share
of Class A Common Stock. Such adjustment shall be made successively whenever
any such distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
distribution.
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<PAGE>
(f) For the purpose of any computation under paragraph 7(d), (e) or (k),
the current market price per share of Class A Common Stock at any date shall be
deemed to be the average of the daily closing prices for a share of Class A
Common Stock for the ten (10) consecutive trading days before the day in
question. The closing price for each day shall be the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either case
on the composite tape, or if the shares of Class A Common Stock are not quoted
on the composite tape, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on which the shares of Class A Common Stock are listed or admitted to
trading, or if they are not listed or admitted to trading on any such exchange,
the last reported sale price (or the average of the quoted closing bid and asked
prices if there were no reported sales) as reported by the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") or any comparable
system, or if the Class A Common Stock is not quoted on NASDAQ or any comparable
system, the average of the closing bid and asked prices as furnished by any
member of the National Association of Securities Dealers, Inc. selected from
time to time by the Corporation for that purpose or, in the absence of such
quotations, such other method of determining market value as the Board of
Directors shall from time to time deem to be fair.
(g) In case of any reclassification or change in the Class A Common Stock
(other than any reclassification or change referred to in paragraph 7(c) and
other than a change in par value) or in case of any consolidation of the
Corporation with any other corporation or any merger of the Corporation into
another corporation or of another corporation into the Corporation (other than a
merger in which the Corporation is the continuing corporation and which does not
result in any reclassification or change (other than a change in par value or
any reclassification or change to which paragraph 7(c) is applicable) in the
outstanding Class A Common Stock), or in case of any sale or transfer to another
corporation or entity (other than by mortgage or pledge) of all or substantially
all of the properties and assets of the Corporation, in any such case after the
Issue Date, the Corporation (or its successor in such consolidation or merger)
or the purchaser of such properties and assets shall make appropriate provision
so that the holder of a Share shall have the right thereafter to convert such
Share into the kind and amount of shares of stock and other securities and
property that such holder would have owned immediately after such
reclassification, change, consolidation, merger, sale or transfer if such holder
had converted such Share into Class A Common Stock immediately prior to the
effective date of such reclassification, change, consolidation, merger, sale or
transfer (assuming for this purpose (to the extent applicable) that such holder
failed to exercise any rights of election and received per share of Class A
Common Stock the kind and amount of shares of stock and other securities and
property received per share by a plurality of the non-electing shares), and the
holders of the Series E Preferred Stock shall have no other conversion rights
under these provisions; provided, that effective provision shall be made, in the
Articles or Certificate of Incorporation of the resulting or surviving
corporation or otherwise or in any contracts of sale or transfer, so that the
provisions set forth herein for the protection of the conversion rights of the
Series E Preferred Stock shall thereafter be made applicable, as nearly as
reasonably may be to any such other shares of stock and other securities and
property deliverable upon conversion of the Series E Preferred Stock remaining
outstanding or other convertible preferred stock or
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<PAGE>
other Convertible Securities received by the holders of Series E Preferred Stock
in place thereof; and provided, further, that any such resulting or surviving
corporation or purchaser shall expressly assume the obligation to deliver, upon
the exercise of the conversion privilege, such shares, securities or property as
the holders of the Series E Preferred Stock remaining outstanding, or other
convertible preferred stock or other convertible securities received by the
holders in place thereof, shall be entitled to receive pursuant to the
provisions hereof, and to make provisions for the protection of the conversion
rights as above provided.
(h) Whenever the Conversion Rate or the conversion privilege shall be
adjusted as provided in paragraphs 7(c), (d), (e) or (g), the Corporation shall
promptly cause a notice to be mailed to the holders of record of the Series E
Preferred Stock describing the nature of the event requiring such adjustment,
the Conversion Rate in effect immediately thereafter and the kind and amount of
stock or other securities or property into which the Series E Preferred Stock
shall be convertible after such event. Where appropriate, such notice may be
given in advance and included as a part of a notice required to be mailed under
the provisions of paragraph 7(j).
(i) The Corporation may, but shall not be required to, make any adjustment
of the Conversion Rate if such adjustment would require an increase or decrease
of less than 1% in such Conversion Rate; provided, however, that any adjustments
which by reason of this paragraph 7(i) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this paragraph 7 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. In any case in which this
paragraph 7(i) shall require that an adjustment shall become effective
immediately after a record date for such event, the Corporation may defer until
the occurrence of such event (x) issuing to the holder of any shares of Series E
Preferred Stock converted after such record date and before the occurrence of
such event the additional shares of Class A Common Stock or other capital stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the shares of Class A Common Stock, or other capital stock
issuable upon such conversion before giving effect to such adjustment and (y)
paying to such holder cash in lieu of any fractional interest to which such
holder is entitled pursuant to paragraph 7(n); provided, however, that, if
requested by such holder, the Corporation shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to receive
such additional shares of Class A Common Stock or other capital stock, and such
cash, upon the occurrence of the event requiring such adjustment.
(j) In case at any time:
(i) the Corporation shall take any action which would
require an adjustment in the Conversion Rate pursuant to this
paragraph;
(ii) there shall be any capital reorganization or
reclassification of the Class A Common Stock (other than a change in
par value), or any consolidation or merger to which the Corporation is
a party and for which approval of any shareholders of the Corporation
is required,
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<PAGE>
or any sale, transfer or lease of all or substantially all of the
properties and assets of the Corporation, or a tender offer for shares
of Class A Common Stock representing, together with any shares of
Class B Common Stock tendered for in such tender offer, at least a
majority of the total voting power represented by the outstanding
shares of Class A Common Stock and Class B Common Stock which has been
recommended by the Board of Directors as being in the best interests
of the holders of Class A Common Stock; or
(iii) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
then, in any such event, the Corporation shall give written notice, in the
manner provided in paragraph 5 hereof, to the holders of the Series E Preferred
Stock at their respective addresses as the same appear on the books of the
Corporation, at least twenty days (or ten days in the case of a recommended
tender offer as specified in clause (ii) above) prior to any record date for
such action, dividend or distribution or the date as of which it is expected
that holders of Class A Common Stock of record shall be entitled to exchange
their shares of Class A Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, transfer, lease, tender offer, dissolution, liquidation or winding up;
provided, however, that any notice required by any event described in clause
(ii) of this paragraph 7(j) shall be given in the manner and at the time that
such notice is given to the holders of Class A Common Stock. Without limiting
the obligations of the Corporation to provide notice of corporate actions
hereunder, the failure to give the notice required by this paragraph 7(j) or any
defect therein shall not affect the legality or validity of any such corporate
action of the Corporation or the vote upon such action.
(k) Before any holder of Series E Preferred Stock shall be entitled to
convert the same into Class A Common Stock, such holder shall surrender the
certificate or certificates for such Series E Preferred Stock at the office of
the Corporation or at the office of the transfer agent for the Series E
Preferred Stock, which certificate or certificates, if the Corporation shall so
request, shall be duly endorsed to the Corporation or in blank or accompanied by
proper instruments of transfer to the Corporation or in blank (such endorsements
or instruments of transfer to be in form satisfactory to the Corporation), and
shall give written notice to the Corporation at said office that such holder
elects to convert all or a part of the Shares represented by said certificate or
certificates in accordance with the terms of this paragraph 7, and shall state
in writing therein the name or names in which such holder wishes the
certificates for Class A Common Stock to be issued. Every such notice of
election to convert shall constitute a contract between the holder of such
Series E Preferred Stock and the Corporation, whereby the holder of such Series
E Preferred Stock shall be deemed to subscribe for the amount of Class A Common
Stock which such holder shall be entitled to receive upon conversion of the
number of shares of Series E Preferred Stock to be converted, and, in
satisfaction of such subscription, to deposit the shares of Series E Preferred
Stock to be converted, and thereby the Corporation shall be deemed to agree that
the surrender of the shares of Series E Preferred Stock to be converted shall
constitute full payment of such subscription for
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<PAGE>
Class A Common Stock to be issued upon such conversion. The Corporation will as
soon as practicable after such deposit of a certificate or certificates for
Series E Preferred Stock, accompanied by the written notice and the statement
above prescribed, issue and deliver at the office of the Corporation or of said
transfer agent to the person for whose account such Series E Preferred Stock was
so surrendered, or to his nominee(s) or, subject to compliance with applicable
law, transferee(s), a certificate or certificates for the number of full shares
of Class A Common Stock to which such holder shall be entitled, together with
cash in lieu of any fraction of a share as hereinafter provided. If surrendered
certificates for Series E Preferred Stock are converted only in part, the
Corporation will issue and deliver to the holder, or to his nominee(s), without
charge therefor, a new certificate or certificates representing the aggregate of
the unconverted Shares. Such conversion shall be deemed to have been made as of
the date of such surrender of the Series E Preferred Stock to be converted; and
the person or persons entitled to receive the Class A Common Stock issuable upon
conversion of such Series E Preferred Stock shall be treated for all purposes as
the record holder or holders of such Class A Common Stock on such date.
Upon the conversion of any Share, the Corporation shall pay, to the
holder of record of such Share on the immediately preceding Record Date, all
accrued but unpaid dividends on such Share to the date of the surrender of such
Share for conversion. Such payment shall be made in cash or, at the election of
the Corporation, the issuance of certificates representing such number of shares
of Class A Common Stock as have an aggregate current market price (as determined
in accordance with paragraph 7(f)) on the date of issuance equal to the amount
of such accrued but unpaid dividends. Upon the making of such payment to the
person entitled thereto as determined pursuant to the first sentence of this
paragraph, no further dividends shall accrue on such Share or be payable to any
other person.
The issuance of certificates for shares of Class A Common Stock upon
conversion of shares of Series E Preferred Stock shall be made without charge
for any issue, stamp or other similar tax in respect of such issuance, provided,
however, if any such certificate is to be issued in a name other than that of
the registered holder of the share or shares of Series E Preferred Stock
converted, the person or persons requesting the issuance thereof shall pay to
the Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of the
Corporation that such tax has been paid.
The Corporation shall not be required to convert any shares of Series
E Preferred Stock, and no surrender of Series E Preferred Stock shall be
effective for that purpose, while the stock transfer books of the Corporation
are closed for any purpose; but the surrender of Series E Preferred Stock for
conversion during any period while such books are so closed shall become
effective for conversion immediately upon the reopening of such books, as if the
conversion had been made on the date such Series E Preferred Stock was
surrendered.
(l) Promptly following the Amendment Date the Corporation shall
reserve and keep available at all times thereafter, solely for the purpose of
issuance upon conversion of the outstanding shares of Series E Preferred Stock,
such number of shares of Class A Common Stock as shall be issuable upon the
conversion of all outstanding Shares, provided that nothing
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contained herein shall be construed to preclude the Corporation from satisfying
its obligations in respect of the conversion of the outstanding shares of Series
E Preferred Stock by delivery of shares of Class A Common Stock which are held
in the treasury of the Corporation. Promptly following the Amendment Date, the
Corporation shall take all such corporate and other actions as from time to time
may be necessary to insure that all shares of Class A Common Stock issuable upon
conversion of shares of Series E Preferred Stock at the Conversion Rate in
effect from time to time will, upon issue, be duly and validly authorized and
issued, fully paid and nonassessable and free of any preemptive or similar
rights.
(m) All shares of Series E Preferred Stock received by the Corporation
upon conversion thereof into Class A Common Stock shall be retired and shall be
restored to the status of authorized and unissued shares of preferred stock (and
may be reissued as part of another series of the preferred stock of the
Corporation), but such shares shall not be reissued as Series E Preferred Stock.
(n) The Corporation shall not be required to issue fractional shares
of Class A Common Stock or scrip upon conversion of the Series E Preferred
Stock. As to any final fraction of a share of Class A Common Stock which a
holder of one or more Shares would otherwise be entitled to receive upon
conversion of such Shares in the same transaction, the Corporation shall pay a
cash adjustment in respect of such final fraction in an amount equal to the same
fraction of the market value of a full share of Class A Common Stock. For
purposes of this paragraph 7(n), the market value of a share of Class A Common
Stock shall be the last reported sale price regular way on the business day
immediately preceding the date of conversion, or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices regular way on such day, in either case on the composite tape, or if the
shares of Class A Common Stock are not quoted on the composite tape, on the
principal United States securities exchange registered under the Exchange Act on
which the shares of Class A Common Stock are listed or admitted to trading, or
if the shares of Class A Common Stock are not listed or admitted to trading on
any such exchange, the last reported sale price (or the average of the quoted
last reported bid and asked prices if there were no reported sales) as reported
by NASDAQ or any comparable system, or if the Class A Common Stock is not quoted
on NASDAQ or any comparable system, the average of the closing bid and asked
prices as furnished by any member of the National Association of Securities
Dealers, Inc. selected from time to time by the Corporation for that purpose or,
in the absence of such quotations, such other method of determining market value
as the Board of Directors shall from time to time deem to be fair.
(o) If any shares of Class A Common Stock which would be issuable upon
conversion of Shares require registration with or approval of any governmental
authority before such shares may be issued upon conversion, the Corporation will
in good faith and as expeditiously as possible cause such shares to be duly
registered or approved, as the case may be. The Corporation will endeavor to
list the shares of Class A Common Stock required to be delivered upon conversion
of Shares prior to such delivery upon the principal national securities exchange
upon which the outstanding Class A Common Stock is listed at the time of such
delivery.
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8. Voting.
------
(a) VOTING RIGHTS. The holders of Series E Preferred Stock shall have
no voting rights whatsoever, except as required by law and except for the voting
rights described in this paragraph 8; provided, however, that the number of
authorized shares of Series E Preferred Stock may be increased or decreased (but
not below the number of shares of Series E Preferred Stock then outstanding) by
the affirmative vote of the holders of at least 66 2/3 of the total voting power
of the then outstanding Voting Securities (as defined in Article V, Section C of
the Corporation's Restated Certificate of Incorporation), voting together as a
single class as provided in Article IX of the Certificate. Without limiting the
generality of the foregoing, no vote or consent of the holders of Series E
Preferred Stock shall be required for (a) the creation of any indebtedness of
any kind of the Corporation, (b) the creation or designation of any class or
series of Senior Stock, Parity Stock or Junior Stock, or (c) any amendment to
the Certificate that would increase the number of authorized shares of Preferred
Stock or the number of authorized shares of Series E Preferred Stock or that
would decrease the number of authorized shares of Preferred Stock or the number
of authorized shares of Series E Preferred Stock (but not below the number of
shares of Preferred Stock or Series E Preferred Stock, as the case may be, then
outstanding).
(b) ELECTION OF DIRECTORS. The holders of the Series E Preferred
Stock shall have the right to vote at any annual or special meeting of
stockholders for the purpose of electing directors. Each share of Series E
Preferred Stock shall have one vote for such purpose, and shall vote as a single
class with any other class or series of capital stock of the Corporation
entitled to vote in any general election of directors, unless the instrument
creating or evidencing such class or series of capital stock otherwise expressly
provides.
9. Waiver.
------
Any provision which, for the benefit of the holders of Series E
Preferred Stock, prohibits, limits or restricts actions by the Corporation, or
imposes obligations on the Corporation, may be waived in whole or in part, or
the application of all or any part of such provision in any particular
circumstance or generally may be waived, in each case with the consent of the
holders of at least a majority of the number of shares of Series E Preferred
Stock then outstanding (or such greater percentage thereof as may be required by
applicable law or any applicable rules of any national securities exchange or
national interdealer quotation system), either in writing or by vote at an
annual meeting or a meeting called for such purpose at which the holders of
Series E Preferred Stock shall vote as a separate class.
10. Method of Giving Notices.
------------------------
Any notice required or permitted hereby to be given to the holders of
shares of Series E Preferred Stock shall be deemed duly given if deposited in
the United States mail, first class mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Corporation or
supplied by him in writing to the Corporation for the purpose of such notice.
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<PAGE>
11. Exclusion of Other Rights.
-------------------------
Except as may otherwise be required by law and except for the
equitable rights and remedies which may otherwise be available to holders of
Series E Preferred Stock, the shares of Series E Preferred Stock shall not have
any designations, preferences, limitations or relative rights other than those
specifically set forth herein.
12. Heading of Subdivisions.
-----------------------
The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
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<PAGE>
FURTHER RESOLVED, that the appropriate officers of the Corporation are
hereby authorized to execute and acknowledge a certificate setting forth these
resolutions and to cause such certificate to be filed and recorded, in
accordance with the requirements of Section 151(g) of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, duly authorized officer has
executed this certificate on this 11th day of October, 1994.
/s/ Larry Romrell
--------------------------------
Name: Larry Romrell
Title: Executive Vice President
Attest: /s/ Stephen M. Brett
--------------------------------
Name: Stephen M. Brett
Title: Secretary
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EXHIBIT 4.1
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATIONS
_______________
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED
AS "PREFERRED REDEEMABLE INCREASED DIVIDEND EQUITY SECURITIES/SM/,
___% PRIDES/SM/, CONVERTIBLE PREFERRED STOCK,
SERIES F" ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
_______________
The undersigned, an Executive Vice President of TELE-COMMUNICATIONS,
INC., a Delaware corporation (the "Company"), HEREBY CERTIFIES that the Board of
Directors of the Company on _____, 1994, duly adopted the following resolutions
creating a new series of the Company's Series Preferred Stock:
"BE IT RESOLVED, that pursuant to authority expressly granted by the
provisions of Article IV, Section D of the Restated Certificate of Incorporation
of the Company, the Board of Directors hereby creates and authorizes the
issuance of a new series of the Company's Series Preferred Stock, par value $.01
per share ("Series Preferred Stock"), and hereby fixes the powers, designations,
dividend rights, voting powers, rights on liquidation, conversion rights,
redemption rights and other preferences and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions of the
shares of such series (in addition to the powers, designations, preferences and
relative, participating, limitations or restrictions thereof set forth in the
Restated Certificate of Incorporation that are applicable to each class and
series of the Company's preferred stock, par value $.01 per share ("Preferred
Stock")), as follows:
(1) Designation; Number of Shares. The designation of the series of
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Series Preferred Stock, par value $.01 per share, of the Company created hereby
shall be "Preferred Redeemable Increased Dividend Equity Securities/SM/, __%
PRIDES/SM/, Convertible Preferred Stock, Series F" ("PRIDES"). The authorized
number of shares of PRIDES shall be ____________. Each share of PRIDES shall
have a stated value of $_____ ("Stated Value").
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/SM/ Service Mark of Merrill Lynch & Co., Inc.
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Any shares of PRIDES redeemed, converted or otherwise acquired by the
Company shall be retired and shall resume the status of authorized and unissued
shares of Series Preferred Stock, without designation as to series, until such
shares are once more designated as part of a particular series of Series
Preferred Stock by the Board of Directors.
(2) Certain Definitions. Unless the context otherwise requires, the
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terms defined in this paragraph (2) shall have, for all purposes of this
Certificate of Designations, the meanings herein specified:
"Board of Directors" shall mean the Board of Directors of the Company,
and, unless the context indicates otherwise, shall also mean, to the extent
permitted by law, any committee thereof authorized, with respect to any
particular matter, to exercise the power of the Board of Directors of the
Company with respect to such matter.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in The City of New York, New York are
authorized or obligated by law or executive order to close.
"Call Price" shall have the meaning set forth in subparagraph
(4)(b)(i) of this Certificate of Designations.
"capital stock" shall mean any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) corporate stock.
"Class A Common Stock" shall mean the Class A Common Stock, par value
$1.00 per share, of the Company, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Class
A Common Stock, or in the case of a consolidation or merger of the Company with
or into another entity affecting the Class A Common Stock, such capital stock to
which a holder of Class A Common Stock shall be entitled upon the occurrence of
such event.
"Class A Preferred Stock" shall mean the Class A Preferred Stock, par
value $.01 per share, of the Company.
"Class B Common Stock" shall mean the Class B Common Stock, par value
$1.00 per share, of the Company, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Class
B Common Stock, or in the case of a consolidation or merger of the Company with
or into another entity affecting the Class B Common Stock, such capital stock to
which a holder of Class B Common Stock shall be entitled upon the occurrence of
such event.
"Class B Preferred Stock" shall mean the Class B 6% Cumulative
Redeemable Exchangeable Junior Preferred Stock, par value $.01 per share, of the
Company.
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"Class C Preferred Stock" shall mean the Convertible Preferred Stock,
Series C, par value $.01 per share, of the Company.
"Class E Preferred Stock" shall mean the Convertible Preferred Stock,
Series E, par value $.01 per share, of the Company.
"Closing Price" shall mean, on any day, the closing sale price of the
Class A Common Stock on such day or, in case no such sale takes place on such
day, the average of the reported closing bid and asked prices of the Class A
Common Stock, in each case on the Nasdaq National Market, or, if such bid and
asked prices are not so reported, as furnished by any New York Stock Exchange
member firm selected from time to time by the Board of Directors for that
purpose.
"Common Equivalent Rate" shall initially mean ____ shares of Class A
Common Stock for each share of PRIDES, subject to adjustment as set forth in
subparagraph 4(d) of this Certificate of Designations.
"Common Stock" shall mean the Class A Common Stock and the Class B
Common Stock.
"Current Market Price" per share of Class A Common Stock at any date
of determination shall mean the lesser of (x) the average of the daily Closing
Prices for the fifteen consecutive Trading Dates ending on and including such
date of determination or (y) the Closing Price on such date of determination;
provided, however, that, with respect to any redemption of shares of PRIDES, if
any event that results in an adjustment of the Common Equivalent Rate occurs
during such fifteen-day period, the Current Market Price as determined pursuant
to the foregoing shall be appropriately adjusted to reflect the occurrence of
such event.
"Dividend Payment Date" shall mean, for any Dividend Period, the last
day of such Dividend Period which shall be the [15th] day of each February, May,
August and November, commencing with [February 15], 1995, or the next succeeding
Business Day if any such day is not a Business Day.
"Dividend Period" shall mean the period from the Issue Date to but
excluding the first Dividend Payment Date and, thereafter, each quarterly period
from and including a Dividend Payment Date to but excluding the next Dividend
Payment Date.
