<PAGE>
As filed with the Securities and Exchange Commission on December 22, 1994
Registration No. 33-54263
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
Under The Securities Act of 1933
ON
FORM S-3
REGISTRATION STATEMENT
Under the Securities Act of 1933
______________________
TELE-COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1260157
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5619 DTC Parkway
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)
______________________
Copy to:
Elizabeth M. Markowski, Esq.
Baker & Botts, L.L.P.
885 Third Avenue
New York, New York 10022-4834
(212) 705-5000
Approximate date of commencement of proposed sale of the securities to the
public: From time to time 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: [X]
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>
Subject to Completion, dated December 21, 1994
PROSPECTUS
TELE-COMMUNICATIONS, INC.
CLASS A COMMON STOCK
($1.00 Par Value)
This Prospectus relates to shares (the "Shares") of the Class A Common
Stock, par value $1.00 per share (the "Class A Common Stock"), of Tele-
Communications, Inc., a Delaware corporation (the "Company"), to be issued from
time to time upon conversion of up to $30 million aggregate principal amount of
certain convertible notes (the "Notes") of TCI-UA, Inc. ("TCI-UA"), an indirect,
wholly-owned subsidiary of the Company, and the offering and sale of the Shares
by the holders thereof (each a "Selling Stockholder") from time to time
thereafter. At the date of this Prospectus, 5,042,016 shares of Class A Common
Stock are issuable upon conversion of such aggregate principal amount of the
Notes. See "The Shares Being Offered".
The shares of the Company's Class A Common Stock and the Company's Class B
Common Stock, par value $1.00 per share (the "Class B Common Stock"), are traded
in the over-the-counter market on the NASDAQ National Market under the symbols
TCOMA and TCOMB, respectively. The Class A Common Stock and the Class B Common
Stock are identical in all respects except that each share of Class B Common
Stock has ten votes per share and each share of Class A Common Stock has one
vote per share. Each share of Class B Common Stock is convertible, at the option
of the holder, into one share of Class A Common Stock. The Class A Common Stock
is not convertible.
The Shares may be offered for sale by the Selling Stockholders from time to
time in varying amounts and at prices and on terms to be determined at the time
of a sale or sales and to be set forth in a supplement or supplements to this
Prospectus (each, a "Prospectus Supplement"). The Shares may be sold by the
Selling Stockholders directly, through agents designated from time to time or to
or through broker-dealers or underwriters designated from time to time. To the
extent required, the number of Shares to be sold, the name of the Selling
Stockholder, the purchase price, the public offering price, if applicable, the
name of any such agent, broker-dealer or underwriter, and any applicable
commissions, discounts or other items constituting compensation to such agents,
broker-dealers or underwriters with respect to a particular offering will be set
forth in an accompanying Prospectus Supplement. The aggregate proceeds to the
Selling Stockholders from the sale of the Shares so offered will be the purchase
price of the Shares sold less the aggregate commissions, discounts and other
compensation, if any, paid to agents, broker-dealers or underwriters, and other
expenses of the offering and sale not borne by the Company. See "The Shares
Being Offered" and "Plan of Distribution." There will be no proceeds to the
Company from the issuance or sale of the Shares. The Company knows of no selling
arrangement between any agent, broker-dealer or underwriter and the Selling
Stockholders.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of any of the
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended, and any discount or commission received by them and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under such Act.
____________________
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.
____________________
The date of this Prospectus is December __, 1994.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ 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 +
+ 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 THESE +
+ 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 STATE. +
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
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 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.
AVAILABLE INFORMATION
On June 28, 1994, the Securities and Exchange Commission (the "Commission")
declared effective under the Securities Act of 1933, as amended (the "Securities
Act"), a Registration Statement on Form S-4 (Reg. No. 33-54263) (the "Form S-4
Registration Statement") of the Company, which registered the offer and sale of
up to 539,941,193 shares of Class A Common Stock of the Company in connection
with the TCI/Liberty Combination. The shares covered by the Form S-4
Registration Statement included the Shares. The Company has filed with the
Commission a Post-Effective Amendment on Form S-3, of which this Prospectus
forms a part, to the Form S-4 Registration Statement (which, together with all
amendments and exhibits thereto, is referred to herein as the "Registration
Statement") which also covers the Shares. 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 pertaining to the Shares and the Company,
reference is 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
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Commission.
Reports, proxy and information statements and other information filed by the
Company, including the Registration Statement, 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.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference: (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 Quarterly Report on Form 10-Q
for the quarter ended September 30, 1994, as amended by Form 10-Q/A (Amendment
1) and Form 10-Q/A (Amendment 2) (Commission File No. 0-20421), (v) 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 (vi) the Company's Current Reports on Form 8-K
dated August 5, 1994, August 18, 1994, August 26, 1994, October 27, 1994 and
December 2, 1994 , as amended by Form 8-K/A (Amendment 1) (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 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
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<PAGE>
certain 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.
CERTAIN CONSIDERATIONS
The following factors, among others, should be considered carefully before
making an investment decision with respect to the 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 nine-month
periods ended September 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 Cash Flow (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 $1,339 million and $1,409 million for the nine-month periods
ended September 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
$568 million and $549 million for the nine-month periods ended September 30,
1994 and 1993, respectively). 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 nine months ended September 30, 1994 and 1993 was 236%
and 257%, respectively. Operating Cash Flow is a measure of value and borrowing
capacity within the cable television industry and is not intended to be a
substitute for cash flows provided by operating activities, a measure of
performance prepared in accordance with generally accepted accounting
principles, and should not be relied upon as such.
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. The Company also has investments in
cable and telecommunications operations and television programming in certain
international markets. The Company has also invested in companies and joint
ventures involved in developing and providing programming for new television and
telecommunications 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 SHARES BEING OFFERED
On July 9, 1986, the Company entered into a Stock Purchase Agreement (the
"Naify Agreement") with Marshall Naify, Robert A. Naify, a corporation owned by
them, certain members of their respective families and certain trusts
established for the benefit of such persons and certain other members of their
respective families (the "Naify Family"), pursuant to which the Company acquired
from the Naify Family in December of 1986 all of the shares of common stock of
United Artists Communications, Inc. ("UACI") owned by them, which represented
approximately 55% of the UACI shares then outstanding. The consideration paid
for each share of UACI common stock acquired by the Company pursuant to the
Naify Agreement was $18.498, of which $6.64 was paid in cash and the balance of
$11.858 per share was represented by Notes.
The Notes are general unsecured obligations of TCI-UA, the principal
amount of which is payable on December 12, 2021 and bears interest at the rate
of 1.85% per annum until December 12, 2003 and no interest thereafter. The Notes
are presently convertible at any time at the option of the holder into
approximately one share of Class A Common Stock ("Conversion Shares") for each
$5.95 principal amount of Notes, subject to adjustment under stated
circumstances.
As of the date of this Prospectus, Notes in the aggregate principal
amount of $230,330,481 are outstanding, which Notes are convertible at the
current conversion rate into an aggregate of approximately 38,710,990 Conversion
Shares (excluding fractional shares issuable upon conversion of any particular
Note). Exhibit 99.1 to the Registration
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<PAGE>
Statement of which this Prospectus forms a part contains a list of the members
of the Naify Family who currently hold the Notes, the aggregate principal amount
of the Notes held by each such holder and the number of whole shares of Class A
Common Stock into which the Notes of such holder are convertible at the current
conversion rate. It is anticipated that, from time to time after the date
hereof, record ownership of certain of the Notes that are currently held in
trust for the benefit of members of the Naify Family will be transferred to the
beneficiaries of the applicable trust and/or that record ownership of certain of
the Notes may be transferred to living trusts of which the current record owner
or (in the case of Notes currently held in trust) beneficial owner would be a
trustee with sole control and complete discretion to revoke or amend such trust
during such person's lifetime. In accordance with the terms of the Naify
Agreement, neither the Notes nor the Conversion Shares may be transferred unless
they are registered under the Securities Act or an exemption from registration
is available. The Notes have not been registered under the Securities Act and
neither the Company nor TCI-UA has any obligation to register the Notes. The
Naify Agreement provides the holders of the Notes with certain demand and
incidental or "piggyback" registration rights with respect to the Conversion
Shares. Specifically, the demand registration rights permit holders of the Notes
from time to time to require the Company to register Conversion Shares, in
minimum quantities of 1,000,000 Conversion Shares, under the Securities Act for
sale in an underwritten public offering, except that the Company is not
obligated to effect such registration more than once in any six month period or
if, in order to comply with such request, the Company could be required to
undergo a special interim audit (unless the parties requesting registration
agree to pay all fees and expenses of such special interim audit). The
incidental registration rights permit the holders of the Notes to have their
Conversion Shares included in certain types of registration statements proposed
to be filed by the Company. The Company's agreement to register the Shares
covered by this Prospectus as described below is contained in a letter agreement
which has been filed as Exhibit 99.2 to the Registration Statement and is
separate from the Company's obligation to register Conversion Shares under the
Naify Agreement. The full text of the Naify Agreement has been filed as Exhibit
99.3 to the Registration Statement of which this Prospectus forms a part. See
"Available Information."
The Company has agreed, for the benefit of the holders of the Notes, to
register the Conversion Shares to be issued from time to time upon conversion of
up to $30 million aggregate principal amount of the Notes and the resale of such
shares from time to time by the holders thereof. The Shares offered hereby
represent the number of Conversion Shares issuable upon conversion of such
aggregate principal amount of Notes, as such number may be increased or
decreased as a result of adjustments to the conversion rate pursuant to the
anti-dilution provisions of the Notes. At the current conversion rate, 5,042,016
Conversion Shares are issuable upon conversion of $30 million aggregate
principal amount of the Notes. The Conversion Shares will be included in the
Shares covered by this Prospectus on the basis of the order in which the Notes,
up to an aggregate principal amount of $30 million, are converted.
A member of the Naify Family, or any person to whom a member of the Naify
Family has transferred Notes in a transaction permitted by the Naify Agreement,
for whose account Shares are being offered hereby is referred to herein as a
"Selling Stockholder". The Selling Stockholder in connection with a particular
sale of Shares hereunder will be identified in a Prospectus Supplement. The
number of Shares to be sold and the number, if any, and (if one percent or more)
the percentage of the outstanding shares of Class A Common Stock to be owned
beneficially by the Selling Stockholder after completion of any offering
hereunder will be specified in the applicable Prospectus Supplement. To the
Company's knowledge, as of the date of this Prospectus, no member of the Naify
Family beneficially owns any shares of Class A Common Stock other than the
shares that are issuable upon conversion of the Notes, except for 850,328 shares
owned by Robert A. Naify, 184,441 shares owned by Marshall Naify, 9,400 shares
owned by James C. Naify, 32,583 shares owned by Richard R. Naify, 67,320 shares
owned by Josephine Naify, 66,370 shares owned jointly by Richard R. Naify and
Josephine Naify, 2,307 shares owned by the Michael S. Naify 1981 Trust, 2,037
shares owned by the Christina E. Naify 1981 Trust and 675 shares owned by the
Marsha J. Naify Living Trust.
Neither the Company nor any of its affiliates has had any material
relationship with any member of the Naify Family within the past three years,
except that Robert A. Naify has been a director of the Company since June 12,
1987. Any other material relationship between the Company or any of its
affiliates, on the one hand, and a Selling Stockholder, on the other, within
three years prior to the date of a sale by such Selling Stockholder hereunder
will be described in the Prospectus Supplement relating to such sale. The
Company has agreed to bear all costs and expenses of registering the Shares
under the Securities Act and certain state securities laws, including
registration fees, its legal and accounting fees and expenses and photocopying
costs. The Selling Stockholders will bear all other expenses of the offering and
sale of the Shares, including any underwriting discounts, selling commissions or
other compensation to agents, broker-dealers or underwriters, transfer fees or
taxes, if any, and fees and expenses of counsel and other advisers, if any, to
the Selling Stockholders. The Company and the Selling Stockholders have each
agreed to indemnify the other against certain liabilities, including civil
liabilities under the Securities Act.
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<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, par value $.01 per share ("Class A Preferred Stock"), 1,675,096 shares of
Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock, par value
$.01 per share ("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, copies of which are filed as exhibits
to this Registration Statement.
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 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. As of the date of this Prospectus, the Class A and Class B Common
Stock and the Class C Preferred Stock (as defined below) constitute the only
"Voting Stock" of the Company.
Class Preferred Stock
Class A Preferred Stock. The Company is authorized to issue 700,000 shares
of Class A Preferred Stock, of which 592,798 were issued and outstanding as of
the date of this Prospectus and all of which were held by a wholly-owned
subsidiary of the Company. The dividend, liquidation and redemption features of
the Class A Preferred Stock, each of which is discussed below, are determined by
reference to the liquidation value of the Class A Preferred Stock, which as of
any date of determination will be equal, on a per share basis, to the sum of (i)
$322.84, plus (ii) all dividends accrued on such share through the dividend
payment date on or immediately preceding such date of determination to the
extent not paid on or before such date, plus (iii), for purposes of determining
liquidation and redemption payments, all unpaid dividends accrued on the sum of
clauses (i) and (ii) above, to such date of determination.
The holders of Class A Preferred Stock are entitled to receive preferential
cumulative cash dividends when and as declared by the Board of Directors out of
unrestricted funds legally available therefor. Dividends accrue cumulatively at
an annual rate of 9 3/8% of the liquidation value per share, whether or not such
dividends are
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<PAGE>
declared or funds are legally or contractually available for payment of
dividends. Dividends not paid on any dividend payment date are added to the
liquidation value on such date and remain a part thereof until such dividends
and all dividends accrued thereon are paid in full.
Upon the dissolution, liquidation or winding up of the Company, holders of
Class A Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash or property
or a combination thereof, per share, equal to the liquidation value.
The Class A Preferred Stock is subject to optional redemption at any time
by the Company, in whole or in part, and to mandatory redemption by the Company
on the twelfth anniversary of the issue date, in each case at a redemption price
per share equal to the liquidation value of the Class A Preferred Stock.
Class B Preferred Stock. The Company is authorized to issue 1,675,096
shares of Class B Preferred Stock, all of which were issued and outstanding as
of the date of this Prospectus. The holders of Class B Preferred Stock are
entitled to receive preferential cumulative dividends, when and as declared by
the Board of Directors out of unrestricted funds legally available therefor.
Dividends accrue cumulatively (but without compounding) at an annual rate of 6%
of the stated liquidation value of $100 per share (the "Stated Liquidation
Value"), whether or not such dividends are declared or funds are legally
available for the payment of dividends. Accrued dividends are payable annually
and, in the sole discretion of the Board of Directors, may be declared and paid
in cash, in shares of Class A Common Stock or in any combination of the
foregoing. Accrued dividends not paid as provided above on any dividend payment
date will accumulate and such accumulated unpaid dividends may be declared and
paid in cash, shares of Class A Common Stock or any combination thereof at any
time without reference to any regular dividend payment date, to holders of
record of Class B Preferred Stock as of a special record date fixed by the Board
of Directors.
Upon the liquidation, dissolution or winding up of the Company, the holders
of Class B Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash or property
or a combination thereof, per share, equal to the Stated Liquidation Value
thereof, plus all accumulated and accrued but unpaid dividends thereon to the
date of payment.
The Class B Preferred Stock is redeemable at any time at the option of the
Company, in whole or in part, for a redemption price per share payable in cash
equal to the Stated Liquidation Value thereof, plus all accumulated and accrued
but unpaid dividends thereon to and including the redemption date.
The Class B Preferred Stock is exchangeable at the option of the Company in
whole but not in part at any time for junior subordinated debt securities of the
Company ("Junior Exchange Notes"). If the Company exercises its optional
exchange right, each holder of outstanding shares of Class B Preferred Stock
will be entitled to receive in exchange therefor newly issued Junior Exchange
Notes of a series authorized and established for the purpose of such exchange,
the aggregate principal amount of which will be equal to the aggregate Stated
Liquidation Value of the shares of Class B Preferred Stock so exchanged by such
holder, plus all accumulated and accrued but unpaid dividends thereon to and
including the exchange date. The Junior Exchange Notes will mature on the
fifteenth anniversary of the date of issuance and will be subject to earlier
redemption at the option of the Company, in whole or in part, for a redemption
price equal to the principal amount thereof plus accrued but unpaid interest.
Interest will accrue, and be payable annually, on the principal amount of the
Junior Exchange Notes at a rate per annum to be determined prior to issuance by
adding a spread of 215 basis points to the "Fifteen Year Treasury Rate" (as
defined in the Indenture pursuant to which the Junior Exchange Notes will be
issued). Interest will accrue on overdue principal at the same rate, but will
not accrue on overdue interest.
Series Preferred Stock
The Series Preferred Stock is issuable, 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. 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 is expressly authorized by the Company's Restated Certificate of
Incorporation to determine in the resolution or resolutions providing for the
issue of any series of the Series Preferred Stock. No assurance can be given
that the terms of any future series of Series Preferred Stock will not
materially limit or qualify the rights of the holders of Class A or Class B
Common Stock in a manner that is different from
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<PAGE>
or in addition to the terms of any class or series of Preferred Stock that are
outstanding on the date of this Prospectus.
Convertible Preferred Stock, Series C. The Company is authorized to issue
80,000 shares of Convertible Preferred Stock, Series C ("Series C Preferred
Stock"), of which 70,559 were issued and outstanding as of the date of this
Prospectus. Each share of Series C Preferred Stock is convertible, at the option
of the holder, into 100 shares of Class A Common Stock, subject to anti-dilution
adjustments. The dividend, liquidation and redemption features of the Series C
Preferred Stock, each of which is discussed below, are determined by reference
to the liquidation value of the Series C Preferred Stock, which as of any date
of determination is equal, on a per share basis, to the sum of (i) $2,375, plus
(ii) all dividends accrued on such share through the dividend payment date on or
immediately preceding such date of determination to the extent not paid on or
before such date, plus (iii), for purposes of determining liquidation and
redemption payments, all unpaid dividends accrued on the sums of clauses (i) and
(ii) above, to such date of determination. The holders of Series C Preferred
Stock are entitled to receive preferential cumulative cash dividends out of
funds legally available therefor. Dividends accrue cumulatively at an annual
rate of 5 1/2% of the liquidation value per share, whether or not such dividends
are declared or funds are legally or contractually available for payment of
dividends, except that if the Company fails to redeem shares of Series C
Preferred Stock required to be redeemed on a redemption date, dividends will
thereafter accrue cumulatively at an annual rate of 15% of the liquidation value
per share. Dividends not paid on any dividend payment date will be added to the
liquidation value on such date and remain a part thereof until such dividends
and all dividends accrued thereon are paid in full. Dividends will accrue on
unpaid dividends at the rate of 5 1/2% per annum, unless such dividends remain
unpaid for two consecutive quarters in which event such rate will increase to
15% per annum.
Upon the dissolution, liquidation or winding up of the Company, holders of
the Series C Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash, per share,
equal to the liquidation value of the Series C Preferred Stock.
The Series C Preferred Stock is subject to optional redemption at any time
after the seventh anniversary of its issuance, in whole or in part, by the
Company at a redemption price per share equal to the then liquidation value of
the Series C Preferred Stock. Subject to the prior preferences and other rights
of any other class or series of Preferred Stock ranking senior to or on a parity
with the Series C Preferred Stock, the Series C Preferred Stock is required to
be redeemed by the Company at any time after such seventh anniversary at the
option of the holder, in whole or in part (provided that the aggregate
liquidation value of the shares to be redeemed is in excess of $1 million), in
each case at a redemption price per share equal to the liquidation value.
Redeemable Convertible Preferred Stock, Series E. The Company is
authorized to issue 400,000 shares of Redeemable Convertible Preferred Stock,
Series E ("Series E Preferred Stock") of which 246,402 were issued and
outstanding as of the date of this Prospectus and all of which were held by
wholly-owned subsidiaries of the Company. At any time after the Company amends
its Restated Certificate of Incorporation to increase the number of authorized
shares of Class A Common Stock to a number that would permit the conversion of
all of the shares of Series E Preferred Stock then outstanding, the shares of
Series E Preferred Stock shall be convertible, at the option of the holder, into
Class A Common Stock at the rate of 1,000 shares of Class A Common Stock for
each share of Series E Preferred Stock, subject to anti-dilution adjustments.
The dividend, liquidation and redemption features of the Series E Preferred
Stock, each of which is discussed below, are determined by reference to the
liquidation value of the Series E Preferred Stock, which as of any date of
determination is equal, on a per share basis, to the sum of (i) $22,303, plus
(ii) all dividends accrued on such share through the dividend payment date on or
immediately preceding such date of determination to the extent not paid on or
before such date, plus (iii) for purposes of determining liquidation and
redemption payments, all unpaid dividends accrued on the sum of clauses (i) and
(ii) above, to such date of determination.
The holders of Series E Preferred Stock are entitled to receive
preferential cumulative cash dividends out of funds legally available therefor.
Dividends accrue cumulatively at an annual rate of 5% of the stated liquidation
value per share, whether or not such dividends are declared or funds are legally
available for payment of dividends. Dividends not paid on any dividend payment
date are added to the liquidation value on such date and remain a part thereof
until such dividends are paid.
Upon the dissolution, liquidation or winding up of the Company, holders of
the Series E Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash or property
or a combination thereof, per share, equal to the liquidation value of the
Series E Preferred Stock.
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<PAGE>
The Series E Preferred Stock is subject to optional redemption by the
Company at any time, in whole or in part, at a redemption price, per share,
equal to the then liquidation value of the Series E Preferred Stock. The Company
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 of the last daily sales
prices of the Class A Common Stock for a specified period, subject to
adjustments described in the certificate of designations establishing the Series
E Preferred Stock.
Convertible Preferred Stock, Series D. The Company has entered into a
definitive merger agreement with TeleCable Corporation ("TeleCable") whereby
TeleCable will be merged with and into a wholly-owned subsidiary of the Company
(the "TeleCable Merger"). The terms of the TeleCable Merger contemplate the
issuance to the former stockholders of TeleCable of one million shares of a new
series of Series Preferred Stock to be designated as "Convertible Preferred
Stock, Series D" (the "Series D Preferred Stock"), as partial consideration for
the proposed acquisition by the Company of TeleCable. If such series is issued,
the preferences and relative, participating, optional or other special rights,
qualifications, limitations or restrictions thereof are expected to be as set
forth below.
Each share of Series D Preferred Stock will be convertible, at the option
of the holder, into 10 shares of Class A Common Stock, subject to anti-dilution
adjustments. The dividend, liquidation and redemption features of the Series D
Preferred Stock, each of which is discussed below, will be determined by
reference to the liquidation value of the Series D Preferred Stock, which as of
any date of determination will equal, on a per share basis, the sum of (i) $300,
plus (ii) all dividends accrued on such share through the dividend payment date
on or immediately preceding such date of determination to the extent not paid on
or before such date, plus (iii) for purposes of determining liquidation and
redemption payments, all unpaid dividends accrued on the sum of clauses (i) and
(ii) above, to such date of determination.
The holders of Series D Preferred Stock will be entitled to receive
preferential cumulative cash dividends out of funds legally available therefor.
Dividends will accrue cumulatively at an annual rate of 5 1/2% of the
liquidation value per share, whether or not such dividends are declared or funds
are legally or contractually available for payment of dividends, except that if
the Company fails to redeem shares of Series D Preferred Stock required to be
redeemed on a redemption date, dividends thereafter will accrue cumulatively at
an annual rate of 10% of the liquidation value per share. Dividends not paid on
any dividend payment date will be added to the liquidation value on such date
and remain a part thereof until such dividends and all dividends accrued thereon
are paid in full. Dividends will accrue on unpaid dividends at the rate of 5
1/2% per annum, unless such dividends remain unpaid for two consecutive quarters
in which event such rate shall increase to 10% per annum. To the extent any cash
dividends are not paid on any dividend payment date, the amount of such
dividends will be converted, to the extent permissible under the Delaware
General Corporation Law, into shares of Class A Common Stock at a conversion
rate equal to 95% of the then current market price (as defined in the
certificate of designations establishing the Series D Preferred Stock) of Class
A Common Stock, and upon issuance of Class A Common Stock to holders of Series D
Preferred Stock in respect of such conversion such dividend will be deemed paid
for all purposes.
Upon the dissolution, liquidation or winding up of the Company, holders of
the Series D Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash, per share,
equal to the liquidation value of the Series D Preferred Stock.
The Series D Preferred Stock will be subject to optional redemption by the
Company at any time after the fifth anniversary of its issuance, in whole or
from time to time in part, at a redemption price per share equal to the
liquidation value of the Series D Preferred Stock. Shares of Series D Preferred
Stock may also be subject to optional redemption by the Company after the third
anniversary of the issue date if the market value per share of Class A Common
Stock shall have exceeded $37.50 for the period specified in the certificate of
designations establishing the Series D Preferred Stock. Subject to the prior
preferences and other rights of any other class or series of Preferred Stock
ranking senior to or on a parity basis with, the Series D Preferred Stock and
subject to any prohibition or restriction contained in any instrument evidencing
indebtedness of the Company, any holder of Series D Preferred Stock, at such
holder's option, may require the Company, at any time after the tenth
anniversary of the issuance of such Series D Preferred Stock, to redeem all or a
portion of such holder's shares of Series D Preferred Stock, provided that the
aggregate liquidation value of the shares to be redeemed is in excess of $50,000
(or, if all of the shares of Series D Preferred Stock held by such holder has an
aggregate liquidation value of less than $50,000, all but not less than all of
such shares of Series D Preferred Stock), in each case at a redemption price per
share equal to the then liquidation value of the Series D Preferred Stock. If
the Company fails to effect any redemption of Series D Preferred Stock, the
holders thereof will have the option to convert their shares of Series D
Preferred Stock into Class A Common Stock at a conversion rate equal to 95% of
the current market value of the Class A Common Stock
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<PAGE>
over a period specified in the certificate of designations establishing the
Series D Preferred Stock, provided that such option may not be exercised
unless the failure to redeem continues for more than a year.
Ranking; Limitations on Rights of Holders of Common Stock
All classes and series of Preferred Stock outstanding on the date of this
Prospectus rank senior to the Class A Common Stock and Class B Common Stock as
to dividend rights, rights to redemption and rights on liquidation.
For so long as any dividends are in arrears on any outstanding class or
series of Preferred Stock, and until all dividends accrued up to the immediately
preceding dividend payment date on such Preferred Stock and on any class or
series of Preferred Stock ranking on a parity with such Preferred Stock ("Parity
Stock") shall have been paid or declared and set apart so as to be available for
payment in full thereof and for no other purpose, neither the Company nor any
subsidiary thereof may purchase or otherwise acquire any shares of Class A
Common Stock or Class B Common Stock, or set aside any money or assets for any
such purpose, unless all of the outstanding shares of such Preferred Stock and
Parity Stock are redeemed. For so long as any dividends are in arrears on any
outstanding class or series of Preferred Stock and until all dividends accrued
up to the immediately preceding dividend payment date on such Preferred Stock
shall have been paid or declared and set apart so as to be available for payment
in full thereof and for no other purpose, the Company may not declare or pay any
dividend on or make any distribution with respect to the Class A Common Stock or
Class B Common Stock or set aside any money or assets for any such purpose. If
the Company fails to redeem shares of Class A Preferred Stock, Class B Preferred
Stock or Series E Preferred Stock required to be redeemed on a redemption date,
the Company may not declare or pay any dividend on or make any distribution with
respect to the Class A Common Stock or Class B Common Stock or set aside money
or assets for any such purpose, and neither the Company nor any subsidiary
thereof may purchase or otherwise acquire any shares of Class A Common Stock or
Class B Common Stock or set aside any money or assets for any such purpose,
until all shares of such class or series of Preferred Stock are redeemed in
full. If the Company fails to redeem shares of Series C Preferred Stock or
Series D Preferred Stock required to be redeemed on a redemption date, neither
the Company nor any subsidiary thereof may purchase or otherwise acquire any
shares of Class A Common Stock or Class B Common Stock or set aside any money or
assets for any such purpose, until all shares of such series of Preferred Stock
are redeemed in full. Neither the Company nor any subsidiary thereof may
purchase or otherwise acquire any shares of Class A Common Stock or Class B
Common Stock, or set aside any money or assets for such purpose, if after giving
effect to such purchase or acquisition the amount that would be available for
distribution to the holders of Class A Preferred Stock, Class B Preferred Stock
and Series E Preferred Stock upon liquidation, dissolution or winding up of the
Company, if such liquidation, dissolution or winding up were to occur on the
date fixed for such purchase or acquisition of shares of Class A Common Stock or
Class B Common Stock, would be less than the aggregate liquidation preference of
all then outstanding shares of such classes and series of Preferred Stock. The
failure of the Company (i) to redeem on any date fixed for redemption any
outstanding shares of Class A Preferred Stock, Class B Preferred Stock or Series
E Preferred Stock or (ii) to pay dividends on the Series C Preferred Stock or
Series D Preferred Stock, shall not prevent the Company from paying any
dividends on Class A Common Stock or Class B Common Stock solely in shares of
capital stock ranking junior to such class or series of Preferred Stock or (with
respect to (i) above only) the purchase or other acquisition of Class A Common
Stock or Class B Common Stock solely in exchange for (together with a cash
adjustment for fractional shares, if any) shares of such junior capital stock.
PLAN OF DISTRIBUTION
The Shares may be sold by the Selling Stockholders directly or through
agents designated from time to time or to or through broker-dealers or
underwriters designated from time to time. To the extent required, any such
agent, broker-dealer or underwriter involved in the offer and sale of the Shares
and any applicable commissions, discounts or other items constituting
compensation to such agents, broker-dealers or underwriters will be set forth in
the accompanying Prospectus Supplement. The Company has been advised by the
Selling Stockholders that they have not, as of the date of this Prospectus,
entered into any arrangement with an agent, broker-dealer or underwriter for the
sale of the Shares.
The distribution of the Shares may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at prices determined on a negotiated or competitive bid basis.
If any Shares are sold in an underwritten offering, such Shares may be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
Unless otherwise indicated in the
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<PAGE>
applicable Prospectus Supplement, the obligations of any underwriters to
purchase Shares will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all of the Shares specified in such
Prospectus Supplement if any are purchased. Shares may be sold through a broker-
dealer acting as agent or broker for a Selling Stockholder, or to a broker-
dealer acting as principal. In the latter case, the broker-dealer may then
resell such Shares to the public at varying prices to be determined by such
broker-dealer at the time of resale.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of any of the
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act and any discount or commission received by them and any profit realized by
them on the resale of Shares may be deemed to be underwriting discounts and
commissions under the Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the Shares will be passed upon for
the Company by Baker & Botts, L.L.P., 885 Third Avenue, Suite 1900, New York,
New York 10022-4834. 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.
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 Annual Report
on Form 10-K, as amended, of TCI Communications, Inc. for the year ended
December 31, 1993, 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 reports of
KPMG Peat Marwick LLP refer to a change in the method of accounting for income
taxes in 1993.
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), included 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 the Current Report on Form 8-K of the
Company 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 auditing and accounting.
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================================================================================
No dealer, salesman or other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus or the Prospectus Supplement in connection with the offer made hereby
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company. Neither the delivery of this
Prospectus or the Prospectus Supplement nor any sale made hereunder shall, under
any circumstances, create an implication that the information contained or
incorporated by reference herein is correct as of any time subsequent to its
date or that there has been no change in the affairs of the Company since such
date. This Prospectus and the Prospectus Supplement do not constitute an offer
to sell or a solicitation of an offer to buy by anyone in any jurisdiction in
which such offer or solicitation is not authorized, or in which the person
making such offer or solicitation is not qualified to do so, or to anyone to
whom it is unlawful to make such offer or solicitation.
-----------------------------
TABLE OF CONTENTS
Page
----
Available Information.......... 2
Incorporation of Documents by
Reference................... 2
Certain Considerations......... 3
The Company.................... 3
The Shares Being Offered....... 3
Description of Capital Stock... 5
Plan of Distribution........... 9
Legal Matters.................. 10
Experts........................ 10
================================================================================
================================================================================
Tele-Communications, Inc.
Class A Common Stock
($1.00 Par Value)
-----------------------------------------
PROSPECTUS
-----------------------------------------
December __, 1994
================================================================================
<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 Shares are set forth below. None of the listed expenses will
be borne by the Selling Stockholders.
Registration Fee *............... $36,186.02
Blue Sky Fees and Expenses
(including counsel fees) **.... 15,000.00
Legal Fees and Expenses **....... 25,000.00
Accounting Fees and Expenses **.. 7,000.00
Miscellaneous **................. 2,813.98
----------
Total **.................. $86,000.00
______________________________
* Previously paid in connection with Form S-4 Registration Statement.
** 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 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 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 facts and 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 Amended and 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
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.
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<PAGE>
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 laws of the State of
Delaware and the Company's Certificate of Incorporation, as then or thereafter
in effect.