"Initial Redemption Date" shall mean [November 15], 1997.
"Issue Date" shall mean the date on which shares of PRIDES are first
issued.
"Junior Stock" shall mean (i) the Class A Common Stock, (ii) the Class
B Common Stock, (iii) the Class B Preferred Stock, (iv) any other class or
series of capital stock,
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whether now existing or hereafter created, of the Company, other than (A) any
class or series of Parity Stock (except to the extent provided under clause (v)
hereof) and (C) any class or series of Senior Stock, and (v) any class or series
of Parity Stock to the extent that it ranks junior to the PRIDES as to dividend
rights, rights of redemption or rights on liquidation, as the case may be. For
purposes of clause (v) above, a class or series of Parity Stock shall rank
junior to the PRIDES as to dividend rights, rights of redemption or rights on
liquidation if the holders of shares of PRIDES shall be entitled to dividend
payments, payments on redemption or payments of amounts distributable upon
dissolution, liquidation or winding up of the Company, as the case may be, in
preference or priority to the holders of shares of such class or series.
"Liquidation Preference" measured per share of the PRIDES as of any
date in question shall mean an amount equal to the sum of (a) the Stated Value
per share and (b) an amount equal to all dividends accrued but unpaid on such
share.
"Mandatory Conversion" shall have the meaning set forth in
subparagraph (4)(a) of this Certificate of Designations.
"Mandatory Conversion Date" shall mean [November 15], 1999.
"Notice Date" shall have the meaning set forth in subparagraph
(4)(b)(i) of this Certificate of Designations.
"Optional Conversion Rate" shall initially mean ___ shares of Class A
Common Stock, subject to adjustment as set forth in subparagraph (4)(d) of this
Certificate of Designations.
"Parity Stock" shall mean the PRIDES and any class or series of
capital stock, whether now existing or hereafter created, of the Company ranking
on a parity basis with the PRIDES as to dividend rights, rights of redemption or
rights on liquidation. Capital stock of any class or series, whether now
existing or hereafter created, shall rank on a parity as to dividend rights,
rights of redemption or rights on liquidation with the PRIDES, whether or not
the dividend rates, dividend payment dates, redemption or liquidation prices per
share or sinking fund or mandatory redemption provisions, if any, are different
from those of the PRIDES, if the holders of shares of such class or series shall
be entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Company, as the
case may be, in proportion to their respective accumulated and accrued and
unpaid dividends, redemption prices or liquidations prices, respectively,
without preference or priority, one over the other, as between the holders of
shares of such class or series and the holders of PRIDES. No class or series of
capital stock that ranks junior to the PRIDES as to rights on liquidation shall
rank or be deemed to rank on a parity basis with the PRIDES as to dividend
rights or rights of redemption, unless the instrument creating or evidencing
such class or series of capital stock otherwise expressly provides. The Class A
Preferred Stock, the Class C Preferred Stock and the Class E Preferred Stock
rank on a parity basis with the PRIDES as to
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dividend rights, rights of redemption and rights of liquidation and constitute,
together with the PRIDES, "Parity Stock" for purposes of this Certificate of
Designations.
"PRIDES" shall have the meaning set forth in paragraph (1) of this
Certificate of Designations.
"Record Date" for the dividends payable on any Dividend Payment Date
shall mean the [first] day of the month during which such Dividend Payment Date
shall occur, or if any such day is not a Business Day, then on the next
succeeding Business Day, as and if designated by the Board of Directors.
"Senior Stock" shall mean any class or series of capital stock of the
Company hereafter created ranking prior to the PRIDES as to dividend rights,
rights of redemption or rights on liquidation. Capital stock of any class or
series shall rank prior to the PRIDES as to dividend rights, rights of
redemption or rights on liquidation if the holders of shares of such class or
series shall be entitled to dividend payments, payments on redemption or
payments of amounts distributable upon dissolution, liquidation or winding up of
the Company, as the case may be, in preference or priority to the holders of
shares of PRIDES. No class or series of capital stock that ranks on a parity
basis with or junior to the PRIDES as to rights on liquidation shall rank or be
deemed to rank prior to the PRIDES as to dividend rights or rights of
redemption, notwithstanding that the dividend rate, dividend payment dates,
sinking fund provisions, if any, or mandatory redemption provisions thereof are
different from those of the PRIDES, unless the instrument creating or evidencing
such class or series of capital stock otherwise expressly provides.
"Subsidiary" shall mean (i) a corporation a majority of the capital
stock of which, having voting power under ordinary circumstances to elect
directors, is at the time, directly or indirectly, owned by the Company and/or
one or more Subsidiaries of the Company and (ii) any other entity (other than a
corporation) in which the Company and/or one or more Subsidiaries of the
Company, directly or indirectly, has (x) a majority ownership interest or (y)
the power to elect or direct the election of a majority of the members of the
governing body of such entity.
"Trading Date" shall mean a date on which the Nasdaq National Market
(or any successor thereto) is open for the transaction of business.
(3) Dividends.
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(a) Payment. The holders of shares of PRIDES shall be entitled to
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receive, when, as and if declared by the Board of Directors out of funds legally
available therefor, cumulative dividends, in preference to dividends on any
Junior Stock, from the Issue Date at the rate per annum of __% of the Stated
Value per share, rounded to the nearest cent (or a dividend rate per share of
$_____ per annum or $_____per quarter for each share of PRIDES), and no
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more, payable quarterly for each share of PRIDES in arrears on each Dividend
Payment Date; provided, however, that, with respect to any Dividend Period
during which a redemption occurs, the Board of Directors may, at its option,
declare accrued dividends to, and pay such dividends on, the related redemption
date, in which case such dividends would be payable on such redemption date in
cash to the holders of the shares of PRIDES as of the record date for such
dividend payment and such accrued dividends would not be included in the
calculation of the related Call Price pursuant to subparagraph (4)(b) of this
Certificate of Designations. Each dividend on the shares of PRIDES shall be
payable to holders of record as they appear on the stock register of the Company
on the Record Date for such dividend and, for purposes of calculating the
accrual of dividends, dividends will accrue to, but not including, the date
fixed for payment. Dividends (or amounts equal to accrued and unpaid dividends)
payable on shares of PRIDES for any period less than a full quarterly dividend
period will be computed on the basis of a 360-day year of twelve 30-day months
and the actual number of days elapsed in any period less than one month. The
first Dividend Period shall be from the Issue Date to but excluding [February
15], 1995 and the first dividend shall be $_____ per share of PRIDES payable on
[February 15], 1995 to holders of record of PRIDES on February 1, 1995.
Dividends on the shares of PRIDES will accrue on a daily basis
(without interest or compounding) whether or not there are unrestricted funds
legally available for the payment of such dividends and whether or not such
dividends are declared. Dividends will cease to accrue in respect of shares of
PRIDES on the Mandatory Conversion Date or on the date of their earlier
conversion or redemption.
(b) Limitations on Dividends and Redemptions. As long as any shares
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of PRIDES are outstanding, no dividends (other than dividends payable in shares
of, or warrants, rights or options exercisable for or convertible into shares
of, Junior Stock and cash in lieu of fractional shares in connection with any
such dividend) shall be paid or declared in cash or otherwise, nor will any
other distribution be made (other than a distribution payable in Junior Stock
and cash in lieu of fractional shares in connection with any such distribution),
on any Junior Stock unless: (i) full dividends on all Parity Stock have been
paid, or declared and set aside for payment, for all dividend periods
terminating on or prior to the date of such Junior Stock dividend or
distribution payment to the extent such dividends are cumulative; (ii) dividends
in full for the current quarterly dividend period have been paid, or declared
and set aside for payment, on all Parity Stock to the extent such dividends are
cumulative; (iii) the Company has paid or set aside all amounts, if any, then or
theretofore required to be paid or set aside for all purchase, retirement, and
sinking funds, if any, for any Parity Stock; and (iv) the Company is not in
default on any of its obligations to redeem any Parity Stock.
In addition, as long as any shares of PRIDES are outstanding, no
shares of any Junior Stock may be purchased, redeemed, or otherwise acquired by
the Company or any of its Subsidiaries (except in connection with a
reclassification or exchange of any Junior Stock through the issuance of other
Junior Stock (and cash in lieu of fractional shares in connection therewith) or
the purchase, redemption, or other acquisition of any Junior Stock with any
Junior Stock (and cash in lieu of fractional shares in connection therewith))
nor may any funds be set
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aside or made available for any sinking fund for the purchase or redemption of
any Junior Stock unless: (i) full dividends on all Parity Stock have been paid,
or declared and set aside for payment, for all dividend periods terminating on
or prior to the date of such purchase, redemption or acquisition to the extent
such dividends are cumulative; (ii) dividends in full for the current quarterly
dividend period have been paid, or declared and set aside for payment, on all
Parity Stock to the extent such dividends are cumulative; (iii) the Company has
paid or set aside all amounts, if any, then or theretofore required to be paid
or set aside for all purchase, retirement, and sinking funds, if any, for any
Parity Stock; and (iv) the Company is not in default on any of its obligations
to redeem any Parity Stock.
Subject to the provisions described above, such dividends or
distributions (payable in cash, property or Junior Stock) as may be determined
by the Board of Directors may be declared and paid on the shares of any Junior
Stock from time to time and Junior Stock may be purchased, redeemed or otherwise
acquired by the Company of any of its Subsidiaries from time to time. In the
event of the declaration and payment of any such dividends or other
distributions, the holders of such Junior Stock will be entitled, to the
exclusion of holders of shares of PRIDES, to share therein according to their
respective interests.
As long as any shares of PRIDES are outstanding, dividends or other
distributions may not be declared or paid on any Parity Stock (other than
dividends or other distributions payable in Junior Stock and cash in lieu of
fractional shares in connection therewith), and the Company may not purchase,
redeem or otherwise acquire any Parity Stock (except with any Junior Stock and
cash in lieu of fractional shares in connection therewith), unless either: (a)
(i) full dividends on all Parity Stock have been paid, or declared and set aside
for payment, for all dividend periods terminating on or prior to the date of
such Parity Stock dividend, distribution, purchase, redemption or other
acquisition payment to the extent such dividends are cumulative; (ii) dividends
in full for the current quarterly dividend period have been paid, or declared
and set aside for payment, on all Parity Stock to the extent such dividends are
cumulative; (iii) the Company has paid or set aside all amounts, if any, then or
theretofore required to be paid or set aside for all purchase, retirement, and
sinking funds, if any, for any Parity Stock; and (iv) the Company is not in
default on any of its obligations to redeem any Parity Stock; or (b) with
respect to the payment of dividends only, any such dividends are declared and
paid pro rata so that the amounts of any dividends declared and paid per share
on shares of PRIDES and each other share of such Parity Stock will in all cases
bear to each other the same ratio that accrued and unpaid dividends (including
any accumulation with respect to unpaid dividends for prior dividend periods, if
such dividends are cumulative) per share on shares of PRIDES and such other
share of Parity Stock bear to each other.
(c) Credit. Any dividend payment made on the shares of PRIDES shall
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first be credited against the earliest accrued but unpaid dividend due with
respect to the shares of PRIDES.
(d) Pro Rata. All dividends paid with respect to the shares of PRIDES
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shall be paid pro rata to the holders entitled thereto.
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(e) Priority. Payment of dividends to the holders of the shares of
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PRIDES shall be subject to the prior preferences and other rights of any Senior
Stock.
(4) Redemptions and Conversions.
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(a) Mandatory Conversion. On the Mandatory Conversion Date, each
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outstanding share of PRIDES shall convert automatically (the "Mandatory
Conversion") into shares of Class A Common Stock at the Common Equivalent Rate
in effect on the Mandatory Conversion Date and the right to receive an amount in
cash equal to all accrued and unpaid dividends on such share of PRIDES (other
than previously declared dividends payable to a holder of record on a prior
date) to the Mandatory Conversion Date, whether or not declared, out of
unrestricted funds legally available for the payment of dividends, subject to
the right of the Company to redeem the shares of PRIDES on or after the Initial
Redemption Date and prior to the Mandatory Conversion Date, as described below,
and subject to the conversion of the shares of PRIDES at the option of the
holder at any time prior to the Mandatory Conversion Date. Dividends on the
shares of PRIDES shall cease to accrue and such shares shall cease to be
outstanding on the Mandatory Conversion Date. The Company shall make such
arrangements as it deems appropriate for the issuance of certificates
representing shares of Class A Common Stock and for the payment of cash in
respect of such accrued and unpaid dividends, if any, or cash in lieu of
fractional shares of Class A Common Stock (determined in accordance with
subparagraph (4)(i) below), if any, in exchange for and contingent upon
surrender of certificates representing the shares of PRIDES, and the Company may
defer the payment of dividends on such shares of Class A Common Stock and the
voting thereof until, and make such payment and voting contingent upon, the
surrender of such certificates representing the shares of PRIDES, provided that
the Company shall give the holders of the shares of PRIDES such notice of any
such actions as the Company deems appropriate and upon such surrender such
holders shall be entitled to receive such dividends declared and paid on such
shares of Class A Common Stock subsequent to the Mandatory Conversion Date.
Amounts payable in cash in respect of the shares of PRIDES or in respect of such
shares of Class A Common Stock shall not bear interest.
(b) Redemption by the Company.
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(i) Right to Redeem. Shares of PRIDES are not redeemable by the
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Company prior to the Initial Redemption Date. At any time and from time to time
on or after the Initial Redemption Date and prior to the Mandatory Conversion
Date, the Company shall have the right to redeem, in whole or in part, the
outstanding shares of PRIDES. Upon any such redemption, the Company shall
deliver to the holders whose shares of PRIDES are to be redeemed, in accordance
with the provisions of this Certificate of Designations, in exchange for each
share so redeemed, the greater of (A) a number of shares of Class A Common Stock
equal to the quotient derived by dividing (x) the Call Price in effect on the
Redemption Date, by (y) the Current Market Price of the Class A Common Stock
determined as of the second Trading Day immediately preceding the related Notice
Date or (B) _____ shares of Class A Common Stock (subject to adjustment in the
same manner as the Optional Conversion Rate). The "Call Price" of each share of
PRIDES is the sum of (i) $_____ on and after [November 15], 1997 through and
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including [February 14], 1998, $_____ on and after [February 15], 1998 through
and including [May 14], 1998, $_____ on and after [May 15], 1998 through and
including [August 14], 1998, $_____ on and after [August 15], 1988 through and
including [October 14], 1998 and $_____ on and after [October 15], 1998 to and
including November 14, 1998 and (ii) all accrued and unpaid dividends thereon to
but not including the date fixed for redemption (other than previously declared
dividends payable to a holder of record as of a prior date), subject to the
right of the Company pursuant to subparagraph (3)(a) of this Certificate of
Designations to pay separately such accrued and unpaid dividends in cash (in
which case such accrued dividends would not be included in the calculation of
the Call Price). The public announcement of any call for redemption shall be
made prior to, or at the time of, the mailing of the notice of such call to
holders of shares of PRIDES as described below. If fewer than all the
outstanding shares of PRIDES are to be redeemed, shares of PRIDES to be redeemed
shall be selected by the Company from outstanding shares of PRIDES not
previously redeemed by lot or pro rata (as nearly as may be practicable) or by
any other method determined by the Board of Directors in its sole discretion to
be equitable. As used in this subparagraph (b), the term "Notice Date" with
respect to any notice given by the Company in connection with a redemption of
shares of PRIDES means the date on which first occurs either the public
announcement of such redemption or the commencement of mailing of such notice to
the holders of shares of PRIDES.
(ii) Notice of Redemption. The Company shall provide notice of any
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redemption of shares of PRIDES to holders of record of PRIDES to be called for
redemption not less than 10 nor more than 60 days prior to the date fixed for
such redemption. Such notice shall be provided by mailing notice of such
redemption first class postage prepaid, to each holder of record of shares of
PRIDES to be redeemed, at such holder's address as it appears on the stock
register of the Company; provided, however, that neither failure to give such
notice nor any defect therein shall affect the validity of the proceeding for
the redemption of any shares of PRIDES to be redeemed except as to the holders
to whom the Company has failed to give said notice or whose notice was
defective.
Each such notice shall state, as appropriate, the following and may
contain such other information as the Company deems advisable:
(A) the redemption date;
(B) that all outstanding shares of PRIDES are to be
redeemed or, in the case of a call for redemption of
fewer than all outstanding shares of PRIDES, the number
of shares held by such holder to be redeemed;
(C) the applicable Call Price, the number of shares of
Class A Common Stock deliverable upon redemption of
each share of PRIDES to be redeemed and the Current
Market Price used to calculate such number of shares of
Class A Common Stock;
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(D) the place or places where certificates for PRIDES to be
redeemed are to be surrendered for redemption; and
(E) that dividends on the shares of PRIDES to be redeemed
shall cease to accrue on such redemption date (except
as otherwise provided herein).
(iii) Deposit of Shares and Funds. The Company's obligation to
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deliver shares of Class A Common Stock and provide funds upon redemption in
accordance with this paragraph (4) shall be deemed fulfilled if, on or before
the related redemption date, the Company shall irrevocably deposit with a bank
or trust company, or an affiliate of a bank or trust company, having an office
or agency in New York City and having a capital and surplus of at least
$50,000,000, or shall set aside or make other reasonable provision for the
issuance of, such number of shares of Class A Common Stock as are required to be
delivered by the Company pursuant to this paragraph (4) upon the occurrence of
the related redemption (and for the payment of cash in lieu of the issuance of
fractional share amounts and accrued and unpaid dividends payable in cash on the
shares to be redeemed as and to the extent provided by this paragraph (4)). Any
interest accrued on such funds shall be paid to the Company from time to time.
Any shares of Class A Common Stock or funds so deposited and unclaimed at the
end of two years from such redemption date shall be repaid and released to the
Company, after which the holder or holders of such shares of PRIDES so called
for redemption shall look only to the Company for delivery of such shares of
Class A Common Stock or funds.
(iv) Surrender of Certificates; Status. Each holder of shares of
---------------------------------
PRIDES to be redeemed shall surrender the certificates evidencing such shares
(properly endorsed or assigned for transfer, if the Company shall so require and
the notice shall so state) to the Company at the place designated in the notice
of such redemption and shall thereupon be entitled to receive certificates
evidencing shares of Class A Common Stock and to receive any funds payable
pursuant to this paragraph (4) following surrender and following the date of
such redemption. In case fewer than all the shares of PRIDES represented by any
such surrendered certificate are called for redemption, a new certificate shall
be issued at the expense of the Company representing the unredeemed shares. If
such notice of redemption shall have been given, and if on the date fixed for
redemption shares of Class A Common Stock and funds necessary for the redemption
shall have been irrevocably either set aside by the Company separate and apart
from its other funds or assets in trust for the account of the holders of the
shares to be redeemed (and so as to be and continue to be available therefor) or
deposited with a bank or a trust company or an affiliate thereof as provided
herein or the Company shall have made other reasonable provision therefor, then,
notwithstanding that the certificates evidencing any shares of PRIDES so called
for redemption shall not have been surrendered, the shares represented thereby
so called for redemption shall be deemed no longer outstanding, dividends with
respect to the shares so called for redemption shall cease to accrue on the date
fixed for redemption (except that holders of shares of PRIDES at the close of
business on a record date for any payment of dividends shall be entitled to
receive the dividend payable on such shares on the corresponding Dividend
Payment Date notwithstanding the redemption of such shares following such record
date and prior
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to such Dividend Payment Date) and all rights with respect to the shares so
called for redemption shall forthwith after such date cease and terminate,
except for the rights of the holders to receive the shares of Class A Common
Stock and funds, if any, payable pursuant to this paragraph (4) without interest
upon surrender of their certificates therefor (unless the Company defaults on
the delivery of such shares or the payment of such funds). Holders of shares of
PRIDES that are redeemed shall not be entitled to receive dividends declared and
paid on such shares of Class A Common Stock, and such shares of Class A Common
Stock shall not be entitled to vote, until such shares of Class A Common Stock
are issued upon the surrender of the certificates representing such shares of
PRIDES and upon such surrender such holders shall be entitled to receive such
dividends declared and paid on such shares of Class A Common Stock subsequent to
such redemption date.
(c) Conversion at Option of Holder. Shares of PRIDES are convertible,
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in whole or in part, at the option of the holders thereof, at any time and from
time to time from and after the Issue Date and prior to the Mandatory Conversion
Date, unless previously redeemed, into shares of Class A Common Stock at the
Optional Conversion Rate. The right to convert shares of PRIDES called for
redemption shall terminate immediately prior to the close of business on the
related redemption date.
Conversion of shares of PRIDES at the option of the holder may be
effected by delivering certificates evidencing such shares, together with
written notice of conversion and a proper assignment of such certificates to the
Company or in blank, to the office or agency to be maintained by the Company for
that purpose (and, if applicable, cash payment of an amount equal to the
dividend attributable to the current quarterly Dividend Period payable on such
shares as described below), and otherwise in accordance with conversion
procedures established by the Company. Each optional conversion shall be deemed
to have been effected immediately prior to the close of business on the date on
which all of the foregoing requirements shall have been satisfied. The
conversion shall be at the Optional Conversion Rate in effect at such time and
on such date.
Holders of shares of PRIDES at the close of business on a Record Date
for any payment of declared dividends shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion of such shares following such Record Date and
prior to the corresponding Dividend Payment Date. However, shares of PRIDES
surrendered for conversion after the close of business on a Record Date for any
payment of dividends and before the opening of business on the next succeeding
Dividend Payment Date must be accompanied by payment in cash of an amount equal
to the dividend thereon attributable to the current quarterly Dividend Period
which is to be paid on such Dividend Payment Date (unless such shares are
subject to redemption on a redemption date between such record date and such
Dividend Payment Date). A holder of shares of PRIDES called for redemption on
[November 15], 1997 or on any other Dividend Payment Date will (if such holder
is the registered holder on the applicable Record Date) receive the dividend on
such shares payable on that date and will be able to convert such shares after
the Record Date for such dividend without paying an amount equal to such
dividend to the Company upon conversion.