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 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,
II-2
<PAGE>
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.
In addition, the Selling Stockholders, severally and not jointly, have
agreed to indemnify the Company, its directors and officers and each person, if
any, who controls the Company within the meaning of either the Securities Act or
the Securities Exchange Act of 1934, as amended, against certain liabilities,
including civil liabilities under the Securities Act.
Item 16. Exhibits.
--------
4.1 Specimen Certificate for Class A Common Stock.*
4.2 Registrant's Restated Certificate of Incorporation.
4.3 Registrant's By-laws.*
5 Opinion of Baker & Botts, L.L.P., Counsel to Registrant.
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 (previously filed as Exhibit 24 to the
Form S-4 Registration Statement, Reg. No. 33-54263).*
99.1 Information with respect to Noteholders.
99.2 Letter agreement, dated December 19, 1994, between the Company
and the Selling Stockholders.
II-3
<PAGE>
99.3 Stock Purchase Agreement, dated as of July 9, 1986, among Tele-
Communications, Inc. and certain shareholders of United Artists
Communications, Inc.
____________________
* Previously filed.
Item 17. Undertakings.
------------
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
- -------- -------
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) 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.
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 Post-
Effective Amendment to the Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Greenwood Village,
State of Colorado, on December 19, 1994.
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
-------------------------------------
Stephen M. Brett
Executive Vice President
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment to the Registration Statement has been signed by
the following persons in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
* Chairman of the Board
- -------------------- and Director
(Bob Magness)
* President and Director
- -------------------- (Principal Executive
(John C. Malone) Officer)
* Executive Vice President and
- -------------------- Director (Principal Financial
(Donne F. Fisher) and Accounting Officer)
* Director
- --------------------
(John W. Gallivan)
* Director
- --------------------
(Kim Magness)
* Director
- --------------------
(Robert A. Naify)
* Director
- --------------------
(Jerome H. Kern)
* Director
- --------------------
(Tony Coelho)
* Director
- --------------------
(R. E. Turner)
*By:/s/ Stephen M. Brett December 19, 1994
-------------------------------------------------
Stephen M. Brett, Esq.
Attorney-in-Fact
II-6
<PAGE>
EXHIBIT INDEX
Sequential
Exhibits Page No.
- -------- ----------
4.1 Specimen Certificate for Class A Common Stock.*
4.2 Registrant's Restated Certificate of Incorporation.
4.3 Registrant's By-laws.*
5 Opinion of Baker & Botts, L.L.P., Counsel to Registrant.
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 (previously filed as Exhibit 24 to the
Form S-4 Registration Statement, Reg. No. 33-54263).*
99.1 Information with respect to Noteholders.
99.2 Letter agreement, dated December 19, 1994, between the Company
and the Selling Stockholders.
99.3 Stock Purchase Agreement, dated as of July 9, 1986, among Tele-
Communications, Inc. and certain shareholders of United Artists
Communications, Inc.
____________________
* Previously filed.
<PAGE>
EXHIBIT 4.2
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
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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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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
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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
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<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
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<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,
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<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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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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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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(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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(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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(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.
16
<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.
-2-
<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
-7-
<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
-8-
<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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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.
-19-
<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.
-20-
<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
<PAGE>
December 21, 1994
EXHIBIT 5
---------
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Dear Sirs:
As counsel for Tele-Communications, Inc., a Delaware corporation (the
"Company"), we have examined and are familiar with the Post-Effective Amendment
No. 2 on Form S-3 to the Form S-4 Registration Statement (Reg. No. 33-54263) of
the Company (the "S-3 Registration Statement"). The S-3 Registration Statement
relates to the issuance of shares (the "Shares") of the Company's Class A Common
Stock, par value $1.00 per share, from time to time upon conversion of up to $30
million aggregate principal amount of certain convertible notes (the "Notes") of
TCI-UA, Inc., an indirect, wholly-owned subsidiary of the Company, and the
offering and sale of the Shares by the holders thereof named in the S-3
Registration Statement (the "Selling Stockholders") from time to time
thereafter.
In connection therewith, we have examined, among other things, originals,
certified copies or copies otherwise identified to our satisfaction as being
copies of originals, of the Restated Certificate of Incorporation and By-Laws of
the Company, as amended; resolutions of the Company's Board of Directors with
respect to the filing of the S-3 Registration Statement, the issuance of the
Shares upon conversion by the Selling Stockholders of the Notes held by them and
related matters; and such other documents, records, certificates of public
officials and questions of law as we deemed necessary or appropriate for the
purpose of this opinion. In rendering this opinion, we have relied, to the
extent we deem such reliance appropriate, on certificates of officers of the
Company as to factual matters. We have assumed the authenticity of all
documents submitted to us as originals and the conformity to authentic original
documents of all documents submitted to us as certified, conformed or
reproduction copies. We have further assumed that there will be no changes
<PAGE>
December 21, 1994
Page 2
in applicable law between the date of this opinion and the date of issuance of
the Shares to the Selling Stockholders.
Based upon the foregoing, we are of the opinion that the Shares to be
issued upon conversion of the Notes by the Selling Stockholders have been duly
authorized and, when issued and delivered upon conversion of the Notes, will be
validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the S-3
Registration Statement and to the reference to us contained therein under the
heading "Legal Matters." In giving the foregoing consent, we do not admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
Jerome H. Kern, a partner of Baker & Botts, L.L.P., is a director of the
Company.
Very truly yours,
BAKER & BOTTS, L.L.P.
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
-------------------------------
The Board of Directors and Stockholders
Tele-Communications, Inc.:
We consent to the incorporation by reference in Post-Effective Amendment No. 2
to Form S-4 on Form S-3 registration statement (no. 33-54263) 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 all related 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
December 21, 1994
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
-------------------------------
The Board of Directors and Stockholders
Liberty Media Corporation:
We consent to the incorporation by reference in Post-Effective Amendment No. 2
to Form S-4 on Form S-3 registration statement (no. 33-54263) of Tele-
Communications, 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 Tele-Communications, 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
December 21, 1994
<PAGE>
EXHIBIT 23.3
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in the Post-Effective
Amendment No. 2 to Form S-4 on Form S-3 Registration Statement (No. 33-54263) 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 Registration Statement.
Price Waterhouse LLP
Norfolk, Virginia
December 21, 1994
<PAGE>
Exhibit 99.1
Number of Whole
Shares of Class A
Common Stock Into
Aggregate Principal Which Notes are
Noteholder Amount of Notes Held Convertible
- ---------- -------------------- -------------------
Marshall Naify 73,924,889.75 12,424,351
Robert A. Naify 133,559,215.23 22,446,926
Valerie Naify 960,498.00 161,428
Leslie C. Naify 1,383,117.12 232,456
Christie M. Naify 1,383,117.12 232,456
Robert J. Naify 1,383,117.12 232,456
Mark S. Naify 20,331.02 3,416
Marshall Naify, Robert A. Naify and 2,032,556.06 341,606
Georgette N. Rosekrans,
Trustees under the Michael N. Naify
testamentary trust for the
benefit of Marshall Naify
John M. Sherwood, Trustee under the 182,233.74 30,627
Leslie C. Naify 1981 Trust, dated
December 22, 1981
John M. Sherwood, Trustee under the 182,233.74 30,627
Christie M. Naify 1981 Trust,
dated December 22, 1981
John M. Sherwood, Trustee under the 182,233.74 30,627
Robert J. Naify 1981 Trust, dated
December 22, 1981
<PAGE>
Number of Whole
Shares of Class A
Common Stock Into
Aggregate Principal Which Notes are
Noteholder Amount of Notes Held Convertible
- ---------- -------------------- ---------------
John M. Sherwood, Trustee under the 139,734.67 23,484
Christina Cortese 1983
Trust, dated December 21, 1983
John M. Sherwood, Trustee under the 139,734.67 23,484
Acela Cortese 1983 Trust, dated
December 21, 1983
John M. Sherwood, Trustee under the 139,734.67 23,484
Christina E. Naify 1985
Trust, dated June 26, 1985
John M. Sherwood, Trustee under the 114,619.43 19,263
Drew Michael Andrade 1986
Trust, dated April 25, 1986
John M. Sherwood, Trustee under the 132,856.16 22,328
Marsha J. Naify Living Trust,
dated October 1, 1990
John M. Sherwood, Trustee under the 650,506.16 109,328
Michael S. Naify 1981 Trust,
dated December 29, 1981
John M. Sherwood, Trustee under the 472,006.16 79,328
Christina E. Naify 1981
Trust, dated December 29, 1981
Michael S. Naify 973,335.44 163,585
Christina E. Naify 875,120.40 147,079
Marshall Naify, Trustee under the 1,368,481.30 229,996
Michael Stephen Naify 1963
Trust, dated January 21, 1963
Richard Naify 3,833,900.00 644,352
Josephine Naify 5,995,736.82 1,007,686
James Naify 301,172.93 50,617
<PAGE>
Exhibit 99.2
December 19, 1994
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111
Gentlemen:
The persons listed on Schedule 1 hereto (the "Selling Stockholders")
are the holders of notes (the "Notes") issued by TCI-UA, Inc. ("TCI-UA"), an
indirect wholly-owned subsidiary of Tele-Communications, Inc. (the "Company").
The Notes are convertible into shares of the Class A Common Stock, $1.00 par
value per share, of the Company (the "Class A Stock"). The Selling Stockholders
have requested that the Company file pursuant to the Securities Act of 1933, as
amended (the "Act"), a registration statement with respect to the number of
shares of Class A Stock to be issued from time to time upon conversion of up to
$30 million aggregate principal amount of the Notes (the "Shares"), and the
offering and sale of the Shares from time to time by the Selling Stockholder or
Selling Stockholders to whom they are issued. The Company filed a Registration
Statement on Form S-4 (Reg. No. 33-54263) (the "Form S-4 Registration
Statement") which was declared effective on June 28, 1994 by the Securities and
Exchange Commission (the "Commission") under the Act and which registered the
offer and sale of up to 539,941,193 shares of Class A Stock in connection with
the transactions contemplated by an Agreement and Plan of Merger, dated as of
January 27, 1994, as amended, by and among the Company, Liberty Media
Corporation, TCI Communications, Inc. (formerly, Tele-Communications, Inc.) TCI
Mergerco, Inc. and Liberty Mergerco, Inc. The shares covered by the Form S-4
Registration Statement included the Shares. The Company has prepared a Post-
Effective Amendment on Form S-3 to the Form S-4 Registration Statement (the
"Registration Statement") with respect to the Shares and the offering and sale
thereof by the Selling Stockholders on a delayed or continuous basis pursuant to
Rule 415 under the Act. On the terms and conditions set forth in this letter
agreement (this "Agreement"), the Company has agreed to file the Registration
Statement with the Commission and to use diligent efforts to cause said
Registration Statement to become effective under the Act and to remain effective
until the earlier of (i) the termination of the offering of the Shares by the
Selling Stockholders or (ii) the first anniversary of the effective
<PAGE>
Tele-Communications, Inc.
December 19, 1994
Page 2
date of the Registration Statement (or for such longer period as the Company in
its sole discretion may determine). As used herein, the term "Registration
Statement" means the Registration Statement, including exhibits and financial
statements and schedules and documents incorporated by reference therein, as
amended, when it becomes effective under the Act and, in the case of references
to the Registration Statement as of a date subsequent to the effective date, as
amended or supplemented as of such date. As used herein, the term "Prospectus"
means the prospectus included in the Registration Statement as of the date it
becomes effective under the Act and, in the case of references to the Prospectus
as of a date subsequent to the effective date of the Registration Statement, as
amended or supplemented as of such date, including all documents incorporated by
reference therein, as amended, and each prospectus supplement relating to the
offering and sale of any of the Shares. As used herein, the term "Selling
Stockholder" means each person listed on Schedule 1 hereto and each person (a
"Permitted Transferee") to whom a person listed on Schedule 1 hereto transfers
Notes after the date hereof in a transaction permitted by that certain Stock
Purchase Agreement, dated as of July 9, 1986, among the Company and certain
shareholders of United Artists Communications, Inc., provided that such
Permitted Transferee becomes a party to this Agreement as contemplated by
paragraph 9 hereof.
The Selling Stockholders hereby confirm their agreement with the
Company as follows:
1. All expenses in connection with the Registration Statement, any
qualification or compliance with federal or state laws required in connection
therewith, and the distribution of the Shares shall, as between the Selling
Stockholders and the Company, be borne as follows:
(a) The Company shall pay and be responsible for the registration
fee payable under the Act, blue sky fees and expenses, if applicable
(subject to the limitations set forth in paragraph 4), and all fees
and disbursements of the Company's counsel and accountants. The
Company will not engage the services of a printer with respect to the
Registration Statement or the Prospectus, but will arrange for the
photocopying thereof and bear the photocopying costs.
(b) The Selling Stockholders shall pay all fees and disbursements
of their own counsel and advisers, all stock transfer fees or
expenses, if any, and all other expenses (including underwriting
discounts and selling commissions)
<PAGE>
Tele-Communications, Inc.
December 19, 1994
Page 3
related to the distribution of the Shares that have not expressly been
assumed by the Company as set forth above.
2. Each Selling Stockholder hereby confirms to the Company that the
information contained in the sections of the Registration Statement entitled
"The Shares Being Offered" and "Plan of Distribution", on the first two pages of
the Prospectus included therein and on Exhibit 99.1 to the Registration
Statement, in each case as it relates to such Selling Stockholder (including,
without limitation, such Selling Stockholder's ownership of Notes and offering
of Shares) is accurate and complete and may specifically be used in the
Registration Statement. Without limiting the generality of the foregoing, each
Selling Stockholder acknowledges and confirms that the shares of Class A Stock
issued upon conversion of the Notes will be included in the Shares covered by
the Registration Statement on the basis of the order in which the Notes, up to
an aggregate principal amount of $30 million, are converted. Each Selling
Stockholder further acknowledges that the information referred to in the first
sentence of this paragraph 2 is disclosed in the Registration Statement in
accordance with the requirements of Items 507 and 508 of Regulation S-K
promulgated by the Commission under the Act, and each Selling Stockholder agrees
to notify promptly the Company of any change after the date hereof in such
information and of any additional information relating to such Selling
Stockholder and the distribution of the Shares (including, without limitation,
the information referred to in paragraph 4 below) that may be required pursuant
to said Items to be disclosed. The information referred to in this paragraph 2
and in paragraph 4 below, as amended or supplemented from time to time, is
hereinafter called the "Selling Stockholder Information".
3. During such time as the Selling Stockholders may be engaged in a
distribution of the Shares, each Selling Stockholder agrees to comply with Rules
10b-2, 10b-6 and 10b-7 promulgated under the Securities Exchange Act of 1934
(the "Exchange Act") and pursuant thereto will, among other things, (i) not
engage in any stabilization activity in connection with the securities of the
Company in contravention of such Rules; (ii) distribute the Shares owned by such
Selling Stockholder solely in the manner described in the Registration
Statement; (iii) cause to be furnished to each agent, broker-dealer or
underwriter to or through whom the Shares owned by such Selling Stockholder may
be offered, or to the offeree if an offer is made directly by such Selling
Stockholder, such copies of the Prospectus (as amended or supplemented to such
date) and documents incorporated by reference therein as may be required by such
agent, broker-dealer, underwriter or offeree and (iv) not bid for or purchase
any securities of the Company or attempt to induce any person to purchase any
securities of the Company other than as permitted under the Exchange Act.
<PAGE>
Tele-Communications, Inc.
December 19, 1994
Page 4
4. Each Selling Stockholder agrees to notify the Company, at least
five (5) business days prior to any distribution of Shares by such Selling
Stockholder, of the dates on which the distribution will commence and terminate,
the number of Shares to be sold, the terms and manner of sale (including, to the
extent applicable, the purchase price, the public offering price, the name of
any agent, broker-dealer or underwriter to or through whom such distribution is
being made, and the amount of any selling commissions, underwriting discounts or
other items constituting compensation to such agent, broker-dealer or
underwriter), and the number of shares of Class A Stock that will be
beneficially owned by such Selling Stockholder after giving effect to such sale.
To the extent required, the Company will (i) prepare a supplement to the
Prospectus based upon the information so provided and file the same with the
Commission pursuant to Rule 424(b) under the Act and (ii) register or qualify at
its expense the Shares to be sold under the securities or blue sky laws of such
reasonable number of jurisdictions in the United States as such Selling
Stockholder shall request; provided, however, that the Company shall in no event
-------- -------
be required to qualify to do business as a foreign corporation or as a dealer in
any jurisdiction where it is not so qualified, to conform its capitalization or
the composition of its assets at the time to the securities or blue sky laws of
any such jurisdiction, to execute or file any general consent to service of
process under the laws of any jurisdiction, to take any action that would
subject it to service of process in suits other than those arising out of the
offer and sale of the Shares, or to subject itself to taxation in any
jurisdiction where it has not theretofore done so. Each Selling Stockholder
also agrees to inform the Company and any agents or broker-dealers through whom
sales of Shares by such Selling Stockholder may be made when each distribution
of the Shares is over.
5. On notice from the Company that, in connection with action
proposed to be taken by the Company (including, without limitation, the
distribution or repurchase of any of its securities), it requires the suspension
by the Selling Stockholders of the distribution of any of the Shares, each
Selling Stockholder agrees to cease distributing the Shares until such time as
the Company notifies the Selling Stockholders that distribution of the Shares
may recommence.
6. (a) The Company agrees to indemnify and hold harmless each
Selling Stockholder and each person (if any) who controls such Selling
Stockholder within the meaning of either the Act or the Exchange Act
(collectively, the "Seller Indemnified Parties") from and against any losses,
claims, damages or liabilities, joint or several, to which such Seller
Indemnified Parties may become subject, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the
<PAGE>
Tele-Communications, Inc.
December 19, 1994
Page 5
Prospectus, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or any
violation by the Company of any federal or state securities law or rule or
regulation thereunder applicable to the Company and relating to any action
required of the Company in connection with the Registration Statement; and,
subject to paragraph 6(c), the Company will reimburse such Seller Indemnified
Parties for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage or
liability; provided, however, that the Company will not indemnify or hold
-------- -------
harmless any Seller Indemnified Party from or against any such loss, claim,
damage, liability or expense (i) that arises out of or is based upon any
violation of any federal or state securities laws, rules or regulations
committed by any of the Seller Indemnified Parties (or any agent, broker-dealer
or underwriter engaged by them) or (ii) if the untrue statement, omission or
allegation thereof upon which such losses, claims, damages, liabilities or
expenses are based (x) was made in reliance upon and in conformity with the
Selling Stockholder Information, or (y) was made in any Prospectus used after
such time as the Company advised the Selling Stockholders that the filing of a
post-effective amendment or supplement thereto was required, except the
Prospectus as so amended or supplemented, or (z) was made in any Prospectus used
after such time as the obligation of the Company hereunder to keep the
Registration Statement effective and current has expired.
(b) Each Selling Stockholder, severally and not jointly, agrees
to indemnify and hold harmless, the Company, its directors and officers and each
person, if any, who controls the Company within the meaning of either the Act or
the Exchange Act (the "TCI Indemnified Parties"), from and against any losses,
claims, damages or liabilities, joint or several, to which the TCI Indemnified
Parties may become subject, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, if the statement or omission was made in
reliance upon and in conformity with the Selling Stockholder Information
relating to such Selling Stockholder, or (ii) the use of any Prospectus after
such time and the Company has advised the Selling Stockholders that the filing
of a post-effective amendment or supplement thereto is required, except the
Prospectus as so amended or supplemented, or (iii) the use of any Prospectus
after such time as the obligation of the Company hereunder to keep the
Registration Statement effective and current has expired, or (iv) any violation
by such Selling Stockholder or any person who controls such Selling Stockholder
within the meaning of either the Act or the Exchange Act (or any agent, broker-
<PAGE>
Tele-Communications, Inc.
December 19, 1994
Page 6
dealer or underwriter engaged by such Selling Stockholder or any such
controlling person) of any federal or state securities law or rule or regulation
thereunder; and, subject to paragraph 6(c), such Selling Stockholder will
reimburse such TCI Indemnified Parties for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage or liability.
(c) Each party entitled to indemnification under this paragraph
6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and the
Indemnifying Party shall assume the defense of any such claim and any action or
proceeding resulting therefrom, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all expenses. The
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of any liability that it may have to any
Indemnified Party otherwise than under this paragraph 6. The Indemnified Party
shall have the right to employ separate counsel in any such action or proceeding
and to participate in the defense thereof, but the fees and expenses of such
separate counsel shall be such Indemnified Party's expense unless (i) the
Indemnifying Party has agreed to pay such fees and expenses or (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
proceeding and employ counsel reasonably satisfactory to the Indemnified Party
or (iii) the named parties to any such action or proceeding (including any
impleaded parties) include an Indemnified Party and the Indemnifying Party, and
such Indemnified Party shall have been advised by counsel that there may be a
conflict of interest between such Indemnified Party and the Indemnifying Party
in the conduct of the defense of such action (in which case, if such Indemnified
Party notifies the Indemnifying Party that it elects to employ separate counsel
at the expense of the Indemnifying Party, the Indemnifying Party shall not
assume the defense of such action or proceeding on such Indemnified Party's
behalf, it being understood, however, that the Indemnifying Party shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (unless the members of such firm are
not admitted to practice in a jurisdiction in which an action is pending, in
which case the Indemnifying Party will pay the reasonable fees and expenses of
one additional firm of attorneys to act as local counsel in such jurisdiction,
provided that the services of such counsel are substantially limited to that of
appearing as attorneys of record) at any time for all Indemnified Parties, which
firm shall be designated in writing by the Representatives (as defined in
paragraph 7 below) or the Company as the case may be). No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
the Indemnified Party, consent to
<PAGE>
Tele-Communications, Inc.
December 19, 1994
Page 7
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. The Indemnifying Party shall not be liable for any settlement of
any such action or proceeding effected without its written consent, but if
settled with its written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding, the Indemnifying Party shall
indemnify and hold harmless the Indemnified Party from and against any loss or
liability by reason of such settlement or judgment.
7. Each Selling Stockholder represents and warrants to the Company
that (i) such Selling Stockholder has duly authorized John M. Sherwood, Robert
A. Naify and Marshall Naify (the "Representatives") and each of them, in such
Selling Stockholder's name and on behalf of such Selling Stockholder, to execute
and deliver this Agreement and any other document necessary or desirable in
connection with the transactions contemplated hereby and to give all notices to
the Company, and to receive all notices from the Company, that may be required
or permitted hereunder, and to take such other action as may be necessary or
desirable in connection with this Agreement and the transactions contemplated
hereby, and (ii) a power of attorney to the foregoing effect has been duly
authorized, executed and delivered by such Selling Stockholder and is a legal,
valid and binding agreement of such Selling Stockholder. Without limiting the
generality of the foregoing, each Selling Stockholder agrees that the Company
may rely, without independent investigation, upon information contained in any
notice given by a Representative to the Company pursuant to paragraphs 2 and 4
hereof, as fully and with the same effect as if the notice had been given by
such Selling Stockholder directly.
8. All notices or other communications required or permitted
hereunder shall be given in writing, either delivered by hand, by mail or by
telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below:
<PAGE>
Tele-Communications, Inc.
December 19, 1994
Page 8
If to the Company:
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Attention: Stephen M. Brett
Executive Vice President and
General Counsel
Telephone: (303) 267-4800
Facsimile: (303) 488-3245
If to the Representative or a Selling Stockholder:
John M. Sherwood
John M. Sherwood Law Corporation
172 Golden Gate Ave.
San Francisco, CA 94102
Telephone: (415) 928-3200
Facsimile: (415) 673-3329
or at such other address as such party may designate from time to time by notice
duly given in accordance with the terms of this paragraph 8.
9. Each Selling Stockholder hereby acknowledges that TCI
Communications, Inc. (formerly Tele-Communications, Inc. and, as referred to
herein, "Old TCI") has withdrawn its Registration Statement on Form S-3 (Reg.
No. 33-51104) (the "Former Shelf Registration Statement"), which covered the
issuance of shares of Class A Stock to the Selling Stockholders upon conversion
of up to $30 million aggregate principal amount of Notes, and the subsequent
resale of those shares by the holders thereof from time to time thereafter.
Each Selling Stockholder further acknowledges that such Selling Stockholder may
no longer sell any shares of Class A Stock pursuant to the Former Shelf
Registration Statement, nor shall such Selling Stockholder have any rights to
require the Company or Old TCI to register any shares of Class A Stock pursuant
to that certain letter agreement, dated September 30, 1992, among Old TCI and
the Selling Stockholders.
10. This Agreement shall be binding upon and inure to the benefit of
the Company and each of the persons listed on Schedule 1 hereto and their
respective Permitted
<PAGE>
Tele-Communications, Inc.
December 19, 1994
Page 9
Transferees; provided, however, that no Permitted Transferee shall be entitled
-------- -------
to the benefits of this Agreement unless, in connection with the transfer of
Notes to such Permitted Transferee, such Permitted Transferee signifies its
agreement to and acceptance of the terms and conditions of this Agreement by
executing and delivering a counterpart of this Agreement to the Company and a
power of attorney to the effect set forth in paragraph 7 hereof to the
Representatives.
If the foregoing accurately sets forth our understanding, please so
signify by signing the enclosed copy of this letter agreement in the space
provided and returning it to the undersigned.
Very truly yours,
THE SELLING STOCKHOLDERS
NAMED IN SCHEDULE I ATTACHED
HERETO
By: /s/ John M. Sherwood
----------------------------
Attorney-in-fact
TELE-COMMUNICATIONS, INC.
By: /s/ Stephen M. Brett
--------------------------
Stephen M. Brett
Executive Vice President
<PAGE>
SCHEDULE 1
to Letter Dated December 19, 1994
Selling Stockholders to Tele-Communications, Inc.
Robert A. Naify
Marshall Naify
Valerie Naify
Leslie C. Naify
Christie M. Naify
Robert J. Naify
Mark S. Naify
Marshall Naify, Robert A. Naify, Georgette N. Rosekrans as Trustees under the
Michael N. Naify testamentary trust for the benefit of Marshall Naify
John M. Sherwood as Trustee under the Leslie C. Naify 1981 Trust, dated
December 22, 1981
John M. Sherwood as Trustee under the Christie M. Naify 1981 Trust, dated
December 22, 1981
John M. Sherwood as Trustee under the Robert J. Naify 1981 Trust, dated
December 22, 1981
John M. Sherwood as Trustee under the Christina Cortese 1983 Trust, dated
December 21, 1983
John M. Sherwood as Trustee under the Acela Cortese 1983 Trust, dated
December 21, 1983
John M. Sherwood as Trustee under the Christina E. Naify 1985 Trust, dated
June 26, 1985
John M. Sherwood as Trustee under the Drew Michael Andrade 1986 Trust, dated
April 25, 1986
John M. Sherwood as Trustee under the Marsha J. Naify Living Trust, dated
October 1, 1990
John M. Sherwood as Trustee under the Michael S. Naify 1981 Trust, dated
December 29, 1981
John M. Sherwood as Trustee under the Christina E. Naify 1981 Trust, dated
December 29, 1981
Michael S. Naify
Christina E. Naify
Marshall Naify as Trustee under the Michael Stephen Naify Trust, dated
January 21, 1963
Richard R. Naify
Josephine Naify
James Naify
<PAGE>
Exhibit 99.3
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of July 9,
1986, is made by and among TeleCommunications, Inc., a Delaware corporation
("TCI"), and the undersigned shareholders (the "Shareholders") of United Artists
Communications, Inc., a Maryland corporation (the "Company").
Each Shareholder owns the number of shares of the Class A Stock, $1.00
par value, of the Company (the "Company Class A Stock") and the number of shares
of the Class B Stock, $1.00 par value, of the Company (the "Company Class B
Stock") set forth opposite such Shareholder's name on Exhibit A hereto and is
willing to accept TCI's offer that an affiliate of TCI to be designated by TCI
("Acquiror") acquire such shares on the terms set forth herein. As used herein,
the term "Company Common Stock" shall include the Company Class A Stock and the
Company Class B Stock.
Therefore, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE 1
SALE AND PURCHASE OF SHARES
---------------------------
1.1 Sale and Purchase of Shares. Subject to the terms and conditions
---------------------------
hereof, each Shareholder severally
<PAGE>
agrees to sell, transfer, assign and convey to Acquiror, and TCI agrees to cause
Acquiror to purchase and acquire, the number of shares of the Company Common
Stock set forth opposite such Shareholder's name on Exhibit A hereto. The number
of shares set forth opposite any Shareholder's name on Exhibit A hereto is
referred to herein as such Shareholder's "Shares," and the aggregate number of
Shares of all Shareholders is referred to as the "Acquired Shares."
1.2 Consideration. The consideration (the "Consideration") payable
-------------
for each Acquired Share purchased and acquired pursuant to Section 1.1 hereof
shall consist of $18.498, of which $6.64 shall be paid in cash at the Closing
and the balance of $11.858 shall be represented by convertible notes (the
"Notes") of the Acquiror in the form of Exhibit B hereto, maturing on the
thirty-fifth anniversary of the Closing with interest payable on each of the
first seventeen anniversary dates of the Closing at the rate of 1.85%, and with
no interest payable thereafter. The Notes will be convertible, at the option of
the holders, into .332 of a share of the Class A Common Stock, $1.00 par value
of TCI (the "TCI Stock"), for each $11.858 principal amount of the Notes.
1.3 Closing. The closing of the sale and purchase of the Acquired
-------
Shares (the "Closing" shall take place at the offices of Orrick, Herrington &
Sutcliffe, San Francisco,
-2-
<PAGE>
California, at 10:00 A.M., local time, on such date (the "Closing Date") as TCI
may select by at least ten days' written notice to the Representatives (as
defined in Section 1.5 hereof), which date shall be as soon as practicable after
all conditions set forth in Articles 5 and 6 hereof have been satisfied or
waived.
1.4 Exchange of Certificates. At the Closing, (i) each Shareholder
------------------------
shall deliver to Acquiror a certificate or certificates, representing all of
such Shareholder's Shares, duly endorsed in blank or accompanied by a separate
instrument or instruments of assignment duly executed in blank, with signature
guaranteed by a commercial bank, trust company or registered broker-dealer with
all necessary stock transfer tax stamps attached, and (ii) Acquiror shall
deliver to such Shareholder the Cash and Notes to which such Shareholder is
entitled pursuant to Section 1.2 hereof. The Notes delivered to each
Shareholder shall be in such denominations as the Representatives may reasonably
request.
1.5 Representatives of the Shareholders. Each of the Shareholders
-----------------------------------
hereby appoints each of Marshall Naify and Robert A. Naify as such Shareholder's
representative (a "Representative") for purposes of this Agreement, and agrees
that either of the Representatives, acting alone, may exercise the rights,
powers and privileges herein granted to the Representatives or either of them.
-3-
<PAGE>
1.6 Recapitalization, etc.; Additional Shares.
-----------------------------------------
In the event of (i) the declaration or payment with respect to any
class of the Company's capital stock of any cash dividend or other cash
distribution (other than the Company's regular quarterly dividend of not in
excess of 1c per share after giving effect to the two-for-one split-up of
the Company Common Stock on May 29, 1986) or any distribution of property other
than capital stock of the Company or (ii) any increase or decrease or other
change (a "Recapitalization") in the capital stock of the Company for any reason
and of any nature, including by reason of a stock dividend, stock split,
recapitalization, capital reorganization, combination of shares, exchange of
shares, merger, consolidation, sale of assets or otherwise, then (x) the terms
"Shares" and "Acquired Shares" as used in this Agreement shall be deemed to mean
or include (as appropriate) the number and class of shares of capital stock or
other securities (whether or not the Company is the issuer thereof), cash and
property which Acquiror would have received in respect of the Acquired Shares if
the Acquired Shares had been purchased and acquired by Acquiror immediately
prior to the record date for such event or, if more than one such event shall
occur, prior to the record date for the first of such events, (y) the numbers of
Shares specified in Sections 2.3 and 2.4 shall be appropriately and equitably
adjusted, and (z) the
-4-
<PAGE>
Consideration payable for each Acquired Share shall be appropriately and
equitably adjusted; provided, however, that in no event shall the aggregate
number of shares of TCI Stock required upon conversion of the Notes to be
delivered to any Shareholder exceed the number which would be required to be
delivered pursuant to Section 1.2 hereof if such event had not occured;
provided, further, that if the property distributed by the Company consists
solely of voting stock (the "Todd-AO Stock") of The Todd-AO Corporation, a New
York corporation which is a majority-owned subsidiary of the Company
("Todd-AO"), which is distributed in a rights offering to all of the Company's
shareholders, for which the Company receives, as consideration for the Todd-AO
Stock, the fair market value of such stock as determined by the Company's Board
of Directors, and with respect to which the Shareholders commit to and purchase
any shares of the Todd-AO Stock not purchased by any other shareholders of the
Company for such consideration, Acquiror shall not be entitled to acquire the
Todd-AO stock distributed in respect of or attributable to the Acquired Shares,
and there shall be no adjustment to the Consideration payable for the Acquired
Shares.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
------------------------------
Each of the Shareholders, severally and not jointly, hereby
represents and warrants to, and covenants with, TCI as follows:
<PAGE>
2.1 Organization and Good Standing. To the best of the
------------------------------
Shareholder's knowledge, the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. The Shareholders
previously have delivered to TCI true and complete copies of the Articles of
Incorporation and By-Laws of the Company as presently in effect.