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<PAGE>
Except as provided above, upon any optional conversion of shares of PRIDES, the
Company shall make no payment or allowance for unpaid dividends, whether or not
in arrears, on converted shares of PRIDES or for previously declared dividends
or distributions on the shares of Class A Common Stock issued upon such
conversion.
(d) Common Equivalent Rate and Optional Conversion Rate Adjustments.
---------------------------------------------------------------
The Common Equivalent Rate and the Optional Conversion Rate shall be each
subject to adjustment from time to time as provided below in this subparagraph
(4)(d).
(i) If the Company shall, after the Issue Date:
(A) pay a stock dividend or make a distribution on the
outstanding shares of Class A Common Stock in shares of
Class A Common Stock,
(B) subdivide or split the outstanding shares of Class A Common
Stock into a greater number of shares,
(C) combine the outstanding shares of Class A Common Stock into
a smaller number of shares, or
(D) issue by reclassification of its outstanding shares of Class
A Common Stock any shares of its common stock,
then, in any such event, the Common Equivalent Rate and the
Optional Conversion Rate in effect immediately prior to the
opening of business on the record date for determination of
stockholders entitled to receive such dividend or distribution or
the effective date of such subdivision, split, combination or
reclassification, as the case may be, shall each be adjusted so
that the holder of shares of PRIDES shall thereafter be entitled
to receive, upon Mandatory Conversion or upon conversion at the
option of such holder, the number of shares of Class A Common
Stock or other common stock of the Company which such holder
would have owned or been entitled to receive immediately
following such action if such holder had converted his shares of
PRIDES immediately prior to the record date for, or effective
date of, as the case may be, such event. Such adjustment shall
be made successively whenever any event listed above shall occur.
For a dividend or distribution, the adjustment shall become
effective at the opening of business on the Business Day next
following the record date for such dividend or distribution. For
a subdivision, split, combination or reclassification, the
adjustment shall become effective immediately after the
effectiveness of such subdivision, split, combination or
reclassification.
-12-
<PAGE>
(ii) If the Company shall, after the Issue Date, issue rights,
warrants or options to all holders of its outstanding shares of
Class A Common Stock entitling them (for a period not exceeding
forty-five days from the date of such issuance) to subscribe for
or purchase shares of Class A Common Stock at a price per share
less than the Current Market Price per share of the Class A
Common Stock (determined as of the date of issuance of such
rights, warrants or options), then, in any such event, the Common
Equivalent Rate and Optional Conversion Rate shall each be
adjusted by multiplying the Common Equivalent Rate and the
Optional Conversion Rate, in effect immediately prior to the date
of issuance of such rights, warrants or options, by a fraction,
of which the numerator shall be the number of shares of Class A
Common Stock outstanding on the date of issuance of such rights,
warrants or options, immediately prior to such issuance, plus the
number of additional shares of Class A Common Stock offered for
subscription or purchase pursuant to such rights, warrants or
options, and of which the denominator shall be the number of
shares of Class A Common Stock outstanding on the date of
issuance of such rights, warrants or options, immediately prior
to such issuance, plus the number of additional shares of Class A
Common Stock which the aggregate offering price of the total
number of shares of Class A Common Stock so offered for
subscription or purchase pursuant to such rights, warrants or
options would purchase at such Current Market Price (determined
by multiplying such total number of shares by the exercise price
of such rights, warrants or options and dividing the product so
obtained by such Current Market Price). Such adjustment shall
become effective at the opening of business on the Business Day
next following the record date for the determination of
stockholders entitled to receive such rights, warrants or
options. To the extent that shares of Class A Common Stock are
not delivered after the expiration of such rights, warrants or
options, the Common Equivalent Rate and the Optional Conversion
Rate shall each be readjusted to the Common Equivalent Rate and
the Optional Conversion Rate which would then be in effect had
the adjustments made upon the issuance of such rights, warrants
or options been made upon the basis of delivery of only the
number of shares of Class A Common Stock actually delivered. Such
adjustment shall be made successively whenever any such rights,
warrants or options are issued. Shares of Class A Common Stock
owned by or held for the account of the Company or any of its
Subsidiaries shall not be deemed outstanding for the purposes of
any such adjustment.
(iii) If the Company shall, after the Issue Date, pay a dividend or
make a distribution to all holders of its outstanding shares of
Class A Common Stock of evidences of its indebtedness, cash or
other assets (including capital stock (other than rights,
warrants or options for such capital stock referred to in
subparagraph 4(d)(ii) above) of the Company, but excluding
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<PAGE>
any cash dividends or distributions (other than Extraordinary
Cash Distributions (as hereinafter defined)) and dividends
referred to in subparagraph (4)(d)(i) above)), or shall issue to
all holders of its outstanding shares of Class A Common Stock
rights, warrants or options to subscribe for or purchase any of
its securities (other than those referred to in subparagraph
(4)(d)(ii) above), then, in any such event, the Common Equivalent
Rate and the Optional Conversion Rate shall each be adjusted by
multiplying the Common Equivalent Rate and the Optional
Conversion Rate in effect on the record date referred to below by
a fraction, of which the numerator shall be the Current Market
Price per share of the Class A Common Stock (determined as of the
record date for the determination of stockholders entitled to
receive such dividend or distribution), and of which the
denominator shall be such Current Market Price per share of Class
A Common Stock less either (x) the fair market value (as
determined by the Board of Directors, whose determination shall
be conclusive), as of such record date of the portion of the
assets or evidences of indebtedness so distributed or of such
subscription rights, warrants or options applicable to one share
of Class A Common Stock or (y), if applicable, the amount of the
Extraordinary Cash Dividend, as applicable. The adjustment
pursuant to the foregoing provisions of this subparagraph
(4)(d)(iii) shall be made successively whenever any distribution
to which this subparagraph (4)(d)(iii) applies is made, and shall
become effective on the opening of business on the Business Day
next following the record date for the determination of
stockholders entitled to receive such dividend or distribution.
As used in this subparagraph (4)(d)(iii), the term "Extraordinary
Cash Distributions" means, with respect to any consecutive 12-
month period, all cash dividends and cash distributions on the
outstanding shares of the Class A Common Stock during such period
(other than cash dividends or distributions for which a prior
adjustment to the Common Equivalent Rate and the Optional
Conversion Rate was previously made) to the extent such dividends
and distributions exceed, on a per share of Class A Common Stock
basis, 10% of the average daily Closing Price of the Class A
Common Stock over such period. Shares of Class A Common Stock
owned by or held for the account of the Company or any of its
Subsidiaries shall not be deemed outstanding for the purposes of
any such adjustment.
(iv) Any shares of Class A Common Stock issuable in payment of a
dividend shall be deemed to have been issued immediately prior to
the close of business on the record date for such dividend for
purposes of calculating the number of outstanding shares of Class
A Common Stock under this subparagraph (4)(d).
-14-
<PAGE>
(v) The Company shall also be entitled to make upward adjustments in
the Common Equivalent Rate, the Optional Conversion Rate and the
Call Price, as it in its sole discretion shall determine to be
advisable, in order that any stock dividends, subdivisions of
shares, distribution of rights to purchase stock or securities,
or distribution of securities convertible into or exchangeable
for stock (or any transaction which could be treated as any of
the foregoing transactions pursuant to Section 305 of the
Internal Revenue Code of 1986, as amended) made by the Company to
its stockholders after the Issue Date shall not be taxable.
(vi) In any case in which this subparagraph (4)(d) shall require that
an adjustment as a result of any event become effective at the
opening of business on the Business Day next following a record
date and the date fixed for conversion pursuant to subparagraph
(4)(a) or redemption pursuant to subparagraph (4)(b) occurs after
such record date, but before the occurrence of such event, the
Company may, in its sole discretion, elect to defer the following
until after the occurrence of such event: (A) issuing to the
holder of any converted or redeemed shares of PRIDES the
additional shares of Class A Common Stock issuable upon such
conversion or redemption over the shares of Class A Common Stock
issuable before giving effect to such adjustments and (B) paying
to such holder any amount in cash in lieu of a fractional share
of Class A Common Stock pursuant this paragraph (4).
(vii) All adjustments to the Common Equivalent Rate and the Optional
Conversion Rate shall be calculated to the nearest 1/100th of a
share of Class A Common Stock. No adjustment in the Common
Equivalent Rate and the Optional Conversion Rate shall be
required unless such adjustment would require an increase or
decrease of at least one percent therein; provided, however, that
any adjustment which by reason of this subparagraph is not
required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(viii) Before redeeming any shares of PRIDES, the Company shall take
any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of Class A Common Stock upon
such redemption.
(e) Adjustment for Consolidation or Merger. In case of any
--------------------------------------
consolidation or merger to which the Company is a party (other than a merger or
consolidation in which the Company is the surviving or continuing corporation
and in which the Class A Common Stock outstanding immediately prior to the
merger or consolidation remains unchanged), or in the case of any sale or
transfer to another corporation of the property of the Company as an entirety or
substantially as an entirety, or in case of any statutory exchange of securities
with another
-15-
<PAGE>
corporation (other than in connection with a merger or acquisition), proper
provision shall be made so that each share of PRIDES shall, after consummation
of such transaction, be subject to (i) conversion at the option of the holder
into the kind and amount of securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of shares of Class A
Common Stock into which such share of PRIDES might have been converted
immediately prior to consummation of such transaction, (ii) conversion on the
Mandatory Conversion Date into the kind and amount of securities, cash or other
property receivable upon consummation of such transaction by a holder of the
number of shares of Class A Common Stock into which such share of PRIDES would
have converted if the conversion on the Mandatory Conversion Date had occurred
immediately prior to the date of consummation of such transaction, plus the
right to receive cash in an amount equal to all accrued and unpaid dividends on
such shares of PRIDES (other than previously declared dividends payable to a
holder of record as of a prior date), and (iii) redemption on any redemption
date in exchange for the kind and amount of securities, cash or other property
receivable upon consummation of such transaction by a holder of the number of
shares of Class A Common Stock that would have been issuable at the Call Price
in effect on such redemption date upon a redemption of such share immediately
prior to consummation of such transaction, assuming that, if the Notice Date for
such redemption is not prior to such transaction, the Notice Date had been the
date of such transaction and assuming in each case that such holder of Class A
Common Stock failed to exercise rights of election, if any, as to the kind or
amount of securities, cash or other property receivable upon consummation of
such transaction (provided that if the kind or amount of securities, cash or
other property receivable upon consummation of such transaction is not the same
for each non-electing share, then the kind and amount of securities, cash or
other property receivable upon consummation of such transaction for each non-
electing share shall be deemed to be the kind and amount so receivable per share
by a plurality of the non-electing shares). The kind and amount of securities
into which the shares of PRIDES shall be convertible or redeemable after
consummation of such transaction shall be subject to adjustment as described in
subparagraph (4)(d) following the date of consummation of such transaction. The
Company may not become a party to any such transaction unless the terms thereof
are consistent with the foregoing.
(f) Notice of Adjustments. Whenever the Common Equivalent Rate and
---------------------
Optional Conversion Rate are adjusted as herein provided, the Company shall:
(i) forthwith compute the adjusted Common Equivalent Rate and
Optional Conversion Rate in accordance herewith and prepare a
certificate signed by an officer of the Company setting forth the
adjusted Common Equivalent Rate and the Optional Conversion Rate,
the method of calculation thereof in reasonable detail and the
facts requiring such adjustment and upon which such adjustment is
based, which certificate shall be conclusive, final and binding
evidence of the correctness of the adjustment, and file such
certificate forthwith with the transfer agent for the shares of
PRIDES and the Class A Common Stock; and
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<PAGE>
(ii) make a prompt public announcement and mail a notice to the
holders of the outstanding shares of PRIDES stating that the
Common Equivalent Rate and the Optional Conversion Rate have been
adjusted, the facts requiring such adjustment and upon which such
adjustment is based and setting forth the adjusted Common
Equivalent Rate and Optional Conversion Rate, such notice to be
mailed at or prior to the time the Company mails an interim
statement, if any, to its stockholders covering the fiscal
quarter during which the facts requiring such adjustment
occurred, but in any event within 45 days following the end of
such fiscal quarter.
(g) Notice of Certain Transactions. In case, at any time while any of
------------------------------
the shares of PRIDES are outstanding,
(i) the Company shall declare a dividend (or any other distribution)
on its outstanding shares of Class A Common Stock, excluding any
cash dividends; or
(ii) the Company shall authorize the issuance to all holders of its
outstanding shares of Class A Common Stock of rights, warrants or
options to subscribe for or purchase shares of its Class A Common
Stock or of any other subscription rights, warrants or options;
or
(iii) the Company shall authorize any reclassification of its Class A
Common Stock (other than a subdivision or combination thereof) or
any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required
(except for a merger of the Company into one of its subsidiaries
solely for the purpose of changing the corporate domicile of the
Company to another state of the United States and in connection
with which there is no substantive change in the rights or
privileges of any securities of the Company other than changes
resulting from differences in the corporate statutes of the then
existing and the new state of domicile), or of the sale or
transfer of all or substantially all of the assets of the
Company; or
(iv) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the shares of PRIDES, and shall cause to be mailed
to the holders of shares of PRIDES at their last addresses as they shall appear
on the stock register, at least 10 days before the date hereinafter specified
(or the earlier of the dates hereinafter specified, in the event that more than
one date is specified), a notice stating (A) the date on which a record is to be
taken for the purpose of such dividend or distribution or issuance of such
rights, warrants or options,
-17-
<PAGE>
or, if a record is not to be taken, the date as of which the holders of Class A
Common Stock of record to be entitled to such dividend, distribution, rights,
warrants or options are to be determined, or (B) the date on which any such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Class A Common Stock of record shall be
entitled to exchange their Class A Common Stock for securities or other property
(including cash), if any, deliverable upon such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up. The failure to
give or receive the notice required by this subparagraph (4)(g) or any defect
therein shall not affect the legality or validity of any such dividend,
distribution, right, warrant or option or other action.
(h) Effect of Conversions and Redemptions. The person or persons in
-------------------------------------
whose name or names any certificate or certificates for shares of Class A Common
Stock shall be issuable upon any conversion or redemption of shares of PRIDES
shall be deemed to have become, on the date of such conversion or redemption,
the holder or holders of record of the shares of Class A Common Stock
represented thereby; provided, however, that any surrender of shares of PRIDES
-------- -------
for conversion or redemption on any date when the stock transfer books of the
Company shall be closed shall constitute the person or persons in whose name or
names the certificate or certificates for shares of Class A Common Stock are to
be issued as the record holder or holders thereof for all purposes as of the
opening of business on the next succeeding day on which such stock transfer
books are open.
(i) No Fractional Shares. No fractional shares or script representing
--------------------
fractional shares of Class A Common Stock shall be issued upon the redemption or
conversion of any shares of PRIDES. In lieu of any fractional share otherwise
issuable in respect of the aggregate number of shares of PRIDES of any holder
which are redeemed or converted on any redemption date or upon Mandatory
Conversion or any optional conversion, such holder shall be entitled to receive
an amount in cash (computed to the nearest cent) equal to the same fraction of
(i) the Current Market Price of a share of Class A Common Stock, determined as
of the second trading day immediately preceding the Notice Date, in the case of
a redemption pursuant to subparagraph (4)(b), or (ii) the Closing Price of a
share of Class A Common Stock, determined (A) as of the fifth Trading Date
immediately preceding the Mandatory Conversion Date, in the case of Mandatory
Conversion pursuant to subparagraph (4)(a), or (B) as of the second Trading Date
immediately preceding the effective date of conversion, in the case of an
optional conversion by a holder pursuant to subparagraph (4)(c). If more than
one share of PRIDES shall be surrendered for conversion or redemption at one
time by or for the same holder, the number of full shares of Class A Common
Stock issuable upon conversion or redemption thereof shall be computed on the
basis of the aggregate number of shares of PRIDES so surrendered.
(j) Fractional Shares of PRIDES. No fractional shares of PRIDES may
---------------------------
be tendered for redemption or conversion, or issued upon redemption or
conversion of any shares of PRIDES, except by or to a depositary (a
"Depositary") selected by the Company pursuant to a deposit agreement between
the Company and such Depositary relating to the execution and delivery of
depositary receipts representing interests in shares of PRIDES deposited by the
-18-
<PAGE>
Company with such Depositary. PRIDES held by any person other than the
Depositary may be converted pursuant to subparagraph 4(c) only in whole and not
in part. If a share of PRIDES held by any person other than the Depositary is
redeemed pursuant to subparagraph 4(b), in lieu of any fractional share of
PRIDES that would otherwise be issuable to any person other than the Depositary
upon such redemption, such person shall be entitled to receive the maximum
number of full shares of Class A Common Stock then issuable upon redemption of
such share in full in accordance with this Certificate of Designations and, in
lieu of any fractional share of Class A Common Stock, an amount in cash computed
as provided in subparagraph 4(i) above.
(k) Payment of Taxes. The Company shall pay any and all documentary,
----------------
stamp or similar issue or transfer taxes payable in respect of the issue or
delivery of shares of Class A Common Stock on the redemption or conversion of
shares of PRIDES pursuant to this paragraph (4); provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any registration of transfer involved in the issue or delivery of shares of
Class A Common Stock in a name other than that of the registered holder of
shares of PRIDES redeemed or converted or to be redeemed or converted, and no
such issue or delivery shall be made unless and until the person requesting such
issue has paid to the Company the amount of any such tax or has established, to
the satisfaction of the Company, that such tax has been paid.
(l) Reservation of Class A Common Stock. The Company shall at all
-----------------------------------
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Class A Common Stock and/or its issued
Class A Common Stock held in its treasury, for the purpose of effecting any
Mandatory Conversion of the shares of PRIDES or any conversion of the shares of
PRIDES at the option of the holder, the full number of shares of Class A Common
Stock then deliverable upon any such conversion of all outstanding shares of
PRIDES.
(5) Liquidation Rights. (a) In the event of any liquidation,
------------------
dissolution, or winding up of the affairs of the Company, whether voluntary or
involuntary, the holders of shares of PRIDES then outstanding, after payment or
provision for payment of the debts and other liabilities of the Company and the
payment or provision for payment of any distribution on any shares of Senior
Stock, and before any distribution to the holders of Junior Stock, shall be
entitled to be paid out of the assets of the Company available for distribution
to its stockholders an amount per share of PRIDES in cash equal to the
Liquidation Preference. In the event the assets of the Company available for
distribution to the holders of the shares of PRIDES upon any dissolution,
liquidation or winding up of the Company shall be insufficient to pay in full
the liquidation payments payable to the holders of outstanding shares of PRIDES
and of all other shares of Parity Stock, the holders of shares of PRIDES and of
all other shares of Parity Stock shall share ratably in such distribution of
assets in proportion to the amount which would be payable on such distribution
if the amounts to which the holders of outstanding shares of PRIDES and the
holders of outstanding shares of such Parity Stock were paid in full. Except as
provided in this paragraph (5), holders of PRIDES shall not be entitled to any
distribution in the event of liquidation, dissolution or winding up of the
affairs of the Company.
-19-
<PAGE>
(b) For the purposes of this paragraph (5), none of the following
shall be deemed to be a voluntary or involuntary liquidation, dissolution or
winding up of the Company:
(i) the sale, lease, transfer or exchange of all or
substantially all of the assets of the Company; or
(ii) the consolidation or merger of the Company with one or more
other corporations (whether or not the Company is the
corporation surviving such consolidation or merger).
(6) No Preemptive Rights. The holders of shares of PRIDES shall have
--------------------
no preemptive rights, including preemptive rights with respect to any shares of
capital stock or other securities of the Company convertible into or carrying
rights or options to purchase any such shares.
(7) Voting Rights. (a) The holders of shares of PRIDES shall have
-------------
the right to vote, voting as a class with the holders of Common Stock (and with
the holders of any other class or series of Preferred Stock entitled to vote
with the Common Stock as a class, as to matters submitted generally to
stockholders or as to particular matters), in the election of directors and upon
each other matter coming before any meeting of the stockholders of the Company
on the basis of 100 votes for each share of PRIDES held. The holders of shares
of PRIDES and the holders of Common Stock (and such other class or series of
Preferred Stock) shall vote together as one class except as otherwise set forth
herein or as otherwise provided by law or by the Restated Certificate of
Incorporation of the Company.
(b) If at any time dividends payable on the shares of PRIDES or any
other shares of Parity Stock or Senior Stock are in arrears and unpaid in an
aggregate amount equal to or exceeding the aggregate amount of dividends payable
thereon for six quarterly dividend periods, or if any other shares of Parity
Stock or Senior Stock shall be entitled for any other reason to exercise voting
rights, separate from the Common Stock, to elect any directors of the Company
("Preferred Stock Directors"), the holders of the shares of PRIDES, voting
separately as a class with the holders of all other shares of Parity Stock and
Senior Stock upon which like voting rights have been conferred and are
exercisable, shall have the right to vote for the election of two Preferred
Stock Directors of the Company, such Directors to be in addition to the number
of directors constituting the Board of Directors immediately prior to the
accrual of such right. Such right of the holders of shares of PRIDES to vote
for the election of two Preferred Stock Directors shall, when vested, continue
until all dividends in arrears on the shares of PRIDES and such other shares of
Parity Stock and Senior Stock shall have been paid in full and the right of any
other series of Preferred Stock to exercise voting rights, separate from the
Common Stock, to elect Preferred Stock Directors shall terminate or have
terminated and, when so paid, and such termination occurs or has occurred, such
right of the holders of shares of PRIDES to elect two Preferred Stock Directors
shall cease, subject always to the same provisions for the vesting of
-20-
<PAGE>
such right of the holders of the shares of PRIDES to elect two Preferred Stock
Directors in the case of future dividend defaults.
(c) At any time when the holders of shares of the PRIDES (with the
holders of all other shares of Parity Stock and Senior Stock upon which like
voting rights have been conferred and are exercisable) are entitled to elect two
Preferred Stock Directors in accordance with subparagraph (7)(b) above, the
Company shall, upon the written request (a "Request") of the holders of record
of not less than the greater of (i) 10% of the outstanding shares of PRIDES or
(ii) 10% of the outstanding shares of all classes and series of Parity Stock
(including the PRIDES) and Senior Stock entitled to vote for such Preferred
Stock Directors, call a special meeting of holders of the PRIDES (and such other
Parity Stock and Senior Stock) for the election of the two Preferred Stock
Directors. Notice of the special meeting shall be given in accordance with the
requirements of Delaware law, and such meeting shall be held not more that 60
days after the Company's receipt of the Request. The Preferred Stock Directors
shall be nominated by the persons who submit the Request, except that at any
meeting after the first meeting at which the Preferred Stock Directors are
elected, the Preferred Stock Directors shall be nominated, subject to
subparagraph 7(d) below, by the existing Preferred Stock Directors.
(d) The term of office of each Preferred Stock Director shall
terminate on the earlier of (i) the next annual meeting of stockholders of the
Company at which a successor shall have been elected and qualified (irrespective
of whether the Board of Directors is divided into staggered classes) or (ii) the
termination of the right of the holders of shares of PRIDES and such other
shares of Parity Stock and Senior Stock to vote for Preferred Stock Directors
pursuant to subparagraph 7(b). If, prior to the end of the term of any
Preferred Stock Director elected as aforesaid, a vacancy in the office of such
director shall occur, such vacancy shall be filled for the unexpired term by the
appointment by the remaining Preferred Stock Director elected as aforesaid of a
new director for the unexpired term of such former director. If both Preferred
Stock Directors so elected by the holders of shares of PRIDES (and such other
Parity Stock and Senior Stock) shall cease to serve as directors before their
terms shall expire, the holders of the shares of PRIDES (together with the
holders of such other Parity Stock and Senior Stock, if any) may, at a special
meeting of the holders called as provided in subparagraph (7)(c) above, nominate
and elect successors to hold office for the unexpired terms of such directors
whose places shall be vacant.
(e) For as long as any shares of PRIDES remain outstanding, the
consent of the holders of at least two-thirds of such outstanding shares (voting
separately as a class), given in person or by proxy at any annual meeting or
special meeting called for such purpose, shall be necessary (i) before the
Company may amend, alter or repeal any of the provisions of the Restated
Certificate of Incorporation or By-Laws of the Company which would adversely
affect the powers, preferences or rights of the holders of the shares of PRIDES
then outstanding or reduce the minimum time required for any notice to which
holders of shares of PRIDES then outstanding may be entitled; provided, however,
that (x) any such amendment, alteration or repeal that would authorize, create
or increase the authorized amount of any additional shares of Junior Stock or
shares of any other class or series of Parity Stock (whether or not already
authorized)
-21-
<PAGE>
and (y) any such amendment that would increase the number of authorized shares
of Preferred Stock or the number of authorized shares of PRIDES or that would
decrease the number of authorized shares of Preferred Stock or the number of
authorized shares of PRIDES (but not below the number of authorized shares of
Preferred Stock or PRIDES, as the case may be, then outstanding), shall be
deemed not to adversely affect such powers, preferences or rights and shall not
be subject to approval by the holders of shares of PRIDES; (ii) before the
Company may merge or consolidate with or into any other corporation, unless each
holder of shares of PRIDES immediately preceding such merger or consolidation
shall receive or continue to hold in the resulting corporation the same number
of shares, with substantially the same rights and preferences, as correspond to
the shares of PRIDES so held; and (iii) before the Company may create any Senior
Stock, ranking prior to the PRIDES as to dividend rights, rights of redemption
or rights on liquidation.
Notwithstanding the provisions of the preceding paragraph, however,
no such approval described therein of the holders of the shares of PRIDES shall
be required if, at or prior to the time when such amendment, alteration or
repeal or consolidation or merger, liquidation, dissolution or winding up is to
take effect, as the case may be, provision is made for the redemption of all
shares of PRIDES at the time outstanding; provided, that no such provision may
be made prior to the Initial Redemption Date."
The undersigned has signed this Certificate of Designations on
this ____ day of November, 1994.
-----------------------------------
Executive Vice President of Tele-Communications, Inc.
Attest:
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<PAGE>
EXHIBIT 4.2
DEPOSIT AGREEMENT
among
TELE-COMMUNICATIONS, INC.
and
SHAWMUT BANK CONNECTICTUT, NATIONAL ASSOCIATION
and
THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
IN RESPECT OF THE
_____% PRIDES/SM/, CONVERTIBLE PREFERRED STOCK, SERIES F
Dated as of November __, 1994
/SM/ Service Mark of Merrill Lynch & Co., Inc.
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS.................................................... 1
ARTICLE II FORM OF RECEIPTS, DEPOSIT OF PREFERRED STOCK,
EXECUTION AND DELIVERY, TRANSFER AND SURRENDER OF
RECEIPTS....................................................... 3
SECTION 2.1. Form and Transferability of Receipts............... 3
SECTION 2.2. Deposit of Preferred Stock, Execution and Delivery
of Receipts in Respect Thereof..................... 4
SECTION 2.3. Redemption of Preferred Stock...................... 5
SECTION 2.4. Transfer of Receipts............................... 7
SECTION 2.5. Combination and Split-ups of Receipts.............. 7
SECTION 2.6. Surrender of Receipts and Withdrawal of Preferred
Stock.............................................. 8
SECTION 2.7. Limitations on Execution and Delivery, Transfer,
Split--up, Combination, Surrender and Exchange
of Receipts........................................ 8
SECTION 2.8. Lost Receipts, etc................................. 9
SECTION 2.9. Cancellation and Destruction of Surrendered
Receipts........................................... 9
SECTION 2.10. Optional Conversion of Preferred Stock into Class A
Common Stock....................................... 9
SECTION 2.11. Mandatory Conversion of Preferred Stock into Class
A Common Stock..................................... 12
ARTICLE III CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS AND THE
COMPANY........................................................ 13
SECTION 3.1. Filing Proofs, Certificates and Other Information.. 13
SECTION 3.2. Payment of Taxes or Other Governmental Charges..... 14
SECTION 3.3. Representations and Warranties as to Preferred
Stock.............................................. 14
ARTICLE IV THE PREFERRED STOCK, NOTICES................................... 15
SECTION 4.1. Cash Distributions................................. 15
SECTION 4.2. Distributions Other Than Cash...................... 15
SECTION 4.3. Subscription Rights, Preferences or Privileges..... 15
SECTION 4.4. Notice of Dividends; Fixing of Record Date for
Holders of Receipts................................ 16
SECTION 4.5. Voting Rights...................................... 17
SECTION 4.6. Changes Affecting Preferred Stock and
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Reclassifications, Recapitalizations, etc.......... 17
SECTION 4.7. Inspection of Reports.............................. 18
SECTION 4.8. List of Receipt Holders............................ 18
ARTICLE V THE DEPOSITARY AND THE COMPANY................................. 18
SECTION 5.1. Maintenance of Offices, Agencies, Transfer Books by
the Depositary, the Registrar...................... 18
SECTION 5.2. Prevention of or Delay in Performance by the
Depositary, the Depositary's Agents or the Company. 19
SECTION 5.3. Obligations of the Depositary, the Depositary's
Agents, and the Company............................ 19
SECTION 5.4. Resignation and Removal of the Depositary;
Appointment of Successor Depositary................ 21
SECTION 5.5. Corporate Notices and Reports...................... 21
SECTION 5.6. Deposit of Preferred Stock by the Company.......... 22
SECTION 5.7. Indemnification by the Company..................... 22
SECTION 5.8. Fees, Charges and Expenses......................... 22
ARTICLE VI AMENDMENT AND TERMINATION...................................... 22
SECTION 6.1. Amendment.......................................... 22
SECTION 6.2. Termination........................................ 23
ARTICLE VII MISCELLANEOUS............................................ 24
SECTION 7.1. Counterparts....................................... 24
SECTION 7.2. Exclusive Benefits of Parties...................... 24
SECTION 7.3. Invalidity of Provisions........................... 24
SECTION 7.4. Notices............................................ 24
SECTION 7.5. Depositary's Agents................................ 25
SECTION 7.6. Holders of Receipts Are Parties.................... 25
SECTION 7.7. Governing Law...................................... 25
SECTION 7.8. Headings........................................... 25
<PAGE>
DEPOSIT AGREEMENT
DEPOSIT AGREEMENT dated as of November __, 1994, among TELE-COMMUNICATIONS,
INC., a Delaware corporation, (the "Company"), SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, as Depositary (including any successor, the "Depositary"),
and all holders from time to time of Depositary Receipts executed and delivered
hereunder.
WHEREAS, it is desired to provide, as hereinafter set forth in this Deposit
Agreement, for the deposit of up to ___________ shares of _____% PRIDES,
Convertible Preferred Stock, Series F, par value $0.01 per share (the "Preferred
Stock"), of the Company with the Depositary, as agent for the beneficial owners
of the Preferred Stock, for the purposes set forth in this Deposit Agreement and
for the execution and delivery hereunder of the Receipts (as defined below)
evidencing Depositary Shares (as defined below) in respect of the Preferred
Stock so deposited; and
WHEREAS, the Receipts are to be substantially in the form of the Depositary
Receipt annexed as Exhibit A, with appropriate insertions, modifications and
---------
omissions, as hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the premises contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
The following definitions shall apply to the respective terms (in the
singular and plural forms of such terms) used in this Agreement and the
Depositary Receipts:
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in The City of New York, New York are authorized or
obligated by law or executive order to close.
"Certificate of Designations" shall mean the Certificate of Designations,
Preferences, Rights and Limitations of the _____% PRIDES, Convertible Preferred
Stock, Series F, par value $0.01 per share, as filed with the Secretary of State
of the State of Delaware, establishing and setting forth the designations,
rights, powers, qualifications, limitations and restrictions of the Preferred
Stock.
"Certificate of Incorporation" shall mean the Restated Certificate of
Incorporation, as
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amended from time to time, of the Company.
"Class A Common Stock" shall mean the Class A Common Stock, par value $1.00
per share, of the Company.
"Company" shall mean Tele-Communications, Inc., a Delaware corporation, and
its successors.
"Deposit Agreement" shall mean this agreement, as the same may be amended,
modified or supplemented from time to time.
"Depositary" shall mean SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, as
Depositary hereunder, and any successor as Depositary hereunder.
"Depositary's Office" shall mean the office of the Depositary in the city
of Hartford, Connecticut, at which at any particular time its business in
respect of matters governed by this Deposit Agreement shall be administered,
which at the date of this Deposit Agreement is located at 777 Main Street,
Hartford, Connecticut 06115.
"Depositary Share" shall mean an interest in one-hundredth of a share of
the Preferred Stock deposited with the Depositary hereunder, as evidenced by the
Receipts executed and delivered hereunder, and the same proportional interest in
any and all other property received by the Depositary in respect of such share
of Preferred Stock and held under this Deposit Agreement. Subject to the terms
of this Deposit Agreement, each owner of a Depositary Share is entitled,
proportionately, to all the rights, preferences and privileges of the Preferred
Stock represented by such Depositary Share, including the dividend, voting and
liquidation rights contained in the Certificate of Designations, and to the
benefits of all obligations of the Company under the Certificate of
Designations.
"Depositary's Agent" shall mean an agent appointed by the Depositary as
provided, and for the purposes specified, in Section 7.5.
"Mandatory Conversion Date" shall have the meaning given in Section 2.11.
"Preferred Stock" shall mean the _____% PRIDES, Convertible Preferred
Stock, Series F, par value $0.01 per share, of the Company.
"Receipt" or "Depositary Receipt" shall mean a Depositary Receipt executed
and delivered hereunder to evidence one or more Depositary Shares, whether in
definitive or temporary form.
"Record holder" as applied to a Receipt shall mean the person in whose name
a Receipt is registered on the books maintained by the Depositary for such
purpose.
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"Registrar" shall mean any bank or trust company appointed to register
Receipts as herein provided.
"Securities Act" shall mean the Securities Act of 1933, as amended.
ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF PREFERRED STOCK,
EXECUTION AND DELIVERY, TRANSFER AND SURRENDER OF RECEIPTS
SECTION 2.1 Form and Transferability of Receipts. Definitive
------------------------------------
Receipts shall be engraved or printed or lithographed with steel-engraved
borders and shall be substantially in the form set forth in Exhibit A annexed to
---------
this Deposit Agreement, with appropriate insertions, modifications and
omissions, as hereinafter provided. Pending preparation of definitive Receipts,
the Depositary, upon the written order of the Company or any holder of Preferred
Stock, as the case may be, delivered for deposit in compliance with Section 2.2,
shall execute and deliver temporary Receipts which are printed, lithographed,
typewritten, mimeographed or otherwise substantially of the tenor of the
definitive Receipts in lieu of which they are executed and delivered and with
such appropriate insertions, omissions, substitutions and other variations as
the persons executing such Receipts may determine, as evidenced by their
execution of such Receipts. If temporary Receipts are executed and delivered,
the Company and the Depositary will cause definitive Receipts to be prepared
without unreasonable delay. After the preparation of definitive Receipts, the
temporary Receipts shall be exchangeable for definitive Receipts upon surrender
of the temporary Receipts at an office described in the second to last paragraph
of Section 2.2, without charge to the holder. Upon surrender for cancellation of
any one or more temporary Receipts, the Depositary shall execute and deliver in
exchange therefor definitive Receipts representing the same number of Depositary
Shares as represented by the surrendered temporary Receipt or Receipts. Such
exchange shall be made at the Company's expense and without any charge therefor.
Until so exchanged, the temporary Receipts shall in all respects be entitled to
the same benefits under this Agreement, and with respect to the Preferred Stock
deposited hereunder, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual signature
of a duly authorized signatory of the Depositary; provided, however, that such
signature may be a facsimile if a Registrar (other than the Depositary) shall
have countersigned the Receipts by the manual signature of a duly authorized
signatory of the Registrar. No Receipt shall be entitled to any benefits under
this Deposit Agreement or be valid or obligatory for any purpose unless it shall
have been executed as provided in the preceding sentence. The Depositary shall
record on its books each Receipt executed as provided above and delivered as
hereinafter provided.
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Except as the Depositary may otherwise determine, Receipts shall be in
denominations of any number of whole Depositary Shares. All receipts shall be
dated the date of their execution.
Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or regulation or with the rules and regulations of any
securities exchange upon which the Preferred Stock or the Depositary Shares may
be listed to conform with any usage with respect thereto, or to indicate any
special limitations or restrictions to which any particular receipts are subject
by reason of the date of issuance of the Preferred Stock or otherwise.
Ownership of any Receipt (and of the Depositary Shares evidenced by
such Receipt) that is properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement, or other instrument satisfactory to the
Depositary, shall be transferable by delivery; provided, however, that until a
Receipt shall be transferred on the books of the Depositary as provided in
Section 2.4, the Depositary and the Company may, notwithstanding any notice to
the contrary, treat the record holder thereof at such time as the absolute owner
thereof for the purpose of determining the person entitled to distribution of
dividends or other distributions or to any notice provided for in this Deposit
Agreement and for all other purposes.
SECTION 2.2 Deposit of Preferred Stock, Execution and Delivery of
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Receipts in Respect Thereof. Subject to the terms and conditions of this
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Deposit Agreement, the Company or any holder of Preferred Stock may deposit
shares of Preferred Stock under this Deposit Agreement by delivery to the
Depositary of a certificate or certificates for the shares of Preferred Stock to
be deposited, properly endorsed or accompanied by a properly executed instrument
of transfer or endorsement in form satisfactory to the Depositary, together with
(i) all such certifications as may be required by the Depositary in accordance
with the provisions of this Deposit Agreement and (ii) a written order directing
the Depositary to execute and deliver to or upon the written order of the person
or persons stated in such order a Receipt or Receipts for the number of
Depositary Shares representing such deposited Preferred Stock.
If required by the Depositary, Preferred Stock presented for deposit at any
time, whether or not the register of holders of Receipts is closed, shall also
be accompanied by an agreement or assignment, or other instrument satisfactory
to the Depositary, that will provide for the prompt transfer to the Depositary
or its nominee of any dividend or right to subscribe for additional Preferred
Stock or to receive other property that any person in whose name the Preferred
Stock is or has been registered may thereafter receive upon or in respect of
such deposited Preferred Stock, or in lieu thereof such agreement of indemnity
or other agreement as shall be satisfactory to the Depositary.
<PAGE>
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Upon receipt by the Depositary of a certificate or certificates for
the shares of Preferred Stock to be deposited hereunder, together with the other
documents specified above, the Depositary shall, as soon as transfer and
registration can be accomplished, present such certificates to the registrar and
transfer agent of the Preferred Stock for transfer and registration in the name
of the Depositary or its nominee of the shares of Preferred Stock being
deposited. Deposited Preferred Stock shall be held by the Depositary in an
account to be established by the Depositary at the Depositary's Office.
Upon receipt by the Depositary of a certificate or certificates for
Preferred Stock to be deposited hereunder, together with the other documents
specified above, the Depositary, subject to the terms and conditions of this
Deposit Agreement, shall execute and deliver to or upon the order of the person
or persons named in the written order delivered to the Depositary referred to in
the first paragraph of this Section 2.2 a Receipt or Receipts for the number of
whole Depositary Shares representing the Preferred Stock so deposited and
registered in such name or names as may be requested by such person or persons.
The Depositary shall execute and deliver such Receipt or Receipts at the
Depositary's Office, except that, at the request, risk and expense of any person
requesting such delivery, such delivery may be made at such other place as may
be designated by such person, in each case, delivery will be made only upon
payment by such person to the Depositary of all taxes and other governmental
charges and any fees payable in connection with such deposit and the transfer of
the deposited Preferred Stock.
The Company shall deliver to the Depositary from time to time such
quantities of Receipts as the Depositary may request to enable the Depositary to
perform its obligations under this Deposit Agreement.
SECTION 2.3 Redemption of Preferred Stock. Whenever the Company
-----------------------------
shall elect to redeem shares of Preferred Stock in accordance with the
Certificate of Designations it shall (unless otherwise agreed in writing with
the Depositary) give the Depositary in its capacity as Depositary notice of the
date of such proposed redemption of the Preferred Stock, which notice shall (i)
be given not less than three (3) Business Days prior to the date the Depositary
is to mail notice of the redemption to the record holders of Receipts, in the
case of a redemption of all outstanding Depositary Shares, and not less than ten
(10) calendar days prior to the date the Depositary is to mail notice of the
redemption to the record holders of Receipts evidencing the Depositary Shares to
be redeemed, in the case of a partial redemption of outstanding Depositary
Shares, and (ii) be accompanied by a certificate from the Company stating that
such redemption of the Preferred Stock is in accordance with the provisions of
the Certificate of Designations. Such notice shall be in addition to the notice
required for redemption pursuant to the Certificate of Designations. On the
date of any such redemption of Preferred Stock, provided that the Company shall
then have deposited with the Depositary the shares of Class A Common Stock as
required pursuant to the Certificate of Designations to be delivered in exchange
for the Preferred Stock held by the Depositary to be redeemed, the Depositary
shall redeem (using such shares of Class A Common Stock and any cash deposited
with it) the number
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of Depositary Shares representing such redeemed Preferred Stock. Subject to the
penultimate sentence of this Paragraph, the Depositary shall mail, first class
postage prepaid, notice of the redemption of Preferred Stock and the proposed
simultaneous redemption of the Depositary Shares representing the Preferred
Stock held by the Depositary to be redeemed, not less than 10 and not more than
60 days prior to the date fixed for redemption of such Preferred Stock and
Depositary Shares (the "Redemption Date"), to the record holders of the Receipts
evidencing the Depositary Shares to be so redeemed, at the addresses of such
holders as they appear on the records of the Depositary; but neither failure to
mail any such notice to one or more such holders nor any defect in any notice to
one or more such holders shall affect the sufficiency of the proceedings for
redemption as to other holders. Each such notice shall state: (i) the Redemption
Date; (ii) the number of Depositary Shares to be redeemed and, if less than all
the Depositary Shares held by any such holder are to be redeemed, the number of
such Depositary Shares held by such holder to be so redeemed; (iii) the number
of shares of Class A Common Stock deliverable upon redemption, (iv) the call
price for the Depositary Shares; (v) the Optional Conversion Rate (calculated in
accordance with section 4 of the Certificate of Designations), together with a
statement that all conversion rights with respect to Depositary Shares called
for redemption will terminate immediately prior to the close of business on the
date fixed for redemption; (vi) the place or places where Receipts evidencing
Depositary Shares are to be surrendered for payment of the redemption price and
(vii) that dividends in respect of the shares of Preferred Stock represented by
the Depositary Shares to be redeemed will cease to accumulate from and after
such Redemption Date. Any such notices shall be mailed in the same manner as
notices of redemption of the Preferred Stock are required to be mailed pursuant
to section 4 of the Certificate of Designations and published in the same manner
as notices of redemption of the Preferred Stock are required to be published
pursuant to said section, if so required. In case fewer than all the outstanding
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed shall
be selected by lot or pro rata (as nearly as may be) or by any other equitable
method determined by the Depositary to be consistent with the method determined
by the Board of Directors of the Company with respect to the Preferred Stock.
Notice having been mailed and published by the Depositary as
aforesaid, from and after the Redemption Date (unless the Company shall have
failed to redeem the shares of Preferred Stock to be redeemed by it, as set
forth in the Company's notice provided for in the preceding paragraph), the
Depositary Shares called for redemption shall be deemed no longer to be
outstanding and all rights of the holders of Receipts evidencing such Depositary
Shares (except the right to receive the shares of Class A Common Stock upon
redemption and cash for any fractional share amount) shall, to the extent of
such Depositary Shares, cease and terminate. Upon surrender in accordance with
said notice of the Receipts evidencing such Depositary Shares (properly endorsed
or assigned for transfer, if the Depositary shall so require), such Depositary
Shares shall be redeemed for shares of Class A Common Stock and cash for any
fractional share amount at a rate per Depositary Share equal to one-hundredth of
the number of shares of Class A Common Stock (including fractional amounts)
delivered upon redemption of a share of Preferred Stock pursuant to the
Certificate of Designations. The foregoing shall be subject further
<PAGE>
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to the terms and conditions of the Certificate of Designations.