2.2 Financial Statements. The Shareholders previously have furnished
--------------------
to TCI true and complete copies of (i) the Company's Annual Report on Form 10-K
for its fiscal year ended August 31, 1985, in the form (including exhibits)
filed with the Securities and Exchange Commission (the "SEC") which report,
together with the portion of the annual report to shareholders that is
incorporated therein by reference, is referred to herein as the "Company 10-K"
and (ii) the Company's Quarterly Report on Form 10-Q for the twenty-six weeks
ended February 27, 1986 in the form filed with the SEC (the "Company 10-Q"). To
the best of the Shareholders' knowledge, the audited balance sheets included in
the Company 10-K and the unaudited balance sheets included in the Company 10-Q
(including any related notes and schedules) each fairly presents the
consolidated financial position of the Company and its consolidated subsidiaries
as of its date and the
-6-
<PAGE>
other financial statements included in the Company 10-K and the Company 10-Q
(including any related notes and schedules) fairly present the consolidated
results of operations of or other information set forth therein with respect to
the Company and its consolidated subsidiaries for the respective periods or as
of the respective dates therein set forth, subject, in the case of unaudited
financial statements, to normal year-end adjustments which are not material in
amount or effect, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved and Regulation S-X
promulgated by the SEC.
2.3 Ownership of Shares. On the date hereof, such Shareholder (i)
-------------------
owns as sole owner, beneficially and of record, all of his Shares, free and
clear of all liens, claims, charges, encumbrances, security interests and rights
or interests of any kind ("Security Interests"), except as created hereunder;
provided, however, that the Shareholders may have pledged prior to the Closing
not in excess of an aggregate of 8,000,000 of the Acquired Shares to secure not
in excess of an aggregate of $60,000,000 of indebtedness pursuant to certain
bank loans, brokers' margin account agreements and other secured borrowings
described on Schedule 2.3 attached hereto (collectively, the "Margin Accounts"),
and except as are created hereunder; and (ii) has full right, power, authority
and legal capacity to sell and vote his
-7-
<PAGE>
Shares and to enter into and perform this Agreement, subject, in the case of a
Shareholder which is a trust, to compliance with the provisions of the trust
agreement (and the Shareholders agree to take all actions required under all
such trust agreements which are required so that the representation and warranty
set forth in the last sentence of Section 2.4 shall be true and correct at the
Closing). Other than this Agreement and the agreements described in Schedule
2.3, there is no option, warrant, right, call, proxy, agreement, commitment or
understanding of any nature whatsoever, fixed or contingent (a "Restriction")
that directly or indirectly (i) calls for the sale, pledge or other transfer or
disposition of any of such Shareholder's Shares, any interest therein or any
rights with respect thereto, or relates to the voting or control of such Shares
or (ii) obligates such Shareholder to grant, offer or enter into any of the
foregoing. Except as disclosed in Schedule 2.3, such Shareholder does not own
any capital stock or other securities of the Company except the Shares or any
options or other rights to subscribe for, purchase or otherwise acquire any such
capital stock or other securities.
2.4 Binding Agreement; Approvals and Consents. This Agreement has
-----------------------------------------
been duly executed and delivered by, and constitutes a legal, valid and binding
obligation of, such Shareholder enforceable against such Shareholder in accord-
-8-
<PAGE>
ance with its terms (except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by principles
governing the availability of equitable remedies). The execution, delivery and
performance of this Agreement by such Shareholder and the performance by such
Shareholder of its obligations hereunder do not and will not:
(i) contravene any provision of the Articles of Incorporation or
By-Laws of the Company, except that the transfer to the Acquiror of
shares of Company Class B Stock by those Shareholders holding Company
Class B Stock will, pursuant to Article Fifth, Section 6(d) of the
Articles of Incorporation of the Company, result in the conversion of
such shares of Company Class B Stock into Company Class A Stock;
(ii) (after notice or lapse of time or both) conflict with,
result in a breach of any provision of, constitute a default under,
or require any consent or waiver of any party to, any contract,
agreement, note, instrument or other commitment, arrangement or
understanding, whether written or oral, to which such Shareholder is
a party or by which such Shareholder is bound, except that the
-9-
<PAGE>
performance of this Agreement will require the satisfaction of, or
substitution of collateral for, any then existing Margin Account
indebtedness, and the Shareholders agree to effect such satisfaction
or substitution of collateral prior to the Closing;
(iii) result in the creation of any Security Interest or
Restriction upon, or any person obtaining any right to acquire, any of
the Shares or any of the other properties or assets of such
Shareholder;
(iv) result in a violation of or conflict with any judgment,
decree, order, law, rule or regulation applicable to such Shareholder;
or
(v) to the best of the Shareholders' knowledge, require any
authorization, consent, order, permit or approval of, or notice to, or
filing, registration or qualification with, any federal, state, local
or foreign government or governmental, administrative or judicial
authority, agency or body, except (A) pursuant to the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 and the rules and
regulations thereunder (the "Hart-Scott Act") and (B) filings with,
notices to and consents, orders and approvals (the "Approvals") of the
Federal Communications Commission (the "FCC") and
-10-
<PAGE>
state and local governments and governmental authorities,
agencies and bodies which may be necessary to authorize a
transfer of control of the franchises, licenses, permits,
certificates and other authorizations required for the cable
television operations of the Company and its subsidiaries.
During the term of this Agreement, (i) such Shareholder will keep all of his
Shares free and clear of any Security Interests or Restrictions of any kind
other than not in excess of 8,000,000 Shares pledged to secure Margin Accounts
with an aggregate debit balance not in excess of $60,000,000 and (ii) shall not
take any action which would have the effect of preventing, delaying or disabling
such Shareholder from delivering his Shares to Acquiror upon the Closing or
otherwise performing such Shareholder's obligations under this Agreement. All of
such Shares have been duly and validly authorized and issued, and are fully paid
and nonassessable with no personal liability attaching to the ownership thereof.
Upon the Closing, such Shareholder shall convey to Acquiror good and marketable
title to his Shares, free and clear of all Security Interests and Restrictions
of any kind.
2.5 Investment in the Notes. The Notes acquired by such Shareholder
-----------------------
upon the Closing shall be acquired for
-11-
<PAGE>
such Shareholder's own account for investment and not with a view to, or for
resale in connection with, any distribution or public offering of all or any
part thereof or any interest therein within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), or the rules and regulations of the
SEC. Such Shareholder understands and agrees that such Notes and the shares of
TCI Stock issuable upon conversion of the Notes (i) have not been registered
under the Securities Act by reason of their issuance and delivery in a
transaction believed to be exempt from the registration requirements of the
Securities Act, (ii) have not been registered or qualified under the securities
laws of any state by reason of their issuance and delivery in a transaction
believed to be exempt from the registration requirements of any applicable state
securities laws and (iii) that, except as provided in Article 7 hereof, no such
registration or qualification is required or contemplated. Accordingly, such
Shareholder understands that such Shareholder must bear the economic risk of his
investment in such Notes and shares of TCI Stock for an indefinite period of
time unless a disposition thereof is registered or qualified under the
Securities Act and any applicable state securities laws or is exempt from
registration or qualification thereunder. Such Shareholder further understands
that the exemptions from registration under the Securities Act,
-12-
<PAGE>
including the exemption afforded by Rule 144 promulgated under the Securities
Act, depend on the satisfaction of various conditions. Such Shareholder, alone
or together with any persons he has retained for advice with respect to the
transactions contemplated hereby and the proposed investment in such Notes and
shares of TCI Stock, has such knowledge and experience in financial and business
matters as to be capable of understanding and evaluating the merits and risks of
acquiring and holding such shares as provided in this Agreement. Such
Shareholder, alone or together with persons so retained by him for advice, has
had the opportunity to ask questions of, and receive answers from, TCI and its
executive officers, employees and accountants concerning the terms and
conditions of such transactions and the business and finances of TCI and has had
the opportunity to obtain from TCI any additional information requested by such
Shareholder needed to verify the accuracy of any information supplied to such
Shareholder.
Such Shareholder, alone or together with persons retained by him for
advice, has received, read and understood the contents of (i) the Annual Reports
and Proxy Statements of TCI for the year ended December 31, 1985; and (ii) all
reports, definitive proxy and information statements and documents (including
all exhibits to such reports and proxy and information statements) filed by TCI
with the SEC during
-13-
<PAGE>
the period commencing January 1, 1985 and ending the date hereof. Such
Shareholder acknowledges that neither TCI nor any of its officers, agents or
employees, nor anyone acting on its or any of their behalf, have given the
Shareholder any other information concerning TCI's business, operations and
financial condition or any inducement to enter into this Agreement or made any
representation, warranty or agreement to or with the Shareholder as to the
business, operations and financial condition of TCI not contained in this
Agreement.
2.6 Finders and Brokers. Such Shareholder has not entered into any
-------------------
agreement, arrangement or understanding with any person or firm which will
result in the obligation of TCI or the Company to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the transactions (including the
Business Combination) contemplated hereby, except for the agreement of the
Company to pay a fee to Peter Bauer-Mengelberg in an amount previously disclosed
in writing to TCI.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND
CERTAIN COVENANTS OF TCI
-------------------------------
TCI hereby represents and warrants to, and covenants with, each
Shareholder as follows:
-14-
<PAGE>
3.1 Due Organization. TCI is a corporation duly organized, validly
----------------
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, and to execute,
deliver and perform its obligations under this Agreement.
3.2 TCI Information. TCI has furnished the Shareholders with true
---------------
and correct copies of all of the information referred to in Section 2.5 hereof.
Without limiting the generality of the foregoing, TCI has previously furnished
to the Shareholders true and complete copies of (i) TCI's Annual Report on Form
10-K for its fiscal year ended December 31, 1985, in the form (including
exhibits) filed with the SEC (the "TCI 10-K") and (ii) TCI's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1986 in the form filed with the SEC
(the "TCI 10-Q"). The audited balance sheets included in the TCI 10-K and the
unaudited balance sheets included in the TCI 10-Q (including any related notes
and schedules) each fairly presents the consolidated financial position of TCI
and its consolidated subsidiaries as of its date and the other financial
statements included in the TCI 10-K and the TCI 10-Q (including any related
notes and schedules) fairly present the consolidated results of operations of or
other information set forth therein with
-15-
<PAGE>
respect to TCI and its consolidated subsidiaries for the respective periods or
as of the respective dates therein set forth, subject, in the case of unaudited
financial statements, to normal year-end adjustments which are not material in
amount or effect, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved and Regulation S-X
promulgated by the SEC.
3.3 TCI Shares. The Acquiror agrees that it will deliver, and TCI hereby
agrees with each Shareholder that it will cause the Acquiror to deliver, to the
holder of any of the Notes surrendered for conversion such number of shares of
TCI Stock as may be required by such conversion, which shares will be duly
authorized, validly issued and fully paid and non-assessable with no personal
liability attaching to the ownership thereof. TCI may itself issue such shares
of TCI Stock unless in the opinion of counsel for the Shareholders, which
counsel shall be reasonably acceptable to TCI, the issuance by TCI of the TCI
Stock to be issued upon conversion of the Notes would render the Shareholders
unable to use the installment method of reporting the gain represented by the
Notes.
3.4 Authority; Consents. This Agreement has been duly authorized by all
necessary corporate action of the part of TCI, has been duly executed and
delivered on behalf of TCI by a duly authorized officer of TCI and constitutes a
legal, valid and binding obligation of TCI enforceable against TCI in accordance
with its terms (except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
-16-
<PAGE>
affecting the enforcement of creditors' rights generally or by principles
governing the availability of equitable remedies). The execution, delivery and
performance of this Agreement by TCI and the performance by TCI and Acquiror of
its obligations hereunder do not:
(i) contravene any provision of the Certificate of
Incorporation or By-Laws of TCI;
(ii) (after notice or lapse of time or both) conflict with,
result in a breach of any provision of, constitute a default under,
or require any consent or waiver of any party to, any contract,
agreement, note, instrument or other commitment, arrangement or
understanding, whether written or oral, to which TCI or Acquiror is a
party or by which it is bound;
(iii) result in a violation of or conflict with any judgment,
decree, order, law, rule or regulation applicable to TCI or Acquiror;
or
(iv) to the best of TCI's knowledge, require any authorization,
consent, order, permit or approval of, or notice to, or filing,
registration or qualification with, any federal, state, local or
foreign government or governmental, administrative or judicial
authority, agency or body, except (A) pursuant to the Hart-Scott Act,
(B) the Approvals,
-17-
<PAGE>
and (C) as may be required in order to effect the Business Combination, as
defined in Section 9.1.
3.5 Investment. The Acquired Shares acquired by Acquiror upon the Closing
----------
shall be acquired for Acquiror's own account for investment and not with a view
to, or for resale in connection with, any distribution or public offering of all
or any part thereof or any interest therein within the meaning of the Securities
Act or the rules and regulations of the SEC.
3.6 Finders and Brokers. TCI has not entered into any agreement,
-------------------
arrangement or understanding with any person or firm which will result in the
obligation of the Company or the Shareholders to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
(including the Business Combination) contemplated hereby, and TCI shall be
responsible for any such fee that may be payable to Allen & Company
Incorporated.
3.7 Consents; Cooperation. Subject to the terms and conditions hereof, TCI
---------------------
will, and will use its best efforts to cause its subsidiaries and affiliates to,
use their respective best efforts at their own expense:
(i) to obtain as soon as reasonably possible all waivers, permits,
licenses, approvals,
-18-
<PAGE>
authorizations, qualifications, orders and consents of all third parties and
governmental authorities, and make all filings and registrations with
governmental authorities, which are required on their respective parts for the
consummation of the transactions contemplated by this Agreement;
(ii) if any stay, injunction or other order of the type referred to in
Section 5.3 or 6.3 hereof shall be issued, to have such stay, injunction or
other order lifted; and
(iii) to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and effect the transactions contemplated by this
Agreement.
3.8 TCI Class A Common Stock; Board of Directors. So long as (a) either
--------------------------------------------
of the Representatives is living and (b) the Notes owned by the Shareholders in
the aggregate are convertible into (considered together with any TCI Stock owned
by the Shareholders) at least 5% of the outstanding Common Stock of TCI:
(i) TCI will not take any action, and will use its reasonable best
efforts to prevent the taking of action by others, as a result of which the
holders of Class B Common Stock, par value $1.00 per share, of TCI will receive
economic
-19-
<PAGE>
benefits (as distinguished from voting rights) greater than those to which the
holders of TCI Class A Common Stock are entitled;
(ii) in the event that all of Bob Magness, John C. Malone (or
their respective heirs in the event of their death) and the representatives of
Kearns-Tribune, Inc. or its successors (the "Principal Shareholders of TCI")
are no longer part of the control group of TCI, TCI will exchange shares of TCI
Class B Common Stock, at the option of the Shareholders, for up to 18% of the
aggregate TCI Stock then held by the Shareholders and subject to being acquired
by the Shareholders upon conversion of the Notes;
(iii) in the event TCI or any substantial assets or substantial
subsidiary thereof is sold or otherwise disposed of to another entity in which
one or more of the Principal Shareholders of TCI have a significant equity
interest, TCI will provide the Shareholders with an opportunity to participate
in such other entity on a pro rata basis with the Principal Shareholders of
TCI, pro rata for such purposes meaning the relationship between (i) 18% of the
aggregate TCI stock then held by the Shareholders and subject to being
-20-
<PAGE>
acquired by the Shareholders upon conversion of the Notes and (ii) the
aggregate number of shares of TCI Class B Common Stock then held by
the Principal Shareholders of TCI; and
(iv) so long as he is able and willing to serve, TCI will use its
reasonable best efforts to cause the election of Robert A. Naify to
TCI's Board of Directors, and should Robert A. Naify be unable or
unwilling to serve will so support and recommend a successor designee
of the Shareholders reasonably acceptable to TCI.