If fewer than all of the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such Receipt
upon its surrender to the Depositary, together with the shares of Class A Common
Stock for the Depositary Shares called for redemption, a new Receipt evidencing
the Depositary Shares evidenced by such prior Receipt and not called for
redemption.
No fractional shares of Common Stock shall be issuable upon the
redemption of Preferred Stock underlying the Depositary Shares. In lieu of any
fractional share otherwise issuable in respect of the aggregate number of shares
of Preferred Stock of any holder which are redeemed on any redemption date, the
Company shall cause to be delivered to such holder an amount in cash for such
fractional share as provided in the Certificate of Designations.
Except with respect to a conversion of Depositary Shares which may
occur pursuant to section 4 of the Certificate of Designations, the Depositary
shall not be required (a) to execute and deliver, transfer or exchange any
receipts for a period beginning at the opening of business 15 days next
preceding any selection of Depositary Shares and Preferred Stock to be redeemed
and ending at the close of business on the day of the mailing of notice of
redemption of Depositary Shares or (b) to transfer or exchange for another
Receipt any Receipt evidencing Depositary Shares called or being called for
redemption in whole or in part, except as provided in the third paragraph of
this Section 2.3.
SECTION 2.4 Transfer of Receipts. Subject to the terms and conditions
---------------------
of this Deposit Agreement, the Depositary shall make transfers on its books from
time to time of Receipts upon any surrender thereof at the Depositary's Office
or such other office as the Depositary may designate for such purpose, by the
holder in person or by a duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer or endorsement, or
other instrument satisfactory to the Depositary, together with evidence of the
payment of any transfer taxes as may be required by law. Upon such surrender,
the Depositary shall execute a new Receipt or Receipts and deliver the same to
or upon the order of the person or persons entitled thereto evidencing the same
aggregate number of Depositary Shares evidenced by the Receipt or Receipts
surrendered.
SECTION 2.5 Combination and Split-ups of Receipts. Upon surrender of
-------------------------------------
a Receipt or Receipts at the Depositary's Office or such other office as the
Depositary may designate for the purposes of effecting a split-up or combination
of Receipts, subject to the terms and conditions of this Deposit Agreement, the
Depositary shall execute and deliver a new Receipt or Receipts in the authorized
denominations requested evidencing the same aggregate number of Depositary
Shares evidenced by the Receipt or Receipts surrendered; provided, however, that
the Depositary shall not execute and deliver any Receipt evidencing a fractional
Depositary Share.
<PAGE>
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SECTION 2.6 Surrender of Receipts and Withdrawal of Preferred Stock.
-------------------------------------------------------
Any holder of a Receipt or Receipts may withdraw any or all of the Preferred
Stock (but only in whole shares of Preferred Stock) represented by the
Depositary Shares evidenced by such Receipts and all money and other property,
if any, represented by such Depositary Shares by surrendering such Receipt or
Receipts, properly endorsed or accompanied by a properly executed instrument of
transfer or endorsement, or other instrument satisfactory to the Depositary, at
the Depositary's Office or such other office as the Depositary may designate for
such withdrawals. After such surrender, without unreasonable delay, the
Depositary shall deliver to such holder, or to the person or persons designated
by such holder as hereinafter provided, the whole number of shares of Preferred
Stock and other property, if any, represented by the Depositary Shares evidenced
by the Receipt or Receipts so surrendered for withdrawal. If the Receipt or
Receipts delivered by the holder to the Depositary in connection with such
withdrawal shall evidence a number of Depositary Shares in excess of the number
of whole Depositary Shares representing the whole number of shares of Preferred
Stock to be withdrawn, the Depositary shall at the same time, in addition to
such whole number of shares of Preferred Stock and such money and other
property, if any, to be withdrawn, deliver to such holder, or (subject to
Section 2.4) upon his order, a new Receipt or Receipts evidencing such excess
number of whole Depositary Shares. Delivery of the Preferred Stock and such
money and other property being withdrawn may be made by the delivery of such
certificates, documents of title, and other instruments as the Depositary may
deem appropriate, which, if required by the Depositary, shall be properly
endorsed or accompanied by proper instruments of transfer.
If the Preferred Stock and the money and other property being
withdrawn are to be delivered to a person or persons other than the record
holder of the Receipt or Receipts being surrendered for withdrawal of Preferred
Stock, such holder shall execute and deliver to the Depositary a written order
so directing the Depositary and the Depositary may require that the Receipt or
Receipts surrendered by such holder for withdrawal of such shares of Preferred
Stock be properly endorsed in blank or accompanied by a properly executed
instrument of transfer or endorsement in blank.
The Depositary shall deliver the Preferred Stock and the money and
other property, if any, represented by the Depositary Shares evidenced by
Receipts surrendered for withdrawal at the Depositary's Office, except that, at
the request, risk and expense of the holder surrendering such Receipt or
Receipts and for the account of the holder thereof, such delivery may be made at
such other place as may be designated by such holder.
SECTION 2.7 Limitations on Execution and Delivery, Transfer, Split-up,
----------------------------------------------------------
Combination, Surrender and Exchange of Receipts. As a condition precedent to
- -----------------------------------------------
the execution and delivery, transfer, split-up, combination, surrender or
exchange of any Receipt, the Depositary, the Depositary's Agent or the Company
may require any or all of the following: (i) payment to it of a sum sufficient
for the payment (or, in the event that the Depositary or the Company shall have
made such payment, the reimbursement to it) of any tax or earlier
<PAGE>
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governmental charge with respect thereto (including any such tax or charge with
respect to the Preferred Stock being deposited or withdrawn with respect to the
Class A Common Stock, or other securities or property of the Company being
issued upon conversion or redemption); (ii) the production of proof satisfactory
to it as to the identity and genuineness of any signature; and (iii) compliance
with such regulations, if any, as the Depositary or the Company may establish
not inconsistent with the provisions of the Deposit Agreement.
The deposit of Preferred Stock may be refused, the delivery of
Receipts against Preferred Stock may be suspended, the transfer of Receipts may
be refused, and the transfer, split-up, combination, surrender or exchange of
outstanding Receipts may be suspended (i) during any period when the register of
holders of Receipts is closed, (ii) if any such action is deemed necessary or
advisable by the Depositary, any of the Depositary's Agents or the Company at
any time or from time to time because of any requirement of law or of any
government or governmental body or commission, or under any provision of this
Deposit Agreement, or (iii) except for the transfer of Receipts, with the
approval of the Company, for any other reason.
SECTION 2.8 Lost Receipts, etc. In case any Receipt shall be
------------------
mutilated or destroyed or lost or stolen, the Depositary in its discretion may
execute and deliver a Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt or in lieu of and in substitution for
such destroyed, lost or stolen Receipt; provided, however, that the holder
thereof provides the Depositary with (i) evidence satisfactory to the Depositary
of such destruction, loss or theft of such Receipt, of the authenticity thereof
and of his ownership thereof, (ii) reasonable indemnification satisfactory to
the Depositary and (iii) payment of any expense (including fees, charges and
expenses of the Depositary) in connection with such execution and delivery.
SECTION 2.9 Cancellation and Destruction of Surrendered Receipts. All
----------------------------------------------------
Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy such Receipts so cancelled.
SECTION 2.10 Optional Conversion of Preferred Stock into Class A
---------------------------------------------------
Common Stock. Receipts may be surrendered with written instructions to the
- ------------
Depositary to instruct the Company to cause the conversion of any specified
number of shares, or fractions of shares, of Preferred Stock represented by
whole Depositary Shares evidenced by such Receipts into whole shares of Class A
Common Stock and cash for any fractional share of Class A Common Stock at the
conversion price then in effect for the Preferred Stock pursuant to the
Certificate of Designations as such conversion price may be adjusted by the
Company from time to time as provided in the Certificate of Designations.
Subject to the terms and conditions of this Deposit Agreement and the
Certificate of Designations, a holder of a Receipt or Receipts evidencing
Depositary Shares representing whole or fractional shares of Preferred Stock may
surrender such Receipt or Receipts at the Depositary's Office or at such office
or to such
<PAGE>
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Depositary's Agent, as the Depositary may designate for such purpose, together
with a notice of conversion duly completed and executed, thereby directing the
Depositary to instruct the Company to cause the conversion of the number of
shares, or fractions of shares, of underlying Preferred Stock specified in such
notice of conversion into shares of Class A Common Stock, and an assignment of
such Receipt or Receipts to the Company or in blank, duly completed and
executed. To the extent that a holder delivers to the Depositary for conversion
a Receipt or Receipts which in the aggregate are convertible into less than one
whole share of Class A Common Stock, the holder shall receive payment in cash in
lieu of such fractional share of Class A Common Stock otherwise issuable, if
more than one Receipt shall be delivered for conversion at one time by the same
holder, the number of whole shares of Class A Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
Depositary Shares represented by the Receipts so delivered.
Upon receipt by the Depositary of a Receipt or Receipts, together with
notice of conversion, duly completed and executed, directing the Depositary to
instruct the Company to cause the conversion of a specified number of shares of
Preferred Stock, and an assignment of such Receipt or Receipts to the Company or
in blank, duly completed and executed, the Depositary shall instruct the Company
(i) to cause the conversion of the number of shares, or fractions of shares, of
Preferred Stock represented by the Depositary Shares evidenced by the Receipts
so surrendered for conversion as specified in the written notice to the
Depositary and (ii) to cause the delivery to the holders of such Receipts of a
certificate or certificates evidencing the number of whole shares of Class A
Common Stock and the amount of money, if any, to be delivered to the holders of
Receipts surrendered for conversion in lieu of fractional shares of Class A
Common Stock otherwise issuable. The Company shall as promptly as practicable
after receipt thereof cause the delivery of (i) a certificate or certificates
evidencing the number of whole shares of Class A Common Stock into which the
Preferred Stock represented by the Depositary Shares evidenced by such Receipt
or Receipts has been converted, and (ii) any money or other property to which
the holder is entitled by reason of such conversion. Upon such conversion, the
Depositary (i) shall deliver to the holder a Receipt evidencing the number of
Depositary Shares, if any, that equals that excess of the number of Depositary
Shares evidenced by the surrendered Receipt over the number of Depositary Shares
evidenced by such Receipt that has been so converted, (ii) shall cancel the
Depositary Shares evidenced by Receipts surrendered for conversion and (iii)
shall deliver to the Company or its transfer agent for the Preferred Stock for
cancellation the shares of Preferred Stock represented by the Depositary Shares
evidenced by the Receipts so surrendered and so converted. Upon the delivery of
the shares of Preferred Stock to be cancelled due to such conversion by the
Depositary to the Company, the Company shall deliver to the Depositary a
certificate or certificates evidencing the number of shares, or fractions of
shares, of Preferred Stock, if any, that equals the excess of the number of
shares of Preferred Stock evidenced by the surrendered certificate over the
number of shares of Preferred Stock evidenced by that certificate that has been
so converted.
If Preferred Stock shall be called by the Company for redemption, the
Depositary
<PAGE>
-11-
Shares representing such Stock may be converted into Class A Common Stock as
provided in this Deposit Agreement until, but not after, the close of business
on the Redemption Date unless the Company shall fail to deposit with the
Depositary the shares of Class A Common Stock and cash for any fractional share
amounts required to redeem the Preferred Stock held by the Depositary, in which
case the Depositary Shares representing such Preferred Stock may continue to be
converted into Class A Common Stock until, but not after, the close of business
on the date on which the Company deposits with the Depositary such shares of
Class A Common Stock and cash for any fractional share amounts as are required
by the Certificate of Designations to make full payment of the amounts payable
upon such redemption. Upon receipt by the Depositary of a Receipt or Receipts,
together with a properly completed and executed notice of conversion,
representing any Preferred Stock called for redemption, the shares of Preferred
Stock held by the Depositary represented by such Depositary Shares for which
conversion is requested shall be deemed to have been received by the Company for
conversion as of immediately prior to the close of business on the date of such
receipt by the Depositary.
The record holder of Depositary Shares on any dividend payment record
date established by the Depositary pursuant to Section 4.4 shall be entitled to
receive the dividend payable with respect to such Depositary Shares on the
corresponding dividend payment date notwithstanding the conversion subsequent to
such record date of the shares of Preferred Stock to which such Depositary
Shares relate. If a share of Preferred Stock is converted between the record
date with respect to any dividend payment on the Preferred Stock and the
corresponding dividend payment date, any holder of Receipts surrendered with
instructions to the Depositary for conversion of the underlying Preferred Stock
shall pay to the Depositary an amount, equal to the dividend attributable to the
current quarterly dividend period payable on such dividend payment date on the
Depositary Shares represented by the Receipts being surrendered for conversion
(except for Depositary Shares redeemed on a Redemption Date between such record
date and dividend payment date). Any holder of Receipts on a dividend payment
record date who (or whose transferee) surrenders the Receipts with instructions
to the Depositary for conversion of the underlying Preferred Stock on the
corresponding dividend payment date will receive the dividend payable with
respect to the Depositary Shares underlying such Receipts and will not be
required to include payment of the amount of such dividend upon surrender of the
Receipts for conversion.
Upon the conversion of any share of Preferred Stock for which a
request for conversion has been made by the holder of Depositary Shares
representing such share, all dividends in respect of such Depositary Shares
shall cease to accrue, such Depositary Shares shall be deemed no longer
outstanding, all rights of the holder of the Receipt with respect to such
Depositary Shares (except the right to receive the Class A Common Stock, any
cash payable with respect to any fractional shares of Class A Common Stock as
provided herein and any cash payable on account of accrued dividends as provided
herein and any Receipts evidencing Depositary Shares not so converted) shall
terminate, and the Receipt evidencing such Depositary Shares shall be cancelled
in accordance with Section 2.9 hereof.
<PAGE>
-12-
No fractional shares of Class A Common Stock shall be issuable upon
conversion of Preferred Stock underlying the Depositary Shares. If any holder
of Receipts surrendered with instructions to the Depositary for conversion of
the underlying Preferred Stock would be entitled to a fractional share of Class
A Common Stock upon such conversion, the Company shall cause to be delivered to
such holder an amount in cash for such fractional share as provided in the
Certificate of Designations.
SECTION 2.11 Mandatory Conversion of Preferred Stock into Class A
----------------------------------------------------
Common Stock. With respect to any Preferred Stock on deposit with the
- ------------
Depositary as to which the Company has not exercised its right to redeem and the
record holder has not exercised its right of optional conversion pursuant to the
Certificate of Designations, the Depositary shall mail, first class postage
prepaid, notice of the mandatory conversion of Preferred Stock and the
simultaneous mandatory conversion of the Depositary Shares representing the
Preferred Stock to be mandatorily converted, not less than 5 and not more than
15 days prior to the date fixed for mandatory conversion of such Preferred Stock
and Depositary Shares (the "Mandatory Conversion Date"), to all record holders
of Receipts evidencing Depositary Shares who are of record on the date that is
two Business Days prior to the date of mailing, at the addresses of such holders
as they appear on the records of the Depositary; but neither failure to mail any
such notice to one or more such holders nor any defect in any notice to one or
more such holders shall affect the sufficiency of the proceedings for mandatory
conversion as to any record holder (whether or not such failure or defect
Depositary as affects such record holder). Each such notice shall state: (i) the
Mandatory Conversion Date; (ii) that all outstanding Depositary Shares on the
Mandatory Conversion Date will be mandatorily converted pursuant to the
Certificate of Designations and this Agreement; (iii) the Common Equivalent Rate
(determined in accordance with Section 4 of the Certificate of Designations);
(iv) the place or places where Receipts evidencing Depositary Shares are to be
surrendered for payment of the mandatory conversion price; and (v) that
dividends in respect of the shares of Preferred Stock represented by the
Depositary Shares to be mandatorily converted will cease to accumulate from and
after the Mandatory Conversion Date.
On the Mandatory Conversion Date, all then outstanding shares of
Preferred Stock and the Depositary Shares representing such shares of Preferred
Stock shall mandatorily convert into shares of Class A Common Stock, cash for
any fractional share amounts and the right to receive amounts in cash equal to
all accrued and unpaid dividends on such shares of Preferred Stock to but not
including the Mandatory Conversion Date (other than previously declared
dividends payable to a holder of record as of a prior date), all as provided in
and subject to Section 4 of the Certificate of Designations.
From and after the Mandatory Conversion Date, the Depositary Shares
representing the shares of Preferred Stock mandatorily converted shall be deemed
no longer to be outstanding and all rights of the record holders of Receipts
evidencing such Depositary Shares (except the right to receive the shares of
Class A Common Stock, any cash for accrued and unpaid dividends (other than
previously declared dividends payable to a holder of record as of a prior date)
and
<PAGE>
-13-
any fractional share amount deliverable or payable upon mandatory conversion
or in connection therewith) shall, to the extent of such Depositary Shares,
cease and terminate. Upon surrender, in accordance with said notice, of the
Receipts evidencing such Depositary Shares (properly endorsed or assigned for
transfer, if the Depositary shall so require), such Depositary Shares shall be
exchanged for shares of Class A Common Stock and cash for any fractional share
amount (and the right to receive cash for any accrued and unpaid dividends
payable in connection therewith) at a rate per Depositary Share equal to one-
hundredth of the number (including fractional amounts) of shares of Class A
Common Stock and (one-hundredth of the amount of cash paid in respect of accrued
and unpaid dividends) exchanged for each share of Preferred Stock pursuant to
the Certificate of Designations. The foregoing shall be subject further to the
terms and conditions of the Certificate of Designations.
On or prior to the Mandatory Conversion Date, the Company shall
deposit with the Depositary certificates for the shares of Class A Common Stock
and the cash for any fractional share amounts into which the shares of Preferred
Stock held by the Depositary shall mandatorily convert on the Mandatory
Conversion Date, plus, subject to the Certificate of Designations, an amount in
cash equal to all accrued and unpaid dividends on such shares of Preferred Stock
(other than previously declared dividends payable to a holder of record as of a
prior date) to and including the Mandatory Conversion Date. Using such shares
of Class A Common Stock and cash, the Depositary shall deliver certificates for
the appropriate number of shares of Class A Common Stock and the appropriate
amount of cash, without interest, to record holders who properly deliver their
Receipts to the Depositary.
No fractional shares of Class A Common Stock shall be issuable upon
mandatory conversion of Preferred Stock underlying the Depositary Shares. If
any holder of receipts surrendered to the Depositary for mandatory conversion of
the underlying Preferred Stock shall be entitled to a fractional share of Class
A Common Stock upon such mandatory conversion, the Company shall cause to be
delivered to such holder an amount in cash for such fractional share as provided
in the Certificate of Designations.
ARTICLE III
CERTAIN OBLIGATIONS OF HOLDERS
OF RECEIPTS AND THE COMPANY
SECTION 3.1 Filing Proofs, Certificates and Other Information. Any
-------------------------------------------------
person presenting Preferred Stock for deposit or any holder of a Receipt may be
required from time to time to file such proof of residence or other information,
to execute such certificates and to make such representations and warranties as
the Depositary or the Company may reasonably deem necessary or proper. The
Depositary or the Company, as the case may be, may withhold or delay the
delivery of any Receipt, the transfer, redemption, conversion, or exchange of
any Receipt, the withdrawal of the Preferred Stock or money or other property,
if any, represented
<PAGE>
-14-
by the Depositary Shares evidenced by any Receipt or the distribution of any
dividend or other distribution until such proof or other information is filed,
such certificates are executed or such representations and warranties are made.
SECTION 3.2 Payment of Taxes or Other Governmental Charges. If any
----------------------------------------------
tax or other governmental charge shall become payable by or on behalf of the
Depositary with respect to any Receipt, the Depositary Shares evidenced by such
Receipt, the Preferred Stock (or fractional interest therein) represented by
such Depositary Shares or any transaction referred to in Section 4.6, such tax
(including transfer, issuance or acquisition taxes, if any) or governmental
charge shall be payable by the holder of such Receipt. Until such payment is
made, transfer, redemption, conversion, or exchange of any Receipt or any
withdrawal of the Preferred Stock or money or other property, if any,
represented by the Depositary Shares evidenced by such Receipt may be refused,
any dividend or other distribution with respect to such Receipt or the Preferred
Stock represented by the Depositary Shares evidenced by such receipt may be
withheld and any part or all of the Preferred Stock or other property
represented by the Depositary Shares evidenced by such Receipt may be sold for
the account of the holder thereof (after attempting by reasonable means to
notify such holder prior to such sale). Any dividend or other distribution so
withheld and the proceeds of any such sale may be applied to any payment of such
tax or other governmental charge, the holder of such Receipt remaining liable
for any deficiency. The Depositary shall act as the withholding agent for any
payments, distributions, and exchanges made with respect to the Depositary
Shares and Receipts, and the Preferred Stock, Class A Common Stock or other
securities or assets represented thereby (collectively, the "Securities"). The
Depositary shall be responsible with respect to the Securities for the timely
(i) collection and deposit of any required withholding or backup withholding
tax, and (ii) filing of any information returns or other documents with federal
(and other applicable) taxing authorities. In the event the Depositary is
required to pay any such amounts, the Company shall reimburse the Depositary for
payment thereof upon the request of the Depositary and the Depositary shall,
upon the Company's request and as instructed by the Company, pursue its rights
against such holder at the Company's expense.
SECTION 3.3 Representations and Warranties as to Preferred Stock.
----------------------------------------------------
Each person depositing Preferred Stock under this Deposit Agreement shall be
deemed thereby to represent and warrant that such Preferred Stock and each
certificate therefor are valid and that the person making such deposit is duly
authorized to do so. Such representations and warranties shall survive the
deposit of the Preferred Stock and the execution and delivery of Receipts.