ARTICLE 4
CERTAIN COVENANTS OF THE SHAREHOLDERS
-------------------------------------
Each Shareholder, severally and not jointly, covenants and agrees with
TCI as follows:
4.1 Access; Confidentiality. During the period commencing on the
------------------------
date hereof and ending upon the Closing, such Shareholder shall use his best
efforts to cause the Company and its subsidiaries to, upon reasonable request,
afford to TCI and its counsel, accountants and other authorized representatives
full access during normal business hours to the properties, books and records of
the Company and its subsidiaries in order that they may have the opportunity to
make such reasonable investigations as they shall desire
-21-
<PAGE>
to make of the affairs of the Company and its subsidiaries, and to cause the
Company and its subsidiaries to cause their respective officers, employees,
accountants and other agents to furnish such additional data and other
information as TCI shall from time to time reasonably request. Such Shareholder
shall provide, and use his best efforts to cause the Company and its
subsidiaries and affiliates to provide, TCI and its counsel, accountants and
other authorized representatives with such information concerning such
Shareholder and the Company and its subsidiaries and affiliates as may be
necessary or reasonably requested to prepare such applications or other
documents as may be required to obtain all necessary Approvals, to verify the
performance of and compliance with such Shareholder's representations,
warranties, covenants and agreements herein contained or to effect the Business
Combination (as defined in Section 9.1 hereof). Until the earlier of the Closing
or the effective time of the Business Combination, TCI will hold in confidence
(unless and to the extent compelled to disclose by judicial or administrative
process or, in the opinion of its counsel, by other requirements of law) all
Confidential Information (as defined below) and will not disclose the same to
any third party except in connection with and otherwise as may reasonably be
necessary to carry out this Agreement or effect the Business Combination. If
this Agreement is terminated, TCI will
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<PAGE>
promptly return to the Company, upon the reasonable request of the Company, all
Confidential Information furnished to TCI by the Company. As used herein,
"Confidential Information" shall mean all information concerning the Company and
its subsidiaries obtained by TCI pursuant to this Agreement or in connection
with the transactions contemplated hereby except information (x) ascertainable
or obtained from public information, (y) received from a third party not
employed by or otherwise affiliated with the Company, or (z) which is or becomes
known to the public, other than through a breach of this Agreement.
4.2 Consents; Cooperation. Subject to the terms and conditions hereof,
---------------------
such Shareholder will, and will use its best efforts to cause the Company and
its subsidiaries and affiliates to, use their respective best efforts in
cooperation with TCI:
(i) to obtain as soon as reasonably possible all waivers, permits,
licenses, approvals, authorizations, qualifications, orders and consents of all
third parties and governmental authorities, and make all filings and
registrations with governmental authorities, which are required on their
respective parts for the consummation of the transactions contemplated by this
Agreement;
-23-
<PAGE>
(ii) subject to Article 8 hereof, to defend any lawsuit or other legal
proceedings, whether judicial or administrative, whether brought
derivatively or on behalf of third parties (including governmental
authorities) challenging this Agreement or the transactions contemplated
hereby and, if any stay, injunction or other order of the type referred to
in Section 5.3 or 6.3 hereof shall be issued, to have such stay, injunction
or other order lifted; and
(iii) to take, or cause to be taken, all action and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws
and regulations or reasonably requested by TCI to consummate and make
effective the transactions contemplated by this Agreement (including the
Business Combination).
4.3 Financial Statements. Such Shareholders shall use his best efforts to
--------------------
cause the Company to prepare and cause to be prepared, in accordance with
generally accepted accounting principles consistently applied and Regulation S-X
promulgated by the SEC, and to deliver to TCI, as promptly as practicable after
a request by TCI, all audited or unaudited financial statements of the Company
and its subsidiaries which, in the opinion of counsel to TCI, as required to be
-24-
<PAGE>
filed by TCI with the SEC by reason of the execution of this Agreement as a
condition to the registration of its securities under the Securities Act,
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act")
or otherwise.
4.4 Confidential Information. Such Shareholder acknowledges that TCI
------------------------
would be irreparably damaged if confidential information concerning the business
and affairs of the Company or any of its subsidiaries were disclosed to or
utilized on behalf of any person. Such Shareholder covenants and agrees that it
will not, at any time, directly or indirectly, without the prior written consent
of TCI, make use of or divulge, or permit any of its associates or agents to
make use of or divulge, to any person any non-public information concerning the
business or financial or other affairs of, or any of the methods of doing
business used by, the Company or any of its subsidiaries, unless and to the
extent compelled to disclose by judicial or administrative process or, in the
opinion of counsel for the Company, by other requirements of law.
4.5 Non-Competition. Each Representative covenants and agrees that, for
---------------
the period commencing on the Closing Date and continuing until the fifth
anniversary thereof, such Representative shall not, directly or indirectly,
manage, operate, join, control, participate, or
-25-
<PAGE>
become interested in, or be connected with (as an employee, consultant, partner,
officer, director, stockholder or investor, other than through ownership of up
to a 5% equity interest in a publicly-traded entity) any business which competes
with the cable television or movie theatre exhibition businesses now or
hereafter conducted by the Company or any of its subsidiaries.
ARTICLE 5
CONDITIONS TO THE OBLIGATIONS
OF TCI AND ACQUIROR
-----------------------------
The obligations of TCI to consummate the Closing shall be subject to the
satisfaction, at or prior to the Closing, of each of the following conditions,
each of which may be waived by TCI as provided herein:
-26-
<PAGE>
5.1 Representations and Warranties, Agreements, Covenants. Each
-----------------------------------------------------
Shareholder's representations and warranties contained in this Agreement shall
be true and correct in all material respects as of the date hereof and shall be
true and correct in all material respects at and as of the Closing, with the
same force and effect as though made at and as of the Closing. Each Shareholder
shall have performed all obligations and agreements, and complied in all
material respects with all covenants and conditions, of such Shareholder
contained in this Agreement to be performed or complied with by such Shareholder
prior to or at the Closing. At the Closing, TCI and Acquiror shall have
received from the Representatives a certificate, dated the Closing Date and duly
executed by the Representatives, to the effect that the conditions set forth in
this Section 5.1 have been satisfied.
5.2 Authorizations and Consents. The waiting period required under the
---------------------------
Hart-Scott Act shall have expired or been terminated. All material Approvals
shall have been obtained and shall be in full force and effect. The time for
filing a request for administrative or judicial relief with respect to such
Approvals, or for instituting administrative review thereof sua sponte, shall
--- ------
have expired without any such filing having been made or notice of such review
having been issued, or, in the event of such filing or review sua sponte shall
--- ------
have been disposed of favorably to the grant and
-27-
<PAGE>
the time for seeking further relief with respect thereto shall have expired
without any request for such further relief having been filed. As used in this
Agreement, an Approval shall not be deemed to be material unless the failure to
obtain such Approval (together with all other Approvals which have not been
obtained) would adversely affect the right or authority of the Company or any of
its subsidiaries to provide cable television service to 7% or more of the basic
subscribers to cable television service provided by the Company and its
subsidiaries. Notwithstanding the foregoing, in the event that the Closing does
not occur by reason of the failure to obtain all material Approvals as herein
provided, TCI agrees to negotiate with the Shareholders in good faith concerning
amendments of this Agreement and a restructuring of the transaction contemplated
hereby in order to avoid termination of this Agreement. The Shareholders
acknowledge that any such amendments or restructuring pursuant to the preceding
sentence will involve adjustment of the consideration receivable by the
Shareholders and that TCI shall not be under any obligation to reach any such
agreement.
5.3 Absence of Injunctive Relief. No order, stay, injunction,
----------------------------
judgment or decree shall have been issued and be in effect by any court or
governmental authority restraining,
-28-
<PAGE>
prohibiting or materially restricting or delaying the consummation of the
transactions contemplated hereby.
5.4 Absence of Certain Changes.
--------------------------
(a) Except for the two-for-one split of the Company Common Stock on May 29,
1986, there shall not have been any change in the capitalization of the Company
as set forth in the Company 10-Q, other than (i) the issuance of approximately
19,274,382 shares of Company Class B Stock in exchange for an equal number of
shares of Company Class A Stock, and (ii) the issuance by the Company of not in
excess of an aggregate of 870,000 shares of Company Class A Stock pursuant to
the exercise of options under the Company's 1982 Stock Option Plan granted prior
to the date hereof or granted pursuant to Section 5.4(b) hereof. Other than such
options and the conversion rights of the Company Class B Stock, there shall not
be outstanding any security, option, warrant, call, subscription or other right
of any kind that directly or indirectly calls for the issuance or sale of any
shares of capital stock of the Company. Except as (x) disclosed in the Company
10-Q, (y) set forth on Schedule 5.4 attached hereto, and (z) subsequently
disclosed to and approved by TCI, since August 31, 1985 there shall not have
occurred: (i) any material acquisition; (ii) any amendment or other change to
the Articles of Incorporation or Bylaws of the Company, except the amendment to
the Articles of Incorporation
-29-
<PAGE>
attached as Appendix A to the Company's Proxy Statement dated February 7, 1986;
(iii) any sale or other disposition of any material assets or properties of the
Company or any of its subsidiaries or, except in the ordinary course of the
Company's business, the grant or creation of any mortgage thereof or security
interest therein; or (iv) any incurrence, assumption or guarantee by the Company
or any of its subsidiaries of any long-term debt except in the ordinary
course of the Company's business. For purposes of this Section 5.4(a), (i) an
acquisition or disposition of assets or properties shall not be deemed material
unless such acquisition or disposition includes a gross consideration (including
debt assumed by the buyer or carried by the seller) of $5,000,000 or more, (ii)
the incurrence, assumption or guarantee of long-term debt or the grant or
creation of a mortgage or security interest shall be deemed to be in the
ordinary course of the Company's business unless the amount involved is
$5,000,000 or more, and (iii) debt incurred or renewed by the Company's
subsidiary United Artists Cablevision, Inc. in accordance with the provisions of
existing agreements shall be deemed to be in the ordinary course of the
Company's business. The Acquired Shares shall constitute at least 50.1% of the
Company Common Stock outstanding on the Closing Date and represent at least
50.1% of the aggregate number of votes entitled to be cast for the
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<PAGE>
election of directors of the Company represented by all of the shares of the
Company Common Stock outstanding on the Closing Date. There shall be no
provision of the Articles of Incorporation or Bylaws of the Company, any
resolution or other action by the Board of Directors of the Company or
applicable law which would require for the merger, consolidation or dissolution
of the Company, the transfer of all or substantially all of the assets of the
Company or any transaction by the Company with TCI or any of the Company's
affiliates approval by the affirmative vote of more than two-thirds of the votes
entitled to be cast by the holders of any class of the capital stock of the
Company (or by the holders of all such classes voting as a single class) or
exclude from the calculation of the number of votes of shareholders required for
any such approval any of the Acquired Shares or any shares of capital stock of
the Company held by TCI or any affiliate of TCI.
(b) For purposes of this Section 5.4, the granting to employees of the
Company and its subsidiaries, other than the Shareholders or any other directors
of the Company, after the date hereof of options to purchase up to but not in
excess of 100,000 shares of Company Common Stock (after giving effect to the
two-for-one split of the Company Common Stock on May 29, 1986) at such prices
(but in no event less than the fair market value of the Company Common Stock
-31-
<PAGE>
subject to such options on the date of grant) and upon such other terms and
conditions as may be fixed by the Board of Directors of the Company shall not be
considered a change in the capitalization of the Company.
ARTICLE 6
CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS
-------------------------------------------------
The obligations of the Shareholders to consummate the Closing shall be
subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, each of which may be waived by either of the
Representatives as provided herein except as otherwise provided by law:
6.1 Representations and Warranties; Agreements. Each of the
------------------------------------------
representations and warranties of TCI contained in this Agreement shall be true
and correct in all material respects as of the date hereof and shall be true and
correct in all material respects at and as of the Closing, with the same force
and effect as though made at and as of the Closing. TCI and Acquiror shall have
performed all obligations and agreements, and complied in all material respects
with all covenants and conditions, contained in this Agreement to be performed
or complied with by them prior to or at the Closing. At the Closing, the
Shareholders shall have received a certificate from each of TCI and Acquiror,
dated the Closing Date and duly executed by its chief executive
-32-
<PAGE>
officer, to the effect that the conditions set forth in this Section 6.1 have
been satisfied.
6.2 Authorizations and Consents. All corporate action on the part of
---------------------------
TCI and Acquiror necessary to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
shall have been duly and validly taken. The waiting period required under the
Hart-Scott Act shall have expired or been terminated.
6.3 Absence of Injunction. No order, stay, injunction, judgment or
---------------------
decree shall have been issued and be in effect by any court or governmental
authority restraining or prohibiting or materially restricting or delaying the
consummation of the transactions contemplated hereby.
6.4 Absence of Chance in Tax Treatment. No amendment of the Internal
----------------------------------
Revenue Code or the Regulations thereunder shall be in effect or publicly known
to be under active consideration which would prevent the Shareholders from
using the installment method of reporting with respect to that portion of
the gain realized upon the sale of the Company Common Stock being sold by
them hereunder which is represented by the Notes received by them.
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<PAGE>
ARTICLE 7
TRANSFER OF TCI SHARES;
REGISTRATION RIGHTS
-----------------------
7.1 Certain Definitions. As used in this Article 7, the following
-------------------
terms have the following meanings:
Average Market Price: The average of the daily average of the high
--------------------
and low prices per share of TCI Stock in the over-the-counter market at the
close of business on each trading day during the relevant period, as reported in
the Wall Street Journal.
Registrable Shares: Shares of TCI Stock issued upon conversion of the
------------------
Notes and any other shares of TCI stock or other capital stock of TCI issued in
respect of such shares (because of stock splits, stock dividends,
reclassifications, recapitalizations, mergers, consolidations or similar
events).
Transfer: (i) Any sale, exchange, assignment, gift, pledge or other
--------
transfer or disposition of Notes or Registrable Shares or any interest
(including any security interest) therein or (ii) the making of any agreement,
commitment, or arrangement to do any of the foregoing.
7.2 Permitted Transfers
-------------------
(a) Each Shareholder covenants and agrees with TCI that neither
such Shareholder, nor any direct or indirect Permitted Transferee of such
Shareholder, shall at any time transfer any Notes or Registrable Shares except:
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<PAGE>
(i) a Transfer to TCI or with TCI's prior written consent;
(ii) a Transfer to a Permitted Transferee who agrees to be bound
by all of the provisions of this Article 7;
(iii) sales of Registrable Shares for cash made after the second
anniversary of the Closing Date and in accordance with the provisions of
Rule 144 under the Securities Act, provided, however, that the aggregate number
of Registrable Shares sold pursuant to this clause (iii) during any period of
six consecutive calendar months by all of the Shareholders, all of their
Permitted Transferees and all other persons subject to this Section 7.2 shall
not exceed 1,000,000 (after giving effect to the two-for-one split of the TCI
Stock effective on July 14, 1986); or
(iv) sales of Registrable Shares pursuant to the registration
rights granted in Section 7.5 hereof.
(b) Notwithstanding any contrary provision of Article 7 hereof, the
aggregate number of Registrable Shares which may be sold by the Shareholders,
their Permitted Transferees and all other persons subject to this Section 7.2
pursuant to clauses (iii) and (iv) of this Section 7.2 shall
-35-
<PAGE>
not exceed: (i) 4,500,000 shares until the third anniversary of the Closing
Date, (ii) 6,300,000 shares until the fourth anniversary of the Closing Date and
(iii) 7,200,000 shares until the fifth anniversary of the Closing date;
provided, however, that neither the foregoing restriction nor any other
provisions of Article 7 hereof shall prevent the Shareholders from selling
such number of Registrable Shares as may be required to permit the Shareholders
to pay all federal income taxes for which they may become liable if as a result
of any amendment of the Internal Revenue Code (or any subsequent provision of
similar purport) or the Regulations thereunder or the interpretation thereof by
the Internal Revenue Service or by the courts, the Shareholders cease to be
eligible to use the installment method of reporting with respect to that portion
of the gain realized by them upon the sale of the Company Common Stock which is
represented by the Notes then held by them.
(c) In the event of any Recapitalization affecting TCI's capital
stock (other than the two-for-one split of the TCI Stock effective on July 14,
1986), the numbers of shares specified in clause (iii) of subsection (a) of this
Section 7.2, clause (i)(E) of Section 7.3, clauses (i)(B), (ii)(D) and (ii)(E)
of Section 7.5(d) and Section 7.4(c) hereof shall be appropriately and equitably
adjusted. In the event of any Recapitalization affecting TCI's capital stock
(including the
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<PAGE>
two-for-one split of the TCI Stock effective on July 14, 1986), the numbers of
shares specified in subsection (b) of this Section 7.2 shall be appropriately
and equitably adjusted.
(d) Any person who sells Registrable Shares pursuant to clause (iii)
of subsection (a) of this Section 7.2 shall, promptly after effecting any such
sale (or, if reasonably practicable, prior to effecting any such sale) notify
TCI of the date of such sale, the number of Registrable Shares sold and the
manner of such sale.
7.3 Permitted Transferees. (a) A "Permitted Transferee" shall mean,
---------------------
with respect to each person from time to time holding Notes or Registrable
Shares (a "Holder"):
(i) In the case of a Holder who is a natural person:
(A) The spouse of such Holder, any lineal descendant of such
Holder, any spouse of such lineal descendent and any lineal descendent of such
spouses;
(B) The trustee of a trust principally for the benefit of such
Holder or one or more of his Permitted Transferees described in each subclause
of this clause (i) other than this subclause (B);
(C) A corporation a majority of the beneficial ownership of
outstanding capital stock of
-37-
<PAGE>
which entitled to vote for the election of directors is owned by, or a
partnership a majority of the beneficial ownership of the partnership
interests of which entitled to participate in the management of the
partnership are held by, such Holder or his Permitted Transferees
determined under this clause (i);
(D) The estate of such Holder; and
(E) An institutional investor which has been approved by TCI as a
prospective purchaser of Notes or Registrable Shares (such approval not to
be unreasonably withheld) and which acquires Notes or Registrable Shares
for a gross consideration of at least $5,000,000, provided that no more
than 1,000,000 Registrable Shares in the aggregate (or Notes convertible
into no more than 1,000,000 Registrable Shares) may be sold to not more
than five such investors.
(ii) In the case of a Holder holding Notes or Registrable Shares as
trustee pursuant to a trust (other than a trust described in clause (iii)
below), "Permitted Transferee" means (A) any person transferring Notes or
Registrable Shares to such trust and (B) any Permitted Transferee of any
such transferor determined pursuant to clause (i) above.
-38-
<PAGE>
(iii) In the case of a Holder holding Notes or Registrable Shares as
trustee pursuant to an irrevocable trust, "Permitted Transferee" means (A)
any person to whom or for whose benefit principal or income may be
distributed either during or at the end of such trust whether by power of
appointment or otherwise and (B) any Permitted Transferee of such person
determined pursuant to clause (i) above.
(iv) In the case of a Holder which is a corporation or a partnership,
"Permitted Transferee" means (A) any person transferring Notes or
Registrable Shares to such corporation or partnership and (B) any Permitted
Transferee of any such transferor determined under clause (i) above.
(v) In the case of Holder which is the estate of a deceased Holder,
or which is the estate of a bankrupt or insolvent Holder, "Permitted
Transferee" means a Permitted Transferee of such deceased, bankrupt or
insolvent Holder as determined pursuant to clause (i), (ii), (iii) or (iv)
above, as the case may be.
(b) Notwithstanding anything to the contrary set forth herein, any Holder
may pledge such Holder's Notes or Registrable Shares to a pledgee pursuant to a
bona fide
-39-
<PAGE>
pledge of such Notes or shares as collateral security for indebtedness due to
the pledgee, provided that such Notes or shares shall remain subject to the
provisions of this Article. In the event of foreclosure or other similar action
by the pledgee, such pledged Notes or shares may only be transferred to a person
who agrees, pursuant to an agreement in form and substance satisfactory to TCI,
to be bound by all of the provisions of this Article 7 and Section 1.7 hereof.
(c) For purposes of this Section 7.3:
(i) The relationship of any person that is derived by or through legal
adoption shall be considered a natural one.
(ii) Each joint owner of Notes or Registrable Shares shall be
considered a Holder of such Notes or shares.
(iii) A person for whom Notes or Registrable Shares are held pursuant
to a Uniform Gifts to Minors Act (the "UGMA") or similar law shall be considered
a Holder of such Notes or shares.
7.4 Legend and Stop Transfer Order. To assist in effectuating the
------------------------------
provisions of this Agreement, each Shareholder hereby consents and agrees as
follows:
(a) All certificates representing ownership of Registrable Shares
beneficially owned or held by him and his Permitted Transferees shall bear (in
addition to any other
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<PAGE>
legend required by applicable securities laws) the following legend until such
Registrable Shares have been sold, transferred or disposed of pursuant to clause
(iii) or (iv) of Section 7.2 hereof:
The shares represented by this certificate are subject to
the provisions of an Agreement, dated as of July 9, 1986,
among Tele-Communications, Inc. and certain former shareholders
of United Artists Communications, Inc., and may not be sold,
transferred, pledged, hypothecated or otherwise disposed of
except in accordance therewith. A copy of said Agreement
is on file at the office of the corporate Secretary of
Tele-Communications, Inc.
(b) No Transfer or attempted Transfer of Registrable Shares or Notes in
violation of this Article 7 shall be effective for any purpose. TCI may enter a
stop transfer order with the transfer agent or agents of the Corporation's
securities against the transfer of Registrable Shares or Notes except in
compliance with the requirements of this Agreement, or if TCI shall become its
own transfer agent with respect to any Registrable Shares or Notes, TCI may
refuse to transfer any Registrable Shares or Notes except in compliance with the
requirements of this Agreement.
(c) Upon the request of the Representatives and the delivery to TCI of
certificates for Registrable Shares bearing the legend set forth in Section
7.4(a) hereof, TCI
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<PAGE>
shall promptly issue new certificates for such Registrable Shares not bearing
such legend in the following amounts:
(i) On or after the second anniversary of the Closing, TCI shall
issue unlegended certificates for an aggregate of 2,000,000 Registrable Shares;
(ii) On or after each succeeding anniversary of the Closing Date,
in addition to the number of shares referred to in (i) above, TCI shall issue
unlegended certificates for an aggregate of 2,000,000 Registrable Shares.
7.5 Registration Rights.
-------------------
(a) Demand Registration.
-------------------
(i) The Shareholders and their Permitted Transferees (the
"Eligible Holders") shall have the right to request registration (a "Demand
Registration") under the Securities Act of the Registrable Shares then owned by
the Eligible Holders, or which the Eligible Holders have the right to acquire
upon the conversion of Notes owned by them, upon the terms and subject to the
conditions set forth in this Section 7.5. As soon as practicable after the
receipt by TCI of a written request by an Eligible Holder for registration under
this Section 7.5(a). TCI shall (A) give written notice of such request to all of
the Shareholders and (B) file, and use
-42-
<PAGE>
its best efforts to cause to become effective, a registration statement
under the Securities Act covering the Registrable Shares requested to
be registered by the Eligible Holder making such request and by each
other Eligible Holder who requests that TCI include his Registrable
Shares in such Demand Registration within 10 days after receipt of
TCI's notice thereof. The public offering or distribution of Registrable
Shares under this Section 7.5(a) shall be pursuant to a firm commitment
underwriting, the managing underwriter of which shall be a nationally
recognized investment banking firm selected by TCI and approved by the
Eligible Holders who hold a majority of the Registrable Shares requested
to be included in the Demand Registration in question (which approval shall
not be unreasonably withheld). TCI shall enter into the same underwriting
agreement as shall the Eligible Holders, containing representations,
warranties and agreements not substantially different from those
customarily made by an issuer in underwriting agreements with respect
to secondary distributions. TCI, as a condition to fulfilling its
obligations under this Section 7.5(a), may require the underwriters to
-43-
<PAGE>
enter into an agreement indemnifying the TCI Indemnified Parties
against any Losses (as such capitalized terms are defined in Section 7.7
hereof) that arise out of or are based upon an untrue statement
or an alleged untrue statement or omission or alleged omission in the
registration statement or any related prospectus made in reliance
upon and in confirmity with written information furnished to TCI by
the underwriters specifically for use in the preparation thereof.
(ii) TCI shall be entitled to postpone, for a reasonable period of
time not to exceed 90 days, the filing of a registration statement
otherwise required to be prepared and filed by it pursuant to this
Section 7.5(a), if at the time it receives a request therefor it
determines, in its reasonable business judgment, that such registration
and offering could interfere with any financing, acquisition, corporate
reorganization, or other material transaction or development involving
TCI or any of its affiliates and gives the participating Eligible Holders
written notice of such determination. In the event of such postponement,
TCI shall file such registration statement as soon as practicable after
it shall determine, in its
-44-
<PAGE>
reasonable business judgment, that such registration and offering will
not interfere with the matters described in the preceding sentence.
If TCI shall postpone the filing of any registration statement, the
participating Eligible Holders shall have the right to withdraw their
request for such registration by giving notice to TCI within 15 days
of the notice of postponement. In the event that the participating
Eligible Holders withdraw their request, such request shall not be
counted for purposes of determining the number of registrations to
which the Eligible Holders are entitled pursuant to this Section 7.5(a).
(b) Piggyback Registration Rights. If TCI shall propose the registration
-----------------------------
under the Securities Act of an offering of any of its equity securities to be
sold for cash pursuant to a firm commitment underwriting, for its own account or
for the account of other securities holders (other than in connection with a
dividend reinvestment, employee stock purchase, stock option or similar plan, a
merger, consolidation or reorganization, or an offering or rights, warrants or
securities convertible into equity securities), the Eligible Holders shall be
entitled, on each such occasion, to request to have any or all of the
Registrable Shares owned by them, or which the Eligible Holders have the
-45-
<PAGE>
right to acquire upon the conversion of Notes owned by them, included in such
registration. On each such occasion, TCI shall, as promptly as practicable but
in no event later than 15 days prior to the proposed filing date, give written
notice to the Shareholders of its intention to effect such registration. Upon
the written request of an Eligible Holder that TCI include any Registrable
Shares in such registration statement (which request shall state the number of
Registrable Shares for which registration is sought), given within 10 days after
receipt of notice from TCI, TCI shall use its best efforts to cause such
Registrable Shares to be so registered and to be included in the offering
covered by such registration. The inclusion of some or all of the Registrable
Shares which Eligible Holders have requested TCI to register pursuant to this
Section 7.5(b) may be conditioned or restricted if, in the reasonable business
judgment of TCI or the managing underwriter of the proposed offering for which
the registration statement has been or is to be filed, such inclusion will have
an adverse impact on the offering of securities by TCI (provided that such
conditions or restrictions apply on a proportional basis not only to the
Registrable Shares but also to all other securities to be included other than
those for which TCI initiated registration). TCI may, without the consent of any
Eligible Holder, withdraw any registration statement filed pursuant to
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<PAGE>
this Section 7.5(b) and abandon the proposed offering in
which Eligible Holders requested inclusion of any Registrable
Shares. Any request for inclusion of Registrable Shares made
pursuant to this Section 7.5(b) shall not be deemed a request
for registration pursuant to Section 7.5(a) hereof.
(c) Expenses of Registration. TCI shall pay all
------------------------
costs and expenses incurred in connection with the registra-
tion of Registrable Shares pursuant to Section 7.5(a) or
7.5(b) hereof, except that the Eligible Holders shall pay all
fees and disbursements of the Eligible Holders' counsel and
accountants, and all transfer taxes and brokerage and under-
writers' discounts and commissions attributable to the
Registrable Shares being offered and sold by the Eligible
Holders.
(d) Limitations on Registration Rights. Notwith-
----------------------------------
standing the provisions of Section 7.5(a) and 7.5(b) hereof:
(i) the Eligible Holders shall have no right
to request registration of (A) any Registrable
Shares prior to the first business day following
the second anniversary of the Closing Date, except
as provided in Section 7.2(b), or (B) a number of
Registrable Shares which would result in sales in
excess of the limitations contained in Section
7.2(b) hereof;
- 47 -
<PAGE>
(11) TCI shall not be required to effect any
registration if (A) in the case of a request pur-
suant to Section 7.5(a), TCI has previously filed a
registration statement under the Securities Act
pursuant to Section 7.5(a) hereof within six
months; (B) in the case of a request pursuant to
Section 7.5(a) hereof, TCI could be required to
undergo a special interim audit in order to comply
with such request (unless the Eligible Holders
execute an undertaking, reasonably satisfactory to
TCI, to pay all fees and expenses of such special
interim audit); (C) in the opinion of counsel for
TCI, the Eligible Holders could sell under Rule 144
promulgated under the Securities Act the number of
Registrable Shares they propose to have registered
in compliance with this Agreement, and TCI notifies
the Eligible Holders in writing that TCI desires
that they do so; (D) if the number of Registrable
Shares requested to be registered shall be less
than 1,000,000 or (E) at any time following the
date on which the aggregate number of Registrable
Shares held by all Eligible Holders shall first be
less than 1,000,000 (for this purpose Registrable
Shares which Eligible Holders are then entitled to
- 48 -
<PAGE>
acquire upon the conversion of Notes held by them shall be deemed to
be held by Eligible Holders).
(e) Obligations with Respect to Registration.
----------------------------------------
(i) If and whenever TCI is obligated by the provisions of this
Section 7.5 to effect the registration of any Registrable Shares under the
Securities Act, TCI shall:
(A) prepare and file with the SEC any amendments and supplements
to such registration statement and to the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act and the rules and
regulations promulgated thereunder with respect to the disposition of all
Registrable Shares covered by such registration statement for the period
required to effect the distribution thereof, but in no event shall TCI be
required to do so for a period of more than 90 days following the effective date
of such registration statement;
(B) notify the participating Eligible Holders and confirm such
advice in writing, (1) when such registration statement becomes effective, (2)
when any post-effective amendment to such registration statement becomes
effective, and (3) of any request by the SEC for any amendment of or supplement
to such registration statement or any prospectus relating thereto or for
additional information;
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<PAGE>
(C) furnish at TCI's expense to the participating Eligible Holders such
number of copies of a preliminary, final, supplemental or amended prospectus, in
conformity with the requirements of the Securities Act and the rules and
regulations promulgated thereunder, as may reasonably be required in order to
facilitate the disposition of the Registrable Shares covered by such
registration statement, but only while TCI is required under the provisions
hereof to cause the registration statement to remain effective;
(D) register or qualify at TCI's expense the Registrable Shares covered by
such registration statement under such other securities or blue sky laws of such
jurisdictions in the United States as the managing underwriter shall reasonably
request; provided, however, that TCI shall in no event be required to qualify
-------- -------
to do business as a foreign corporation or as a dealer in any jurisdiction
where it is not so qualified, to conform the composition of its assets at the
time to the securities or blue sky laws of such jurisdiction, to execute or file
any general consent to service of process under the laws of any jurisdiction,
to take any action that would subject it to service of process in suits other
than those arising out of the offer and sale of the Registrable Shares covered
by such registration
-50-
<PAGE>
statement, or to subject itself to taxation in any jurisdiction where it has not
theretofore done so.
(ii) As a condition to the obligations of TCI under this Section 7.5,
the Eligible Holders shall provide such information and materials, execute all
such documents and take all such other actions as TCI shall reasonably request
in order to permit TCI to comply with all applicable requirements of law and to
effect the registration of the Registrable Shares.
7.6 Cooperation, Etc. Each Shareholder covenants and agrees with TCI
----------------
that such Shareholder will and will cause each of its Permitted Transferees to:
(a) cooperate with TCI in connection with the preparation of each
registration statement contemplated by Section 7.5 hereof, and for so long as
TCI is obligated to keep such registration statement effective, provide TCI, in
writing, for use in such registration statement, such information regarding the
Shareholders as may be necessary to enable TCI to prepare such registration
statement and to maintain the currency and effectiveness thereof.
(b) During such time as any of the Holders may be engaged in a distribution
of Registrable Shares, comply with Rules 10b-2, 10b-6 and 10b-7 promulgated
under the Exchange Act and pursuant thereto, among other things: (i) not engage
in any stabilization activity in connection with the securi-
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<PAGE>
ties of TCI in contravention of such Rules; (ii) distribute Registrable Shares
solely in the manner described in the applicable registration statement; (iii)
cause to be furnished at the expense of TCI to each underwriter, broker and
dealer through whom Registrable Shares may be offered, such copies of the
registration statement and related prospectus and any amendment or supplement
thereto and documents incorporated by reference therein as may be required by
such underwriter, broker or dealer; and (iv) not bid for or purchase any
securities of TCI or attempt to induce any person to purchase any securities of
TCI other than as permitted under the Exchange Act.
(c) On written notice from TCI that TCI intends to proceed with a
distribution of any of its securities and, that in connection therewith it
requires the suspension by any of the Holders of the distribution of any of the
Registrable Shares, cease distributing Registrable Shares until such time as the
distribution by TCI has been completed.