<PAGE>
-15-
ARTICLE IV
THE PREFERRED STOCK, NOTICES
SECTION 4.1 Cash Distributions. Whenever the Depositary shall receive
------------------
any cash dividend or other cash distribution on the Preferred Stock, the
Depositary shall, subject to Section 3.2, distribute to record holders of
Receipts on the record date fixed pursuant to Section 4.4 such portions of such
sum as are, as nearly as practicable, proportionate to the respective numbers of
Depositary Shares evidenced by the Receipts held by such holders; provided,
however, that in case the Company or the Depositary shall be required to
withhold from any cash dividend or other cash distribution in respect of the
Preferred Stock an amount on account of taxes or as otherwise required by law,
regulation or court order, the amount made available for distribution or
distributed in respect of Depositary Shares shall be reduced accordingly. The
Depositary shall distribute or make available for distribution, as the case may
be, only such amount, however, as can be distributed without attributing to any
owner of Depositary Shares a fraction of one cent and any balance not so
distributable shall be held by the Depositary (without liability for interest
thereon) and shall be added to and be treated as part of the next sum received
by the Depositary for distribution to record holders of Receipts then
outstanding.
SECTION 4.2 Distributions Other Than Cash. Whenever the Depositary
-----------------------------
shall receive any distribution other than cash on the Preferred Stock, the
Depositary shall, subject to Section 3.2, distribute to record holders of
Receipts on the record date fixed pursuant to Section 4.4 such portions of the
securities or property received by it as are, as nearly as practicable,
proportionate to the respective numbers of Depositary Shares evidenced by the
Receipts held by such holders, in any manner that the Depositary and the Company
may deem equitable and practicable for accomplishing such distribution. If, in
the opinion of the Company after consultation with the Depositary, such
distribution cannot be made proportionately among such record holders, or if for
any other reason (including any requirement that the Company or the Depositary
withhold an amount on account of taxes or as otherwise required by law,
regulation or court order) the Depositary deems, after consultation with the
Company, such distribution not to be feasible, the Depositary may, with the
approval of the Company, adopt such method as it deems equitable and practicable
for the purpose of effecting such distribution, including the sale (at public or
private sale) of the securities or property thus received, or any part thereof,
at such place or places and upon such terms as it may deem proper. The net
proceeds of any such sale shall, subject to Section 3.2, be distributed or made
available for distribution, as the case may be, by the Depositary to record
holders of Receipts as provided by Section 4.1 in the case of a distribution
received in cash.
SECTION 4.3 Subscription Rights, Preferences or Privileges. If the
----------------------------------------------
Company shall at any time offer or cause to be offered to the persons in whose
names Preferred
<PAGE>
-16-
Stock is registered on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the record holders of Receipts if the Company so directs in such manner as the
Company shall instruct (including by the execution and delivery to such record
holders of warrants representing such rights, preferences or privileges);
provided, however, that (a) if at the time of issue or offer of any such rights,
preferences or privileges the Company determines that it is not lawful or
feasible to make such rights, preferences or privileges available to some or all
holders of Receipts (by the execution and delivery of warrants or otherwise) or
(b) if and to the extent instructed by holders of Receipts who do not desire to
exercise such rights, preferences or privileges, the Depositary shall then, if
so instructed by the Company, and if applicable laws and the terms of such
rights, preferences or privileges so permit, sell such rights, preferences or
privileges of such holders at public or private sale, at such place or places
and upon such terms as it may deem proper, the net proceeds of any such sale
shall, subject to Section 3.2, be distributed by the Depositary to the record
holders of Receipts entitled thereto in accordance with the withholding and
fractional amount provisions of Section 4.1.
If registration under the Securities Act of the securities to which
any rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold such securities, the Company shall promptly file
a registration statement pursuant to the Securities Act with respect to such
securities and use its best efforts and take all steps available to it to cause
such registration statement to become effective sufficiently in advance of the
expiration of such rights, preferences or privileges to enable such holders to
exercise such rights, preferences or privileges. In no event shall the
Depositary make available to the holders of Receipts any right, preference or
privilege to subscribe for or to purchase any securities unless and until
notified by the Company in writing that such registration statement has become
effective or that the offering and sale of such securities to such holders are
exempt from registration under the provisions of the Securities Act.
If any other action under the law of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to holders
of Receipts, the Company agrees with the Depositary that the Company will use
its best efforts to take such action or obtain such authorization, consent or
permit sufficiently in advance of the expiration of such rights, preferences or
privileges to enable such holders to exercise such rights, preferences or
privileges.
SECTION 4.4 Notice of Dividends; Fixing of Record Date for Holders of
---------------------------------------------------------
Receipts. Whenever any cash dividend or other cash distribution shall become
- --------
payable, or any distribution other than cash shall be made, or any rights,
preferences or privileges shall at any time be offered, with respect to the
Preferred Stock, or whenever the Depositary shall receive notice of (i) any
meeting at which holders of Preferred Stock are entitled to vote or of which
holders of Preferred Stock are entitled to notice or (ii) any election on the
part of the Company
<PAGE>
-17-
to call for redemption any shares of Preferred Stock, the Depositary shall in
each such instance fix a record date (which shall be the same date as the record
date fixed by the Company with respect to the Preferred Stock) for the
determination of the holders of Receipts (i) who shall be entitled to receive
such dividend, distribution, rights, preferences or privileges or the net
proceeds of the sale thereof, or to give instructions for the exercise of voting
rights at any such meeting or to receive notice of such meeting or (ii) whose
Depositary Shares are to be so redeemed.
SECTION 4.5 Voting Rights. Upon issuance of notice of any meeting at
------------
which the holders of Preferred Stock are entitled to vote, the Company shall
direct the Depositary, as soon as practicable thereafter, to mail to the record
holders of Receipts a notice, which shall be provided by the Company and which
shall contain (i) such information as is contained in such notice of meeting,
(ii) a statement that the holders of Receipts at the close of business on a
specified record date fixed pursuant to Section 4.4 will be entitled, subject to
any applicable provision of law, the Certificate of Incorporation or the
Certificate of Designations, to instruct the Depositary as to the exercise of
the voting rights pertaining to the amount of Preferred Stock represented by
their respective Depositary Shares and (iii) a brief statement as to the manner
in which such instructions may be given. Upon the written request of a holder
of a Receipt on such record date, the Depositary shall endeavor insofar as
practicable to vote or cause to be voted the amount of Preferred Stock
represented by the Depositary Shares evidenced by such Receipt in accordance
with the instructions set forth in such request. The Company hereby agrees to
take all reasonable action that may be deemed necessary by the Depositary in
order to enable the Depositary to vote such Preferred Stock or cause such
Preferred Stock to be voted. In the absence of specific instructions from the
holder of a Receipt, the Depositary will abstain from voting to the extent of
the Preferred Stock represented by the Depositary Shares evidenced by such
Receipt. After aggregating all voting Depositary Shares, the Depositary will
disregard for voting purposes any fractional share of Preferred Stock remaining.
SECTION 4.6 Changes Affecting Preferred Stock and Reclassifications,
--------------------------------------------------------
Recapitalizations, etc. Upon any split-up, consolidation or any other
- ----------------------
reclassification of Preferred Stock, or upon any recapitalization,
reorganization, merger, amalgamation or consolidation affecting the Company or
to which it is a party or sale of all or substantially all of the Company's
assets, the Depositary shall, upon the instructions of the Company, treat any
shares of stock or other securities or property (including cash) that shall be
received by the Depositary in exchange for or upon conversion of or in respect
of the Preferred Stock as new deposited property under this Deposit Agreement,
and Receipts then outstanding shall thenceforth represent the proportionate
interests of holders thereof in the new deposited shares of stock, other
securities or other property so received in exchange for or upon conversion or
in respect of such Preferred Stock. In any such case the Depositary may, in its
discretion, with the approval of the Company, execute and deliver additional
Receipts, or may call for the surrender of all outstanding Receipts to be
exchanged for new Receipts specifically describing such new deposited shares,
other securities or other property.
<PAGE>
-18-
SECTION 4.7 Inspection of Reports. The Depositary shall make
---------------------
available for inspection by holders of Receipts at the Depositary's Office and
at such other places as it may from time to time deem advisable during normal
business hours any reports and communications received from the Company that are
both received by the Depositary as the holder of Preferred Stock and made
generally available to the holders of Preferred Stock by the Company.
SECTION 4.8 List of Receipt Holders. Promptly upon request from time
-----------------------
to time by the Company and at the Company's expense, the Depositary shall
furnish to it a list, as of a recent date, of the names, addresses and holdings
of Depositary Shares of all persons in whose names Receipts are registered on
the books of the Depositary.
ARTICLE V
THE DEPOSITARY AND THE COMPANY
SECTION 5.1 Maintenance of Offices, Agencies, Transfer Books by the
-------------------------------------------------------
Depositary, the Registrar. Upon execution of this Deposit Agreement in
- -------------------------
accordance with its terms, the Depositary shall maintain (i) at the Depositary's
Office, facilities for the execution and delivery, transfer, surrender and
exchange, split-up and combination of Receipts and deposit and withdrawal of
Preferred Stock and (ii) at the offices of the Depositary's Agents, if any,
facilities for the delivery, transfer, surrender and exchange, split-up,
combination and redemption of Receipts and deposit and withdrawal of Preferred
Stock, all in accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books at the Depositary's Office for the
registration and transfer of Receipts, which books during normal business hours
shall be open for inspection by the record holders of Receipts, as provided by
applicable law, and by the Company. The Depositary shall consult with the
Company upon receipt of any request for inspection. The Depositary may close
such books, at any time or from time to time, when deemed expedient by it in
connection with the performance of its duties hereunder.
If the Receipts or the Depositary Shares evidenced thereby or the
Preferred Stock represented by such Depositary Shares shall be listed on the
Nasdaq National Market, the Depositary may, with the approval of the Company,
appoint a Registrar for registry of such Receipts or Depositary Shares in
accordance with the requirements of the Nasdaq National Market. Such Registrar
(which may be the Depositary if so permitted by the requirements of the Nasdaq
National Market) may be removed and a substitute registrar appointed by the
Depositary upon the request or with the approval of the Company. If the
Receipts, such Depositary Shares or such Preferred Stock are listed on one or
more other stock exchanges, the Company will, with
<PAGE>
-19-
the assistance or the Depositary, arrange such facilities for the delivery,
transfer, surrender and exchange of such Receipts, such Depositary Shares or
Preferred Stock as may be required by law or applicable stock exchange
regulations.
SECTION 5.2 Prevention of or Delay in Performance by the Depositary,
--------------------------------------------------------
the Depositary's Agents or the Company. Neither the Depositary nor any
- --------------------------------------
Depositary's Agent nor the Company shall incur any liability to any holder of
any Receipt if, by reason of any provision of any present or future law or
regulation thereunder of the United States of America or of any other
governmental authority or, in the case of the Depositary or any Depositary's
Agent, by reason of any provision, present or future, of the Certificate of
Incorporation or the Certificate of Designations or, in the case of the Company,
the Depositary or any Depositary's Agent, by reason of any act of God or war or
other circumstance beyond the control of the relevant party, the Depositary, any
Depositary's Agent or the Company shall be prevented or forbidden from doing or
performing any act or thing that the terms of this Deposit Agreement provide
shall be done or performed; nor shall the Depositary, any Depositary's Agent or
the Company incur any liability to any holder of a Receipt by reason of any
nonperformance or delay, caused as aforesaid, in the performance of any act or
thing that the terms of this Deposit Agreement provide shall or may be done or
performed or by reason of any exercise of, or failure to exercise, any
discretion provided for in this Deposit Agreement.
SECTION 5.3 Obligations of the Depositary, the Depositary's Agents,
-------------------------------------------------------
and the Company. Neither the Depositary nor any Depositary's Agent nor the
- ---------------
Company assumes any obligation or shall be subject to any liability under this
Deposit Agreement or any Receipt to holders of Receipts other than that each of
them agrees to use good faith in the performance of such duties as are
specifically set forth in this Deposit Agreement.
Neither the Depositary nor any Depositary's Agent nor the Company
shall be under any obligation to appear in, prosecute or defend any action, suit
or other proceeding with respect to the Preferred Stock, Depositary Shares,
Receipts or Class A Common Stock that in its opinion may involve it in expense
or liability, unless indemnity satisfactory to it against all expense and
liability be furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor the Company
shall be liable for any action or any failure to act by it in reliance upon the
advice of, or information from, legal counsel, accountants, any person
presenting Preferred Stock for deposit, any holder of a Receipt or any other
person believed by it in good faith to be competent to give such advice or
information. The Depositary, any Depositary's Agent and the Company may each
rely and shall each be protected in acting upon any written notice, request,
direction or other document believed by it to be genuine and to have been signed
or presented by the proper party or parties.
The Depositary, its parent, affiliates, subsidiaries, officers,
directors or employees and any Depositary's Agent may own, buy, sell or deal in
any class of securities of the Company
<PAGE>
-20-
and its affiliates and Receipts or Depositary Shares, or become pecuniarily
interested in any transaction in which the Company or its officers may be
interested, or contract with or lend money to the Company or any of its
affiliates or officers, or otherwise act fully or as freely as if it were not
the Depositary or the Depositary's Agent hereunder. The Depositary may also act
as transfer agent or registrar of any of the securities of the Company and its
affiliates.
It is intended that neither the Depositary nor any Depositary's Agent
shall be deemed to be an "issuer" of securities under the federal securities
laws or applicable state securities laws, it being expressly understood and
agreed that the Depositary and any Depositary's Agent are acting only in a
ministerial capacity as Depositary for the Preferred Stock; provided, however,
that the Depositary agrees to comply with all information reporting and
withholding requirements applicable to it under law or this Deposit Agreement in
its capacity as Depositary.
Neither the Depositary (or its officers, directors, employees or
agents) nor any Depositary's Agent makes any representation or has any
responsibility as to the validity of the Registration Statement pursuant to
which the Depositary Shares, the Preferred Stock and the Class A Common Stock
are registered under the Securities Act, the Preferred Stock, the Depositary
Shares, the Receipts (except for its countersignatures thereon) or any
instruments referred to therein or herein (other than an instrument executed by
the Depositary or Depositary's Agent), or as to the correctness of any statement
made therein or herein or for the failure of the Company to comply with any
covenants contained in this Agreement or the Receipts; provided, however, that
the Depositary is responsible for its representations in this Deposit Agreement.
The Depositary assumes no responsibility for the correctness of the
description that appears in the Receipts, which can be taken as a statement of
the Company summarizing certain provisions of this Deposit Agreement.
Notwithstanding any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity, genuineness or time
sufficiency of any Preferred Stock at any time deposited with the Depositary
hereunder or of the Depositary Shares, as to the validity or sufficiency of this
Deposit Agreement, as to the value of the Depositary Shares, or as to any right,
title or interest of the record holders of Receipts in and to the Depositary
Shares, except that the Depositary hereby represents and warrants as follows:
(i) the Depositary has been duly organized and is validly existing and in good
standing under the laws of the United States with full power, authority and
legal right under such laws to execute, deliver and carry out the terms of this
Deposit Agreement; (ii) this Deposit Agreement has been duly authorized,
executed and delivered by the Depositary; and (iii) this Deposit Agreement
constitutes a valid and binding obligation of the Depositary, enforceable
against the Depositary in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization or other
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
Depositary shall not be accountable for the use or application by the Company of
the Depositary Shares or the Receipts or the proceeds of the sale thereof.
<PAGE>
-21-
SECTION 5.4 Resignation and Removal of the Depositary; Appointment of
---------------------------------------------------------
Successor Depositary. The Depositary may at any time resign as Depositary
- --------------------
hereunder by notice of its election to do so delivered to the Company, such
resignation to take effect upon the appointment of a successor depositary and
its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice of
such removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 45 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor depositary,
which shall be a bank or trust company, or an affiliate of a bank or trust
company having its principal office in the United States of America and having a
combined capital and surplus of at least $50,000,000. If a successor depositary
shall not have been appointed in 45 days, the resigning Depositary may petition
a court of competent jurisdiction to appoint a successor depositary. Every
successor depositary shall execute and deliver to its predecessor and to the
Company an instrument in writing accepting its appointment hereunder, and
thereupon such successor depositary, without any further act or deed, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor and for all purposes shall be the Depositary under this Deposit
Agreement, and such predecessor, upon payment of all sums due it and on the
written request of the Company, shall promptly execute and deliver an instrument
transferring to such successor all rights and powers of such predecessor
hereunder, shall duly assign, transfer and deliver all rights, title and
interest in the Preferred Stock and any moneys or property held hereunder to
such successor and shall deliver to such successor a list of the record holders
of all outstanding Receipts and such other records respecting the Receipts, the
Depositary Shares and the Preferred Stock as the successor shall require in
order to perform its duties. Any successor depositary shall promptly mail
notice of its appointment to the record holders of Receipts.
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act. Such successor
depositary may execute the Receipts either in the name of the predecessor
depositary or in the name of the successor depositary.
SECTION 5.5 Corporate Notices and Reports. The Company agrees that it
-----------------------------
will deliver to the Depositary, and the Depositary will, promptly after receipt
thereof, and as directed by the Company transmit to the record holders of
Receipts, in each case at the most recent address recorded in the Depositary's
books, copies of all notices and reports (including financial statements)
required by law, by the rules of any national securities exchange upon which the
Preferred Stock, the Depositary Shares or the Receipts are listed, or by the
Restated Certificate of Incorporation and the Certificate of Designations to be
furnished by the Company
<PAGE>
-22-
to holders of Preferred Stock. Such transmission will be at the Company's
expense and the Company will provide the Depositary with such number of copies
of such documents as the Depositary may reasonably request. In addition, the
Depositary will transmit to the record holders of Receipts at the Company's
expense such other documents as may be requested by the Company.
SECTION 5.6 Deposit of Preferred Stock by the Company. Neither the
-----------------------------------------
Company nor any company controlled by the Company will at any time deposit any
Preferred Stock if such Preferred Stock is required to be registered under the
provisions of the Securities Act and no registration statement is at such time
in effect as to such Preferred Stock.
SECTION 5.7 Indemnification by the Company. The Company shall
------------------------------
indemnify Depositary, any Depositary's Agent and any Registrar for, and hold
each of them harmless against, any loss, liability or expense incurred without
gross negligence or intentional misconduct on the part of any such person,
arising out of or in connection with this Deposit Agreement and the Receipts,
including the costs and expenses of any of its duties under this Deposit
Agreement or the Receipts. Anything in this Agreement to the contrary
notwithstanding, in no event shall Depositary, any Depositary's Agent or
Registrar be liable for special, indirect or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits) even if Depositary,
any Depositary's Agent or Registrar has been advised of the likelihood of such
loss or damage and regardless of the form of the action. The obligations of the
Company to Depositary, any Depositary's Agent or Registrar shall survive the
termination of this Agreement.
SECTION 5.8 Fees, Charges and Expenses. No fees, charges and expenses
--------------------------
of the Depositary or any Depositary's Agent hereunder or of any Registrar shall
be payable by any person other than the Company, except for any taxes and other
governmental charges and except as provided in this Deposit Agreement. If the
Depositary incurs fees, charges or expenses for which it is not otherwise liable
hereunder at the election of a holder of a Receipt or other person, such holder
or other person will be liable for such fees, charges and expenses. All other
fees, charges and expenses of the Depositary and any Depositary's Agent
hereunder and of any Registrar (including, in each case, reasonable fees and
expenses of counsel) incident to the performance of their respective obligations
hereunder will be paid from time to time upon consultation and agreement between
the Depositary and the Company as to the amount and nature of such fees, charges
and expenses.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.1 Amendment. The form of the Receipts and any provisions
---------
<PAGE>
-23-
of this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect that they may
deem necessary or desirable. Any amendment that shall impose any fees, taxes or
charges payable by holders of Receipts (other than taxes and other governmental
charges, fees and other expenses provided for herein or in the Receipts), or
that shall otherwise prejudice any substantial existing right of holders of
Receipts, shall not become effective as to outstanding Receipts until the
expiration of 90 days after notice of such amendment shall have been given to
the record holders of outstanding Receipts. Every holder of an outstanding
Receipt at the time any such amendment becomes effective shall be deemed, by
continuing to hold such Receipt, to consent and agree to such amendment and to
be bound by this Deposit Agreement as amended thereby. In no event shall any
amendment impair the right, subject to the provisions of Sections 2.3, 2.6, 2.7,
2.10 and 2.11 and Article III, of any owner of any Depositary Shares to
surrender the Receipt evidencing such Depositary Shares with instructions to the
Depositary to deliver to the holder the Preferred Stock and all money and other
property, if any, represented thereby, or to cause the conversion of the
underlying Preferred Stock into Class A Common Stock and cash for any fractional
share amount, except in order to comply with mandatory provisions of applicable
law.
SECTION 6.2 Termination. Whenever so directed by the Company upon at
-----------
least five Business Days' prior notice, the Depositary will terminate this
Deposit Agreement, provided, that notice of such termination has been given by
mailing notice of such termination to the record holders of all Receipts then
outstanding at least 30 days prior to the date fixed in such notice for such
termination. The Depositary may likewise terminate this Deposit Agreement if at
any time 45 days shall have expired after the Depositary shall have delivered to
the Company a written notice of its election to resign and a successor
depositary shall not have been appointed and accepted its appointment as
provided in Section 5.4.
If any Receipts shall remain outstanding after the date of termination
of this Deposit Agreement, the Depositary thereafter shall discontinue the
transfer of Receipts, shall suspend the distribution of dividends to the holders
thereof and shall not give any further notices (other than notice of such
termination) or perform any further acts under this Deposit Agreement, except as
hereinafter provided in this paragraph and except that the Depositary shall
continue to collect dividends and other distributions pertaining to Preferred
Stock, [shall sell rights, preferences, privileges or other property as provided
in this Deposit Agreement] and shall continue to deliver the Preferred Stock and
any money and other property represented by Receipts, without liability for
interest thereon, upon surrender thereof by the holders thereof. At any time
after the expiration of two years from the date of termination, the Depositary
may sell Preferred Stock then held hereunder at public or private sale, at such
place or places and upon such terms as it deems proper and may thereafter hold
the net proceeds of any such sale, together with any money
<PAGE>
-24-
and other property held by it hereunder, without liability for interest, for the
benefit, pro rata in accordance with their holdings, of the holders of Receipts
that have not theretofore been surrendered. After making such sale, the
Depositary shall be discharged from all obligations under this Deposit Agreement
except to account for such net proceeds and money and other property. Upon the
termination of this Deposit Agreement, the Company shall be discharged from all
obligations under this Deposit Agreement except for its obligations to the
Depositary, any Depositary Agent and any Registrar under Sections 5.7 and 5.8.
In the event this Deposit Agreement is terminated and a sufficient number of
shares of Preferred Stock remain outstanding, the Company hereby agrees to use
its best efforts to cause the shares of Preferred Stock to be split 100 to 1 (so
that each Depositary Share then represents one share of Preferred Stock) and to
have the Preferred Stock included for quotation on the Nasdaq National Market
(unless the holders of a majority of the outstanding shares of Preferred Stock
shall consent to the Company not effecting such listing).
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Counterparts. This Deposit Agreement may be executed by
------------
the Company and the Depositary in separate counterparts, each of which
counterpart, when so executed and delivered, shall be deemed an original, but
all such counterparts taken together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Deposit Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart of this Deposit Agreement. Copies of this Deposit
Agreement shall be filed with the Depositary and each Depositary's Agent, if
any, and shall be open to inspection during business hours at the Depositary's
Office and the respective offices of the Depositary's Agents, if any, by any
holder of a Receipt.
SECTION 7.2 Exclusive Benefits of Parties. This Deposit Agreement is
-----------------------------
for the exclusive benefit of the parties hereto, and their respective successors
hereunder, and shall not be deemed to give any legal or equitable right, remedy
or claim to any other person whatsoever.
SECTION 7.3 Invalidity of Provisions. In case any one or more of the
------------------------
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal, or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
in no way be affected, prejudiced or disturbed thereby.
SECTION 7.4 Notices. Any notices to be given to the Company hereunder
-------
or under the Receipts shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by first class mail, postage prepaid or by
facsimile transmission confirmed by letter, addressed to the Company at Terrace
Tower II, 5619 DTC Parkway, Englewood, Colorado 80111-3000, Attention: General
Counsel, or at any other place to which the Company may have transferred its
principal executive office.
<PAGE>
-25-
Any notices to be given to the Depositary hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by first class mail, postage prepaid, or by
telegram or telex or telecopier confirmed by letter, addressed to the Depositary
at the Depositary's Office.
Any notices given to any record holder of a Receipt hereunder or under
the Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by first class mail, postage prepaid, or by
telegram or telex or telecopier confirmed by letter, addressed to such record
holder at the most recent address of such record holder as it appeared on the
books of the Depositary or, if such holder shall have timely filed with the
Depositary a written request that notices intended for such holder be mailed to
some other address, at the address designated in such request.
Delivery of a notice sent by mail, or by telegram or telex or
telecopier, shall be deemed to be effected at the time when a duly addressed
letter containing the same (or a duly addressed letter confirming an earlier
notice in the case of a facsimile transmission, telegram or telex) is deposited,
postage prepaid, in a post office letter box. The Depositary or the Company
may, however, act upon any facsimile transmission received by it from the other
or from any holder of a Receipt, notwithstanding that such facsimile
transmission shall not subsequently be confirmed by letter as aforesaid.
SECTION 7.5 Depositary's Agents. The Depositary may from time to
-------------------
time appoint Depositary's Agents to act in any respect for the Depositary for
the purposes of this Deposit Agreement and may at any time appoint additional
Depositary's Agents and vary or terminate the appointment of such Depositary's
Agents. The Depositary will notify the Company of any such action.
SECTION 7.6 Holders of Receipts Are Parties. Notwithstanding that
-------------------------------
holders of Receipts have not executed and delivered this Deposit Agreement or
any counterpart thereof, the holders of Receipts from time to time shall be
deemed to be parties to this Deposit Agreement and shall be bound by all of the
terms and conditions hereof and of the Receipts by acceptance of delivery of
Receipts.
SECTION 7.7 Governing Law. This Deposit Agreement and the Receipts
-------------
and all rights hereunder and thereunder and provisions hereof and thereof shall
be governed by, and construed in accordance with, the law of the State of [New
York] without giving effect to principles of conflict of laws.
SECTION 7.8 Headings. The headings of articles and sections in this
--------
Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto
have been inserted for convenience only and are not to be regarded as a part of
this Deposit Agreement or
<PAGE>
-26-
the Receipts or to have any bearing upon the meaning or interpretation of any
provision contained herein or in the Receipts.
IN WITNESS WHEREOF, Tele-Communications, Inc. and Shawmut Bank
Connecticut, National Association have duly executed this agreement as of the
day and year first above set forth and all holders of Receipts shall become
parties hereto by and upon acceptance by them of delivery of Receipts executed
and delivered in accordance with the terms hereof.
TELE-COMMUNICATIONS, INC.
By: __________________________________
Name:
Title:
SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION
as Depositary,
By: __________________________________
Name:
Title:
<PAGE>
EXHIBIT A
DEPOSITARY RECEIPT
FOR
DEPOSITARY SHARES,
EACH REPRESENTING ONE-HUNDREDTH OF A SHARE OF
____% PRIDES/SM/, CONVERTIBLE PREFERRED STOCK, SERIES F
par value $0.01 per share
OF
TELE-COMMUNICATIONS, INC.
(Incorporated under the Laws of the State of Delaware)
No. Depositary Shares
CUSIP _______________
Shawmut Bank Connecticut, National Association, as Depositary (the
"Depositary"), hereby certifies that ___________________ is the registered owner
of ____________________ Depositary Shares (the Depositary Shares"), each
Depositary Share representing one-hundredth of a share of _____% PRIDES,
Convertible Preferred Stock, Series F, par value $0.01 per share (the "Preferred
Stock"), of Tele-Communications, Inc., a corporation duly organized and existing
under the laws of the State of Delaware (the "Company"), and the same
proportionate interest in any and all other property received by the Depositary
in respect of such shares of Preferred Stock and held by the Depositary under
the Deposit Agreement (as defined below). Subject to the terms of the Deposit
Agreement, each owner of a Depositary Share is entitled, proportionately, to all
the rights, preferences and privileges of the Preferred Stock represented
thereby, including the dividend, voting, conversion, liquidation and other
rights contained in the Certificate of Designations, establishing the rights,
preferences, privileges and limitations of the Preferred Stock (the "Certificate
of Designations"), copies of which are on file at the office of the Depositary
at which at any particular time its business in respect of matters governed by
the Deposit Agreement shall be administered, which at the time of the execution
of the Deposit Agreement is located at 777 Main Street, Hartford, Connecticut
06115 (the "Depositary's Office").
/SM/ Service Mark of Merrill Lynch & Co., Inc.
<PAGE>
-2-
THE DEPOSITARY IS NOT RESPONSIBLE FOR THE VALIDITY OF ANY DEPOSITED STOCK. THE
DEPOSITARY ASSUMES NO RESPONSIBILITY FOR THE CORRECTNESS OF THE DESCRIPTION SET
FORTH IN THIS RECEIPT, WHICH CAN BE TAKEN AS A STATEMENT OF THE COMPANY
SUMMARIZING CERTAIN PROVISIONS OF THE DEPOSIT AGREEMENT. UNLESS EXPRESSLY SET
FORTH IN THE DEPOSIT AGREEMENT, THE DEPOSITARY MAKES NO WARRANTIES OR
REPRESENTATIONS AS TO THE VALIDITY, GENUINENESS OR SUFFICIENCY OF ANY STOCK AT
ANY TIME DEPOSITED WITH THE DEPOSITARY UNDER THE DEPOSIT AGREEMENT OR OF THE
DEPOSITARY SHARES OR RECEIPTS (EXCEPT FOR ITS COUNTERSIGNATURES THEREON), AS TO
THE VALIDITY OR SUFFICIENCY OF THE DEPOSIT AGREEMENT, AS TO THE VALUE OF THE
DEPOSITARY SHARES OR AS TO ANY RIGHT, TITLE OR INTEREST OF THE RECORD HOLDERS OF
THE RECEIPTS IN AND TO THE DEPOSITARY SHARES.
The Company will furnish to any holder of a Receipt without charge, upon
request addressed to its executive office or the office of its transfer agent, a
statement or summary of the powers, designations, preferences and relative,
participating, optional or other special rights of each authorized class of
capital stock of the Company, and of each series of preferred stock of the
Company authorized to be issued, so far as the same may have been fixed, and of
the qualifications, limitations or restrictions of such preferences and/or
rights.
This Depositary Receipt (the "Receipt") is continued on the reverse hereof
and the additional provisions therein set forth for all purposes have the same
effect as if set forth at this place.
Dated:
Shawmut Bank Connecticut, National Association
Depositary and Registrar
By:________________________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE
OF DEPOSITARY RECEIPT]
1. The Deposit Agreement. Depositary Receipts (the "Receipts"), of
---------------------
which this Receipt is one, are made available upon the terms and conditions set
forth in the Deposit Agreement, dated as of November __, 1994 (the "Deposit
Agreement") among the Company, the Depositary and all holders from time to time
of Receipts. The Deposit Agreement (copies of which are on file at the
Depositary's Office and at the office of any Depositary's Agent) sets forth the
rights of holders of Receipts and the rights and duties of the Depositary. The
statements made on the face and the reverse of this Receipt are summaries of
certain provisions of the Deposit Agreement and are subject to the detailed
provisions thereof, to which reference is hereby made. In the event of any
conflict between the provisions of this Receipt and the provisions of the
Deposit Agreement, the provisions of the Deposit Agreement will govern.
2. Definitions. Unless otherwise expressly herein provided, all defined
-----------
terms used herein shall have the meanings ascribed thereto in the Deposit
Agreement.
3. Redemption of Preferred Stock. Whenever the Company shall elect to
-----------------------------
redeem shares of Preferred Stock for shares of its Class A Common Stock, par
value $1.00 per share ("Common Stock"), in accordance with the Certificate of
Designations, it shall (unless otherwise agreed in writing with the Depositary)
give the Depositary in its capacity as Depositary the notice required by the
Deposit Agreement. The Depositary shall mail, first class postage prepaid,
notice of such redemption and the proposed simultaneous redemption of the number
of Depositary Shares representing the Preferred Stock held by the Depositary to
be redeemed, not less than 15 and not more than 60 days prior to the date fixed
for redemption of such Preferred Stock and Depositary Shares (the "Redemption
Date"), to the record holders of the Receipts evidencing the Depositary Shares
to be so redeemed, at the addresses of such holders as they appear on the
records of the Depositary; but neither failure to mail any such notice to one or
more such holders nor any defect in any notice to one or more such holders shall
affect the sufficiency of the proceedings for redemption as to other holders.
Each such notice shall state: (i) the Redemption Date; (ii) the number of
Depositary Shares to be redeemed and, if less than all the Depositary Shares
held by any such holder are to be redeemed, the number of such Depositary Shares
held by such holder to be so redeemed; (iii) the number of shares of Common
Stock deliverable upon redemption; (iv) the call price for the Depositary
Shares; (v) the Optional Conversion Rate (calculated in accordance with Section
4 of the Certificate of Designations), together with a statement that all
conversion rights with respect to the Depositary Shares called for redemption
will terminate immediately prior to the close of business on the date fixed for
redemption; (vi) the place or places where Receipts evidencing Depositary Shares
are to be surrendered for payment of the redemption price; and (vii) that
dividends in respect of the shares of Preferred Stock represented by the
Depositary Shares to be redeemed will cease to accumulate from and after such
Redemption Date. Any such notices shall be mailed in the same manner as notices
of redemption of the Preferred Stock are required to be mailed pursuant to
Section 4 of the
<PAGE>
-2-
Certificate of Designations and published in the same manner as notices of
redemption of the Preferred Stock are required to be published pursuant to said
section, if so required. In case fewer than all the outstanding Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed shall be
selected by lot or pro rata (as nearly as may be) or by any other equitable
method determined by the Depositary to be consistent with the method determined
by the Board of Directors of the Company with respect to the Preferred Stock.
Notice having been mailed and published by the Depositary as aforesaid,
from and after the Redemption Date (unless the Company shall have failed to
redeem the shares of Preferred Stock to be redeemed by it, as set forth in the
Company's notice provided for above), the Depositary Shares called for
redemption shall be deemed no longer to be outstanding and all rights of the
holders of Receipts evidencing such Depositary Shares (except the right to
receive the shares of Common Stock upon redemption and cash for any fractional
share amount) shall, to the extent of such Depositary Shares, cease and
terminate. Upon surrender in accordance with said notice of the Receipts
evidencing such Depositary Shares (properly endorsed or assigned for transfer,
if the Depositary shall so require), such Depositary Shares shall be redeemed
for shares of Common Stock and cash for any fractional share amount at a rate
per Depositary Share equal to one-hundredth of the number of shares of Common
Stock (including fractional amounts) delivered upon redemption of a share of
Preferred Stock pursuant to the Certificate of Designations. The foregoing
shall be subject further to the terms and conditions of the Certificate of
Designations and the Deposit Agreement.
If fewer than all of the Depositary Shares evidenced by this Receipt are
called for redemption, the Depositary will deliver to the holder of this Receipt
upon its surrender to the Depositary, together with shares of Common Stock for
the Depositary Shares called for redemption, a new receipt evidencing the
Depositary Shares evidenced by such prior Receipt and not called for redemption.
4. Surrender of Receipts and Withdrawal of Preferred Stock. Upon
-------------------------------------------------------
surrender of this Receipt to the Depositary at the Depositary's Office or such
other offices as the Depositary may designate, and subject to the provisions of
the Deposit Agreement, the holder hereof is entitled to withdraw, and to obtain
delivery of, to or upon the order of such holder, any or all of the Preferred
Stock (but only in whole shares of Preferred Stock) and any or all money and
other property, if any, at the time represented by the Depositary Shares
evidenced by this Receipt; provided, however, that, in the event this Receipt
shall evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the whole number of shares of Preferred Stock to
be withdrawn, the Depositary shall, in addition to such whole number of shares
of Preferred Stock and such money and other property, if any, to be withdrawn,
deliver, to or upon the order of such holder, a new Receipt or Receipts
evidencing such excess number of whole Depositary Shares.
<PAGE>
-3-
5. Optional Conversion of Preferred Stock into Common Stock. Subject to
--------------------------------------------------------
the terms and conditions of the Deposit Agreement and the Certificate of
Designations, this Receipt may be surrendered with written instructions to the
Depositary to instruct the Company to cause the conversion of any specified
number of whole shares of Preferred Stock represented by whole Depositary Shares
evidenced hereby into whole shares of Common Stock and cash for any fractional
share of Common Stock at the conversion price then in effect for the Preferred
Stock pursuant to the Certificate of Designations as such conversion price may
be adjusted by the Company from time to time as provided in the Certificate of
Designations. Subject to the terms and conditions of the Deposit Agreement and
the Certificate of Designations, a holder of a Receipt or Receipts evidencing
Depositary Shares representing whole or fractional shares of Preferred Stock may
surrender such Receipt or Receipts at the Depositary's Office or at such office
or to such Depositary's Agents as the Depositary may designate for such purpose,
together with a notice of conversion duly completed and executed, thereby
directing the Depositary to instruct the Company to cause the conversion of the
number of shares, or fractions of shares, of underlying Preferred Stock
specified in such notice of conversion into shares of Common Stock, and an
assignment of such Receipt or Receipts to the Company or in blank, duly
completed and executed. To the extent that a holder delivers to the Depositary
for conversion a Receipt or Receipts which in the aggregate are convertible into
less than one whole share of Common Stock, the holder shall receive payment in
cash in lieu of such fractional share of Common Stock otherwise issuable. If
more than one Receipt shall be delivered for conversion at one time by the same
holder, the number of whole shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of Depositary
Shares represented by the Receipts so delivered.
If Preferred Stock shall be called by the Company for redemption, the
Depositary Shares representing such Preferred Stock may be converted into Common
Stock as provided in the Deposit Agreement until, but not after, the close of
business on the Redemption Date unless the Company shall fail to deposit with
the Depositary the shares of Common Stock and cash for any fractional share
amounts required to redeem the Preferred Stock held by the Depositary, in which
case the Depositary Shares representing such Preferred Stock may continue to be
converted into Common Stock until, but not after, the close of business on the
date on which the Company deposits with the Depositary such shares of Common
Stock and cash for any fractional share amounts as are required by the
Certificate of Designations to make full payment of the amounts payable upon
such redemption. Upon receipt by the Depositary of a Receipt or Receipts,
together with a properly completed and executed notice of conversion,
representing any Preferred Stock called for redemption, the shares of Preferred
Stock held by the Depositary represented by such Depositary Shares for which
conversion is requested shall be deemed to have been received by the Company for
conversion as of immediately prior to the close of business on the date of such
receipt by the Depositary.
6. Mandatory Conversion of Preferred Stock into Common Stock. With
---------------------------------------------------------
respect to
<PAGE>
-4-
any Preferred Stock on deposit with the Depositary as to which the Company has
not exercised its right to redeem and the record holder has not exercised its
right of optional conversion pursuant to the Certificate of Designations, the
Depositary shall mail, first class postage prepaid, notice of the mandatory
conversion of Preferred Stock and the simultaneous mandatory conversion of the
Depositary Shares representing the Preferred Stock to be mandatorily converted,
not less than 5 and not more than 15 days prior to the date fixed for mandatory
conversion of such Preferred Stock and Depositary Shares (the "Mandatory
Conversion Date"), to all record holders of Receipts evidencing Depositary
Shares who are of record on the date that is two Business Days prior to the date
of mailing, at the addresses of such holders as they appear on the records of
the Depositary; but neither failure to mail any such notice to one or more such
holders nor any defect in any notice to one or more such holders shall affect
the sufficiency of the proceedings for mandatory conversion as to any record
holder (whether or not such failure or defect affects such record holder). Each
such notice shall state: (i) the Mandatory Conversion Date; (ii) that all
outstanding Depositary Shares on the Mandatory Conversion Date will be
mandatorily converted pursuant to the Certificate of Designations and the
Deposit Agreement; (iii) the Common Equivalent Rate (determined in accordance
with Section 4 of the Certificate of Designations); (iv) the place or places
where Receipts evidencing Depositary Shares are to be surrendered for payment of
the mandatory conversion price; and (v) that dividends in respect of the shares
of Preferred Stock represented by the Depositary Shares to be mandatorily
converted will cease to accumulate from and after the Mandatory Conversion Date.
On the Mandatory Conversion Date, all then outstanding shares of Preferred
Stock and the Depositary Shares representing such shares of Preferred Stock
shall mandatorily convert into shares of Common Stock, cash for any fractional
share amounts and the right to receive amounts in cash equal to all accrued and
unpaid dividends on such shares of Preferred Stock to and including the
Mandatory Conversion Date (other than previously declared dividends payable to a
holder of record as of a prior date), all as provided in and subject to Section
4 of the Certificate of Designations.
From and after the Mandatory Conversion Date, the Depositary Shares
representing the shares of Preferred Stock mandatorily converted shall be deemed
no longer to be outstanding and all rights of the record holders of Receipts
evidencing such Depositary Shares (except the right to receive the shares of
Common Stock, any cash for accrued and unpaid dividends (other than previously
declared dividends payable to a holder of record as of a prior date) and any
fractional share amount deliverable or payable upon mandatory conversion or in
connection therewith) shall, to the extent of such Depositary Shares, cease and
terminate. Upon surrender, in accordance with said notice, of the Receipts
evidencing such Depositary Shares (properly endorsed or assigned for transfer,
if the Depositary shall so require), such Depositary Shares shall be exchanged
for shares of Common Stock and cash for any fractional share amount (and the
right to receive cash for any accrued and unpaid dividends payable in connection
therewith) at a rate per Depositary Share equal to one-hundredth of the number
(including fractional amounts) of shares of Common Stock (and one-hundredth of
the right to receive cash for any accrued and unpaid dividends) exchanged
<PAGE>
-5-
for each share of Preferred Stock pursuant to the Certificate of Designations.
The foregoing shall be subject further to the terms and conditions of the
Certificate of Designations and the Deposit Agreement.
On or prior to the Mandatory Conversion Date, the Company shall deposit
with the Depositary certificates for the shares of Common Stock and the cash for
any fractional share amounts into which the shares of Preferred Stock held by
the Depositary shall mandatorily convert on the Mandatory Conversion Date, plus,
subject to the Certificate of Designations, an amount in cash equal to all
accrued and unpaid dividends on such shares of Preferred Stock (other than
previously declared dividends payable to a holder of record as of a prior date)
to and including the Mandatory Conversion Date. Using such shares of Common
Stock and cash, the Depositary shall deliver certificates for the appropriate
number of shares of Common Stock and the appropriate amount of cash, without
interest, to record holders who properly deliver their Receipts to the
Depositary.
7. Transfers, Split-ups, Combinations. Subject to Paragraphs 8, 9 and
----------------------------------
10 below, this Receipt is transferable on the books of the Depositary upon
surrender of this Receipt to the Depositary at the Depositary's Office or such
other offices as the Depositary may designate, properly endorsed or accompanied
by a properly executed instrument of transfer or endorsement, and upon such
surrender the Depositary shall execute and deliver a Receipt to or upon the
order of the person entitled thereto, all as provided in and subject to the
Deposit Agreement. This Receipt may be split into other Receipts or combined
with other Receipts into one Receipt evidencing the same aggregate number of
Depositary Shares evidenced by the Receipt or Receipts surrendered; provided,
however, that the Depositary shall not execute and deliver any Receipt
evidencing a fractional Depositary Share.
8. Conditions to Signing and Delivery, Transfer, etc., of Receipts.
---------------------------------------------------------------
Prior to the execution and delivery, transfer, split-up, combination, surrender
or exchange of this Receipt, the Depositary, any of the Depositary's Agents or
the Company may require any or all of the following: (i) payment to it of a sum
sufficient for the payment (or, in the event that the Depositary or the Company
shall have made such payment, the reimbursement to it) of any tax or other
governmental charge with respect thereto (including any such tax or charge with
respect to Preferred Stock being deposited or withdrawn or with respect to
Common Stock or other securities or property of the Company being issued upon
conversion or redemption); (ii) the production of proof satisfactory to it as to
the identity and genuineness of any signature; and (iii) compliance with such
regulations, if any, as the Depositary or the Company may establish not
inconsistent with the Deposit Agreement. Any person presenting Preferred Stock
for deposit, or any holder of this Receipt, may be required to file such proof
of information, to execute such certificates and to make such representations
and warranties as the Depositary or the Company may reasonably deem necessary or
proper. The Depositary or the Company may withhold or delay the delivery of any
Receipt, the transfer, redemption, conversion or exchange of any Receipt, the
withdrawal of the Preferred Stock or money or other property, if any,
represented
<PAGE>
-6-
by the Depositary Shares evidenced by this Receipt or the distribution of any
dividend or other distribution until such proof or other information is filed,
such certificates are executed or such representations and warranties are made.
9. Suspension of Delivery, Transfer, etc. The deposit of Preferred
-------------------------------------
Stock may be refused, the delivery of Receipts against Preferred Stock may be
suspended, the transfer of Receipts may be refused and the transfer, split-up,
combination, surrender or exchange of this Receipt may be suspended (i) during
any period when the register of holders of Receipts is closed; (ii) if any such
action is deemed necessary or advisable by the Depositary, any of the
Depositary's Agents or the Company at any time or from time to time because of
any requirement of law or of any government or governmental body or commission,
or under any provision of the Deposit Agreement; or (iii) except for the
transfer of Receipts, with the approval of the Company, for any other reason.
Except with respect to a conversion of Depositary Shares which may occur
pursuant to Section 4 of the Certificate of Designations, the Depositary shall
not be required (a) to execute and deliver, transfer or exchange any receipts
for a period beginning at the opening of business 15 days next preceding any
selection of Depositary Shares and Preferred Stock to be redeemed and ending at
the close of business on the day of the mailing of notice of redemption of
Depositary Shares or (b) to transfer or exchange for another Receipt any Receipt
evidencing Depositary Shares called or being called for redemption in whole or
in part, except as provided in the second to last paragraph of Paragraph 3
above.
10. Payment of Taxes or other Governmental Charges. If any tax or other
----------------------------------------------
governmental charge shall become payable by or on behalf of the Depositary with
respect to this Receipt, the Depositary Shares evidenced by this Receipt, the
Preferred Stock (or any fractional interest therein) represented by such
Depositary Shares or any transaction referred to in Section 4.6 of the Deposit
Agreement, such tax (including transfer, issuance or acquisition taxes, if any)
or governmental charge shall be payable by the holder hereof. Until such
payment is made, transfer, redemption, conversion or exchange of this Receipt or
any withdrawal of the Preferred Stock or money and other property, if any,
represented by the Depositary Shares evidenced by this Receipt may be refused,
any dividend or other distribution may be withheld and any part or all of the
Preferred Stock or other property represented by the Depositary Shares evidenced
by this Receipt may be sold for the account of the holder hereof (after
attempting by reasonable means to notify such holder prior to such sale). Any
dividend or other distribution so withheld and the proceeds of any such sale may
be applied to any payment of such tax or other governmental charge, the holder
of this Receipt remaining liable for any deficiency.
11. Amendment. The form of the Receipts and any provision of the Deposit
---------
Agreement may at any time and from time to time be amended by agreement between
the Company and the Depositary in any respect that they may deem necessary or
desirable. Any amendment that shall impose any fees, taxes or charges payable
by holders of Receipts (other than taxes and other governmental charges, fees
and other expenses provided for herein or in the Deposit Agreement), or that
shall otherwise prejudice any substantial existing right of holders of
<PAGE>
-7-
Receipts, shall not become effective as to outstanding Receipts until the
expiration of 90 days after notice of such amendment shall have been given to
the record holders of outstanding Receipts. The holder of this Receipt at the
time any such amendment becomes effective shall be deemed, by continuing to hold
this Receipt, to consent and agree to such amendment and to be bound by the
Deposit Agreement as amended thereby. In no event shall any amendment impair the
right, subject to the provisions of Paragraphs 3, 4, 5, 6, 8, 9 and 10 hereof
and of Sections 2.3, 2.6., 2.7., 2.10 and 2.11 and Article III of the Deposit
Agreement, of the owner of the Depositary Shares evidenced by this Receipt to
surrender this Receipt with instructions to the Depositary to deliver to the
holder the Preferred Stock and all money and other property, if any, represented
hereby, or to cause the conversion of the underlying Preferred Stock into Common
Stock and cash for any fractional share amount, except in order to comply with
mandatory provisions of applicable law.
12. Fees, Charges and Expenses. The Company will pay all fees, charges
--------------------------
and expenses of the Depositary, except for taxes (including transfer taxes, if
any) and other governmental charges and such charges as are expressly provided
in the Deposit Agreement to be at the expense of persons depositing Preferred
Stock, holders of Receipts or other persons.
13. Ownership of Receipts. It is a condition of this Receipt, and every
---------------------
successive holder hereof by accepting or holding the same consents and agrees,
that ownership of this Receipt (and of the Depositary Shares evidenced hereby)
when properly endorsed or accompanied by a properly executed instrument of
transfer or endorsement, is transferable by delivery; provided, however, that
until this Receipt shall be transferred on the books of the Depositary as
provided in Section 2.4 of the Deposit Agreement, the Depositary may,
notwithstanding any notice to the contrary, treat the record holder hereof at
such time as the absolute owner hereof for the purpose of determining the person
entitled to distribution of dividends or other distributions or to any notice
provided for in the Deposit Agreement and for all other purposes.
14. Dividends and Distributions. Whenever the Depositary receives any
---------------------------
cash dividend or other cash distribution on the Preferred Stock, the Depositary
will, subject to the provisions of the Deposit Agreement, distribute such
portions of such sum to record holders of Receipts as are, as nearly as
practicable, proportionate to the respective numbers of Depositary Shares
evidenced by the Receipts held by such holders; provided, however, that in case
the Company or the Depositary shall be required to withhold and does withhold
from any cash dividend or other cash distribution in respect of the Preferred
Stock an amount on account of taxes or as otherwise required by law, regulation
or court order, the amount made available for distribution or distributed in
respect of Depositary Shares shall be reduced accordingly. The Depositary shall
distribute or make available for distribution, as the case may be, only such
amount, however, as can be distributed without attributing to any owner of
Depositary Shares a fraction of one cent and any balance not so distributable
shall be held by the Depositary (without liability for interest thereon) and
shall be added to and be treated as part of the next sum received by the
Depositary for distribution to record holders of Receipts then outstanding.
<PAGE>
-8-
15. Subscription Rights, Preferences or Privileges. If the Company shall
----------------------------------------------
at any time offer or cause to be offered to the persons in whose names
Preferred Stock is registered on the books of the Company any rights,
preferences or privileges to subscribe for or to purchase any securities or any
rights, preferences or privileges of any other nature, such rights, preferences
or privileges shall in each such instance, subject to the provisions of the
Deposit Agreement, be made available by the Depositary to the record holders of
receipts if the Company so directs in such manner as the Company shall instruct.
16. Notice of Dividends; Fixing of Record Date. Whenever any cash
------------------------------------------
dividend or other cash distribution shall become payable, any distribution other
than cash shall be made, or any rights, preferences or privileges shall at any
time be offered, with respect to the Preferred Stock, or whenever the Depositary
shall receive notice of (i) any meeting at which holders of Preferred Stock are
entitled to vote or of which holders of Preferred Stock are entitled to notice
or (ii) any election on the part of the Company to call for redemption any
shares of Preferred Stock, the Depositary shall in each such instance fix a
record date (which shall be the same date as the record date fixed by the
Company with respect to the Preferred Stock) for the determination of the
holders of Receipts (i) who shall be entitled to receive such dividend,
distribution, rights, preferences or privileges or the net proceeds of the sale
thereof, or to give instructions for the exercise of voting rights at any such
meeting or to receive notice of such meeting or (ii) whose Depositary Shares are
to be so redeemed.
17. Voting Rights. Upon issuance of notice of any meeting at which the
-------------
holders of Preferred Stock are entitled to vote, the Company shall direct the
Depositary, as soon as practicable thereafter, to mail to the record holders of
Receipts a notice, which shall contain (i) such information as is contained in
such notice of meeting, (ii) a statement that the holders of Receipts at the
close of business on a specified record date determined as provided in Paragraph
15 will be entitled, subject to any applicable provision of law, the Company's
Restated Certificate of Incorporation or the Certificate of Designations, to
instruct the Depositary as to the exercise of the voting rights pertaining to
the amount of Preferred Stock represented by their respective Depositary Shares,
and (iii) a brief statement as to the manner in which such instructions may be
given. Upon the written request of a holder of a Receipt on such record date,
the Depositary shall endeavor insofar as practicable to vote or cause to be
voted the amount of Preferred Stock represented by the Depositary Shares
evidenced by such Receipt in accordance with the instructions set forth in such
request. The Company has agreed to take all reasonable action that may be
deemed necessary by the Depositary in order to enable the Depositary to vote
such Preferred Stock or cause such Preferred Stock to be voted. In the absence
of specific instructions from the holder of a Receipt, the Depositary will
abstain from voting to the extent of the Preferred Stock represented by the
Depositary Shares evidenced by such Receipt. After aggregating all voting
Depositary Shares, the Depositary will disregard for voting purposes any
fractional share of Preferred Stock remaining.
<PAGE>
-9-
18. Reports, Inspection of Transfer Books. The Depositary shall make
-------------------------------------
available for inspection by holders of Receipts at the Depositary's Office and
at such other places as it may from time to time deem advisable during normal
business hours any reports and communications received from the Company that are
both received by the Depositary as the holder of Preferred Stock and made
generally available to the holders of Preferred Stock by the Company. The
Depositary shall keep books at the Depositary's Office for the registration and
transfer of Receipts, which books during normal business hours will be open for
inspection by the record holders of receipts as provided by applicable law.
19. Liability of the Depositary, the Depositary's Agents and the Company.
--------------------------------------------------------------------
Neither the Depositary nor any Depositary's Agent nor the Company shall incur
any liability to any holder of any Receipt, if by reason of any provision of any
present or future law or regulation of any governmental authority or, in the
case of the Depositary or any Depositary's Agent, by reason of any provision,
present or future, of the Certificate of Incorporation or the Certificate of
Designations or, in the case of the Company, the Depositary or any Depositary's
Agent, by reason of any act of God or war or other circumstance beyond the
control of the relevant party, the Depositary, any Depositary's Agent or the
Company shall be prevented or forbidden from doing or performing any act or
thing that the terms of the Deposit Agreement provide shall or may be done or
performed; nor shall the Depositary, any Depositary's Agent or the Company incur
any liability to any holder of a Receipt by reason of any nonperformance or
delay, caused as aforesaid, in the performance of any act or thing that the
terms of the Deposit Agreement provide shall or may be done or performed or by
reason of any exercise of, or failure to exercise, any discretion provided for
in the Deposit Agreement.
20. Obligations of the Depositary, the Depositary's Agents and the
--------------------------------------------------------------
Company. Neither the Depositary nor any Depositary's Agent nor the Company
- -------
assumes any obligation or shall be subject to any liability hereunder or under
the Deposit Agreement to holders of Receipts other than that each of them agrees
to use good faith in the performance of such duties as are specifically set
forth in the Deposit Agreement. Neither the Depositary nor any Depositary's
Agent nor the Company shall be under any obligation to appear in, prosecute or
defend any action, suit or other proceeding with respect to Preferred Stock,
Depositary Shares, Receipts or Common Stock that in its opinion may involve it
in expense or liability, unless indemnity satisfactory to it against all expense
and liability be furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor the Company will be liable
for any action or failure to act by it in reliance upon the advice of or
information from legal counsel, accountants, any person presenting Preferred
Stock for deposit, any holder of a Receipt or any other person believed by it in
good faith to be competent to give such advice or information.
21. Termination of Deposit Agreement. Whenever so directed by the
--------------------------------
Company upon at least five Business Days prior notice, the Depositary will
terminate the Deposit Agreement, provided that notice of such termination has
been given by mailing notice of such termination
<PAGE>
-10-
to the record holders of all Receipts then outstanding at least 30 days prior to
the date fixed in such notice for such termination. The Depositary may likewise
terminate the Deposit Agreement if at any time 45 days shall have expired after
the Depositary shall have delivered to the Company a written notice of its
election to resign and a successor Depositary shall not have been appointed and
accepted its appointment as provided in Section 5.4 of the Deposit Agreement.
Upon the termination of the Deposit Agreement, the Company shall be discharged
from all obligations thereunder except for its obligations to the Depositary,
any Depositary's Agent and any Registrar under Sections 5.7 and 5.8 of the
Deposit Agreement.
If any Receipts remain outstanding after the date of termination, the
Depositary thereafter shall discontinue all functions and be discharged from all
obligations as provided in the Deposit Agreement, except as specifically
provided therein.
22. Governing Law. The Deposit Agreement and this Receipt and all rights
-------------
thereunder and hereunder and provisions thereof and hereof shall be governed by,
and construed in accordance with, the law of the State of New York without
giving effect to principles of conflict of laws.
This Receipt shall not be entitled to any benefits under the Deposit
Agreement or be valid or obligatory for any purpose, unless this Receipt shall
have been executed on behalf of the Depositary by the manual or facsimile
signature of a duly authorized officer and executed manually or, if a Registrar
for the Receipts (other than the Depositary) shall have been appointed, by
facsimile by the Depositary by the signature of a duly authorized officer and,
if executed by facsimile signature of the Depositary, shall have been
countersigned manually by such Registrar by the signature of a duly authorized
officer.
Dated:
SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION
Depositary and Registrar
By: _______________________________________
Authorized Officer
<PAGE>
-11-
NOTICE OF CONVERSION
The undersigned holder of this Receipt for Depositary Shares hereby
irrevocably exercises the option to convert that number of shares, or fractions
of shares, of ___% PRIDES, Convertible Preferred Stock, Series F, of the Company
represented by one hundred (100) Depositary Shares into shares of Common Stock
of the Company and cash for any fraction of Common Stock in accordance with the
terms of and subject to the conditions of the Preferred Stock, including the
Certificate of Designations in respect thereof, and the Deposit Agreement, and
directs the Depositary to instruct the Company that the shares of Common Stock
deliverable upon such conversion be registered in the name of, and delivered
together with a check in payment for any fractional shares of Common Stock to,
the undersigned unless a different name has been indicated below. If the shares
of Common Stock are to be registered in the name of a person other than the
undersigned, the undersigned will pay all transfer and similar taxes payable
with respect thereto. If the number of shares of Preferred Stock, represented
by the number of Depositary Shares set forth above is less than the number of
shares of Preferred Stock on deposit in respect of this Receipt, the undersigned
directs that the Depositary execute and deliver to the undersigned, unless a
different name is indicated below, a new receipt evidencing Depositary Shares
for the balance of such Preferred Stock not to be converted.
Dated:_______________________________
Signature:________________________________________
( )
NOTE: The signature on this notice of conversion must
correspond with the name as written upon the face of this
Receipt in every particular without alteration or
enlargement or any change whatsoever, and must be guaranteed
by a commercial bank, trust company, securities broker or
dealer, credit union, savings association or other eligible
guarantor institution which is a member of or participant in
a signature guarantee program acceptable to the Depositary.
Name: ____________________________________________________________________
Address: ____________________________________________________________________
(Please print name and address of Registered Holder)
Name: ____________________________________________________________________
Address: ____________________________________________________________________
(Please indicate other delivery instructions, if applicable)
<PAGE>
EXHIBIT 12.1
TELE-COMMUNICATIONS, INC.
AND CONSOLIDATED SUBSIDIARIES
CALCULATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS
(AMOUNTS IN MILLIONS, EXCEPT FOR RATIOS)
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------------- -------------------------------
PRO FORMA PRO FORMA
1993 1993 (a) 1992 (a) 1991 1990 1989 1994 1994 1993 (a)
--------- -------- -------- ----- ----- ---- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings (losses) from
continuing operations
before income taxes.... $-- 161 45 (108) (308) (389) 103 90 134
Add:
Interest on debt....... -- 738 815 928 990 895 409 367 367
Interest portion of
rentals............... 35 23 22 23 23 19 18 12 11
Amortization of debt
expense............... 16 12 9 6 6 5 8 5 6
Distributions from and
(earnings) losses of
less than 50%-owned
affiliates with debt
not guaranteed by TCI. 27 26 (10) (27) 34 46 15 (11) 10
Minority interests in
earnings (losses) of
consolidated subsidi-
aries, including pre-
ferred stock dividend
requirement of consol-
idated subsidiaries... 70 13 277 24 (63) (36) 30 4 8
Elimination of pre-
ferred stock dividend
requirement of consol-
idated subsidiaries to
50%-owned affiliates.. -- -- (250) (42) (36) (31) -- -- --
Preferred stock divi-
dend requirements of
50%-owned affiliates,
other than amounts to -- -- 175 23 15 25 -- -- --
TCI................... ---- ---- ----- ----- ----- ---- -------- -------- --------
Earnings available for
combined fixed charges
and preferred stock $-- 973 1,083 827 661 534 583 467 536
dividends............. ==== ==== ===== ===== ===== ==== ======== ======== ========
Combined fixed charges
and preferred stock
dividends:
Interest on debt:
TCI and consolidated
subsidiaries.......... $-- 731 718 826 868 766 372 363 363
Elimination of interest
of consolidated sub-
sidiaries to 50%-owned
affiliates............ -- -- (36) (47) (51) (51) -- -- --
TCI's proportionate
share of interest of 67 7 133 149 173 180 37 4 4
50%-owned affiliates.. ---- ---- ----- ----- ----- ---- -------- -------- --------
-- 738 815 928 990 895 409 367 367
Interest portion of
rentals................ 35 23 22 23 23 19 18 12 11
Amortization of debt ex-
penses................. 16 12 9 6 6 5 8 5 6
Preferred stock dividend
requirements of consol-
idated subsidiaries.... 71 14 281 61 56 46 36 7 7
Elimination of preferred
stock dividend require-
ments of consolidated
subsidiaries to 50%-
owned affiliates....... -- -- (250) (42) (36) (31) -- -- --
Preferred stock dividend
requirements of 50%-
owned affiliates, other
than amounts to TCI.... -- -- 175 23 15 25 -- -- --
Preferred stock dividend
requirements of the
Company................ -- -- -- -- -- -- -- -- --
Capitalized interest.... 10 9 6 5 6 5 7 6 3
---- ---- ----- ----- ----- ---- -------- -------- --------
Total fixed charges..... $-- 796 1,058 1,004 1,060 964 478 397 394
==== ==== ===== ===== ===== ==== ======== ======== ========
Ratio of earnings to
combined fixed charges
and preferred stock
dividends.............. -- 1.22 1.02 -- -- -- 1.22 1.18 1.36
Deficiency.............. $-- -- -- (177) (399) (430) -- -- --
</TABLE>
- --------
(a) Preferred stock dividend requirements have been increased to an amount
representing the pretax earnings which would be required to cover such
dividend requirements. The effective income tax rate utilized for purposes
of increasing preferred stock dividend requirements in 1993 has been
adjusted to exclude the effect of the federal income tax rate change in
the third quarter of 1993.
(continued)
<PAGE>
TELE-COMMUNICATIONS, INC.
AND CONSOLIDATED SUBSIDIARIES
CALCULATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS, CONTINUED
(AMOUNTS IN MILLIONS, EXCEPT FOR RATIOS)
(UNAUDITED)
Fixed charges related to interest on debt of less than 50%-owned affiliates
guaranteed by TCI:
<TABLE>
<S> <C>
Years ended December 31,
1989.......................................................... $ 745
1990.......................................................... 710
1991.......................................................... 506
1992.......................................................... 2,517
1993.......................................................... 13,833
Pro forma 1993................................................ 14,365
Three Months Ended March 31,
1993.......................................................... $ 629
1994.......................................................... 3,458
Six Months Ended June 30,
1993.......................................................... $ 1,258
1994.......................................................... 5,927
Pro forma 1994................................................ 6,193
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS
TELE-COMMUNICATIONS, INC.:
We consent to the incorporation by reference in the registration statement of
Form S-3 of Tele-Communications, Inc. of our reports dated March 21, 1994,
relating to the consolidated balance sheets of TCI Communications, Inc.
(formerly Tele-Communications, Inc.) and subsidiaries as of December 31, 1993
and 1992, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1993, and the related financial statement schedules, which reports
appear in the December 31, 1993 Annual Report on Form 10-K, as amended, of TCI
Communications, Inc. and to the reference to our firm under the heading
"Experts" in the registration statement. Our reports refer to a change in the
method of accounting for income taxes in 1993.
KPMG PEAT MARWICK LLP
Denver, Colorado
October 31, 1994
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTOR AND STOCKHOLDERSLIBERTY MEDIA CORPORATION:
We consent to the incorporation by reference in the registration statement on
Form S-3 of TeleCommunications, Inc. of our report dated March 18, 1994,
relating to the consolidated balance sheets of Liberty Media Corporation and
subsidiaries (Successor) as of December 31, 1993 and 1992, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended December 31, 1993 and 1992 and the period from April 1, 1991 to
December 31, 1991 (Successor Periods) and the consolidated statements of
operations, stockholders' equity, and cash flows of Liberty Media (a
combination of certain programming interests and cable television assets of TCI
Communications, Inc. (formerly TeleCommunications, Inc.)) (Predecessor) for the
period from January 1, 1991 to March 31, 1991 (Predecessor Period), which
report appears in the Form 8-K of TCI Communications, Inc, dated April 6, 1994
and to the reference to our firm under the heading "Experts" in the
registration statement. Our report refers to a change in the method of
accounting for income taxes in 1993.
KPMG PEAT MARWICK LLP
Denver, Colorado
October 31, 1994
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of the
Registration Statement on Form S-3 of Tele-Communications, Inc. of our report
dated February 4, 1994 relating to the consolidated financial statements of
TeleCable Corporation which appears on page 12 of the TCI Communications, Inc.
and Tele-Communications, Inc. Current Report on Form 8-K dated August 26, 1994.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
Price Waterhouse LLP
Norfolk, Virginia
October 31, 1994