7.7 Indemnification.
---------------
(a) In the event of any registration of any Registrable Shares under the
Securities Act pursuant to this Article 7, TCI will indemnify and hold harmless
the Eligible Holders of such Registrable Shares (the "Seller Indemnified
Parties") against any losses, claims, damages, liabilities or expenses
(including reasonable attorneys' fees), joint or
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<PAGE>
several ("Losses"), to which such Seller Indemnified Parties may become subject,
insofar as such Losses (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in the registration statement or the final prospectus contained in the
registration statement and any post-effective amendment or supplement to such
prospectus, or (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (iii) any violation of any federal or state securities law or
rule or regulation thereunder committed by TCI in connection with the
performance of its obligations under Section 7.5; and TCI will reimburse such
Seller Indemnified Parties for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage or liability; provided, however, that TCI will not be liable in any such
-------- -------
case to the extent that any such Loss arises out of or is based upon any actual
or alleged untrue statement in, or actual or alleged omission from, any
registration statement or prospectus made by TCI in reliance upon and in
conformity with written information furnished to TCI by or on behalf of such
Holder for use in connection with the preparation of the registration statement
or prospectus, or for the use of any prospectus after such time as the
obligation
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<PAGE>
of TCI under Section 7.5 to keep the registration statement effective and
current has expired or for any other violation of any federal or state
securities laws, rules or regulations committed by any of the Seller Indemnified
Parties.
(b) In the event of any registration of any Registrable Shares under the
Securities Act pursuant to this Article 7, each of the Holders of such
Registrable Shares will indemnify and hold harmless TCI, and each of its
directors and officers and each person, if any, who controls TCI, within the
meanings of the Securities Act or the Exchange Act (the "TCI Indemnified
Parties"), against any Losses, joint or several, to which the TCI Indemnified
Parties may become subject, insofar as such Losses (or Actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement or
the final prospectus contained in any registration statement or any post-
effective amendment or supplement to such prospectus or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if the statement or
omission was made in reliance upon and in conformity with written information
furnished to TCI by or on behalf of any Holder for use in connection with the
preparation of the registration statement or prospectus, or (ii) the use of any
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<PAGE>
prospectus after such time as the obligation of TCI to keep
the registration statement effective and current has expired,
or (iii) any violation by any Holder of any federal or state
securities law or rule or regulation thereunder; and each
Holder will reimburse such TCI Indemnified Parties for any
legal or other expenses reasonably incurred by them in
connection with investigating or defending any such Loss.
(c) Any person that proposes to assert the right
to be indemnified under Section 7.7 will, promptly after
receipt of notice of any claim, action, suit, proceeding or
other litigation (collectively, an "Action") against such
person in respect of which a claim is to be made against an
indemnifying party under this Section 7.7, notify each such
indemnifying party of the commencement of such Action, en-
closing a copy of all papers served, but the omission so to
notify such indemnifying party of any such Action shall not
relieve it from any liability that it may have to any indem-
nified party otherwise than under this Section 7.7. In case
any such Action shall be brought and notice given to the
indemnifying party of the commencement thereof, the indem-
nifying party shall be entitled to participate in, and, to
the extent that it shall wish, jointly with any other indem-
nifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to the indemnified party,
and after notice from the indemnifying party to such indem-
- 55 -
<PAGE>
nified party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses, except as provided below and except for the reasonable costs of in-
vestigation subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ
separate counsel and to participate in (but not control) any such Action, but
the fees and expenses of such counsel shall be the expense of such indemnified
party unless (i) the employment of counsel by such indemnified party has been
authorized by the indemnifying parties, (ii) the indemnified party shall have
been advised by its counsel that there may be a conflict of interest between the
indemnifying parties and the indemnified party in the conduct of the defense of
such Action (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying parties shall not in fact have employed counsel to assume the
defense of such action, in each of which cases, the fees and expenses of counsel
shall be at the expense of the indemnifying parties. An indemnifying party shall
not be liable for any settlement of any Action or claims effected without its
written consent.
7.8 Right of First Refusal. Prior to effecting
----------------------
any sale of any Registrable Shares pursuant to clause (iv) of
- 56 -
<PAGE>
Section 7.2(a) hereof, the Holder of such Registrable Shares shall give TCI the
opportunity to acquire such Registrable Shares in the following manner:
(a) TCI shall have the right, exercisable by written notice to such Holder
given within 30 business days after the receipt of written notice of Holder's
request for registration to purchase all or any part of the Registrable Shares
proposed to be registered by such Holder pursuant to Section 7.5 hereof for cash
at a per share price equal to the Average Market Price during the ten
consecutive trading days immediately preceding the date such notice is given,
less (i) in the case of a request for registration pursuant to Section 7.5(a),
one-half of the per share underwriting discount which, in the opinion of a
nationally-recognized investment banking firm selected by TCI and reasonably
satisfactory to such Holder, would be appropriate for a registered offering of
the proposed size and nature or (ii) in the case of a request for registration
pursuant to Section 7.5(b), one-half of the maximum per share underwriting
discount proposed by the managing underwriter for the offering covered by such
registration.
(b) If TCI exercises the right of first refusal granted under Section
7.8(a), the closing of the purchase of the Registrable Shares with respect to
which such right has been exercised shall take place at such time as shall be
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<PAGE>
designated by TCI; provided, however, that such closing shall occur not later
-------- -------
than 30 days after the date that the written notice of such exercise of such
right of first refusal is given pursuant to Section 7.8(a) hereof. Each closing
pursuant to this Section 7.8(b) shall be held at a mutually convenient location.
At such closing, each Holder of the Registrable Shares to be purchased shall
transfer to TCI good and marketable title to all of his Registrable Shares with
respect to which such right of first refusal was exercised, free and clear of
all Security Interests and Restrictions. Such transfer shall be effected by
delivery by such Holder to TCI, against payment by TCI of the purchase price for
such Registrable Shares, or the certificates representing such Shares, duly
endorsed for transfer or accompanied by duly executed instruments of assignment,
with signature guaranteed, and with all required stock transfer tax stamps
attached.
ARTICLE 8
INDEMNIFICATION
---------------
8.1 Indemnification by TCI. TCI agrees to indemnify and hold harmless each
----------------------
Shareholder from and against (i) any and all expenses reasonably incurred by
such Shareholder in investigating or defending against any Action commenced or
threatened by any person, other than a Share-
-58-
<PAGE>
holder, a sister of the Representatives, any grantor or beneficiary of any
trust the trustee of which is a Shareholder or a person for whom Shares are
held by a Shareholder pursuant to the UGMA or similar law, or any affiliate
or associate of any Shareholder or any such grantor, beneficiary or person,
based on or arising in any manner out of or in connection with any conduct
by TCI or its affiliates related to the transactions contemplated by this
Agreement, the execution, delivery and performance of this Agreement by
such Shareholder and the acceptance by such Shareholder of the terms and
provisions of this Agreement or the sale of such Shareholder's Shares
pursuant hereto and the receipt of the Consideration therefor and (ii) any
and all liabilities incurred by such Shareholder as a result of such
Action, excluding any such expenses or liabilities arising solely out of or
resulting solely from a breach by such Shareholder of any representation or
warranty, or a breach or failure by such Shareholder to perform any
covenant or agreement, of such Shareholder contained herein or arising
pursuant to Section 7.7 hereof.
8.2 Third Party Claims. Promptly after the receipt by any Shareholder
------------------
of notice of any Action which is subject to indemnification hereunder, such
party (the "Indemnified Party") shall give written notice to TCI. The
Indemnified Party shall be entitled, at the sole expense and
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<PAGE>
liability of TCI, to exercise full control of the defense,
compromise or settlement of any such Action unless TCI,
within a reasonable time after the giving of such notice by
the Indemnified Party, shall notify the Indemnified Party in
writing of TCI's intention to assume the defense thereof and
retain legal counsel reasonably satisfactory to the
Indemnified Party to conduct the defense of such Action. The
Indemnified Party and TCI shall cooperate with the party
assuming the defense, compromise or settlement of any such
Action in accordance herewith in any manner that such party
reasonably may request. If TCI so assumes the defense of any
such Action, the Indemnified Party shall have the right to
employ separate counsel and to participate in (but not
control) the defense, compromise, or settlement thereof, but
the fees and expenses of such counsel shall be the expense of
the Indemnified Party unless (i) the employment of counsel by
the Indemnified Party has been authorized by TCI, (ii) the
Indemnified Party shall have been advised by its counsel that
there may be a conflict of interest between TCI and the
Indemnified Party in the conduct of the defense of such
Action (in which case TCI shall not have the right to direct
the defense of such Action on behalf of the Indemnified
Party) or (iii) TCI shall not in fact have employed counsel
to assume the defense of such action, in each of which cases,
the fees and expenses of counsel shall be at the expense of
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<PAGE>
TCI. No Indemnified Party shall settle or compromise any such Action for which
it is entitled to indemnification hereunder without the prior written consent of
TCI, unless TCI shall have failed, after reasonable notice thereof, to undertake
control of such Action in the manner provided above in this Section 8.2.
ARTICLE 9
PROPOSED BUSINESS COMBINATION
-----------------------------
9.1 Business Combination Proposal. TCI intends to pursue and implement a
-----------------------------
plan for a business combination with the Company pursuant to which TCI will
attempt to acquire the entire equity interest in the Company (the "Business
Combination") in which each shareholder of the Company other than the
Shareholders and each holder of options to purchase shares of Company Common
Stock would be given an opportunity to receive, for each share of Company Common
Stock owned by such shareholder (and, in the case of holders of options, the
right to acquire for the same consideration that would have been payable upon
the exercise of such options), consideration having a fair market value
equivalent to or greater than the fair market value on such date of the
consideration per Share to be received by each Shareholder pursuant to this
Agreement. TCI's development and implementation of a plan for a Business
Combination shall be
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<PAGE>
subject to such terms and conditions as, in TCI's reasonable judgment, are
normal in the development and implementation of such business combination
proposals, including, without limiting the generality of the foregoing,
conditions relating to the absence of (i) material changes in the business or
financial condition of the Company and its subsidiaries, (ii) pending or
threatened litigation affecting the Company or its subsidiaries or the proposed
Business Combination, and (iii) adverse changes in laws or regulations
applicable to the Company or its subsidiaries or the proposed Business
Combination.
ARTICLE 10
TRANSACTIONS PENDING THE CLOSING
--------------------------------
10.1 Certain Transactions Pending the Closing.
----------------------------------------
(a) Each of the Shareholders agrees that, during the term of this
Agreement, he shall not (i) purchase, or enter into any contract to purchase,
any shares of Company Common Stock, except in connection with the exercise of
outstanding stock options, (ii) tender any shares of Company Common Stock
pursuant to any tender or exchange offer, other than by TCI or its affiliates,
(iii) except as permitted by Section 2.3, sell, transfer, pledge, hypothecate or
otherwise dispose of any shares of Company Common Stock (or any interest
therein) or (iv) enter into any contract, agreement, com-
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<PAGE>
mitment or arrangement with respect to any of the foregoing, or offer to do any
of the foregoing.
(b) During the term of this Agreement and other than with respect to the
Business Combination, none of the Shareholders shall (i) initiate, solicit or
encourage, directly or indirectly, inquiries, discussions, negotiations or
proposals with respect to, or furnish any information relating to, or
participate in any negotiations or discussions concerning, any proposal for a
merger, tender offer, exchange offer or other business combination involving the
Company or any of its subsidiaries, the acquisition or purchase of all or a
substantial portion of the assets of, or a substantial equity interest in, the
Company or any of its subsidiaries or any business combination with the Company
or any of its subsidiaries, or (ii) form or participate in any "group" (as that
term is used in Rule 13(d)(3) of the Exchange Act) which intends to seek control
of the Company or any of its subsidiaries or enter into any agreement or
understanding with any person or "group" with respect to the voting of shares of
Company Common Stock. Each Shareholder agrees to immediately notify TCI if any
such inquiries or proposals are received by, any such information is requested
from, or any negotiations or discussions are sought to be initiated with such
Shareholder.
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<PAGE>
ARTICLE 11
ENFORCEMENT AND RELATED MATTERS
-------------------------------
11.1 Enforcement Provisions. In the event that all of the conditions
----------------------
to TCI's obligations provided in Article 5 hereof have been satisfied prior to
December 31, 1986, the Representatives by written notice to TCI may compel the
Closing to be held on December 31, 1986 or as soon as reasonably possible
thereafter. It is the intention of the parties that the Closing shall take
place on or before December 31, 1986, and all parties shall use their best
efforts to consummate the Closing on or prior to such date. In the event that
the Closing shall not have occurred on or before December 31, 1986 and the
period during which the Closing can occur shall not have been extended by mutual
consent of the Representatives and TCI, then the Agreement may be terminated by
either TCI or the Representatives by written notice to the other.
11.2 Termination by Mutual Consent. This Agreement may be terminated
-----------------------------
prior to the Closing by the mutual consent of TCI and the Representatives.
11.3 Fees and Expenses. Regardless of whether the transactions
-----------------
contemplated by this Agreement are consummated, each of the parties hereto shall
pay its own fees and expenses incident to the negotiation, preparation and
execution
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<PAGE>
of this Agreement, including attorneys' and accountants' fees.
ARTICLE 12
MISCELLANEOUS
-------------
12.1 Certain Consents and Approvals.
------------------------------
(a) Without limiting the generality of Sections 3.7 and 4.2 hereof,
TCI and the Acquiror shall, and the Shareholders shall and shall use their
best efforts to cause the Company and each of its subsidiaries to, as
expeditiously as reasonably practicable:
(i) File with the FCC and such other federal, state and local
governments and governmental agencies, departments and bodies as may
be required, such applications or other documents as may be necessary
to obtain the Approvals and take all steps necessary to prosecute such
applications with diligence and diligently oppose any objections to
(to the extent such objections are directed at a particular party),
appeals from, or petitions to reconsider such approvals, to the end
that preliminary orders and final orders or such other authorizations
as may be
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<PAGE>
required, of the FCC and such other governments and governmental agencies,
departments and bodies may be obtained as soon as practicable.
(ii) Coordinate the preparation, timing and filing of notification under
the Hart-Scott Act so as to present all notices at the time selected by TCI
(which shall be as soon as reasonably practicable after the date of
execution and delivery of this Agreement) and to avoid substantial errors
and inconsistencies between such notices in the description of the
transaction.
(b) Nothing contained in this Section 12.1 or in any other provision of
this Agreement shall require or be deemed to require TCI or any of its direct or
indirect subsidiaries or affiliates to divest itself or dispose of any of its
properties or assets or make special payments or grant any special concessions
or in any way diminish or impair its control, ownership or operation of any of
its properties or assets.
(c) Notwithstanding the provisions of Sections 4.2 and 12.1(a) hereof, the
Shareholders shall not permit the Company or any of its direct or indirect
subsidiaries or af-
-66-
<PAGE>
filiates to divest itself or dispose of any of its properties or assets or make
special payments or grant any special concessions or in any way diminish or
impair its control, ownership or operation of any of its properties or assets in
order to obtain any Approval or any other waivers, permits, licenses, approvals,
authorizations, qualifications, orders or consents referred to in Section 4.2 or
12.1(a) hereof, without the prior written consent of TCI.
12.2 Modification or Amendment. Subject to applicable law, this Agreement
-------------------------
may be amended, modified and supplemented by a written instrument executed and
delivered by TCI and the Representatives. No waiver by TCI or any Shareholder of
any provisions hereof shall be effective unless explicitly set forth in writing
and executed by TCI or a Representative, respectively. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants, or agreements contained herein, and
in any documents delivered or to be delivered pursuant to this Agreement and in
connection with the Closing hereunder. The waiver by any party hereto of a
breach of any provisions of this Agreement shall not operate or be construed as
a waiver of any subsequent breach.
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<PAGE>
12.3 Waiver of Conditions. The conditions to each of the parties'
--------------------
obligations to effect the Closing are for the sole benefit of such party and may
be waived by such party in whole or in part to the extent permitted by
applicable law.
12.4 Survival. The respective representations, warranties, covenants and
--------
agreements of the parties contained in this Agreement shall survive the Closing
and any investigation made by or on behalf of any party.
12.5 Headings. The section headings herein are for convenience of
--------
reference only, do not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions hereof.
12.6 Notices. All notices or other communications required or permitted
-------
hereunder shall be given in writing and shall be delivered or sent by registered
or certified mail, postage prepaid, as follows:
If to the Company:
Marshall Naify
Robert A. Naify
c/o United Artists Communications, Inc.
172 Golden Gate Avenue
San Francisco, California 94102
with a copy to:
James F. Crafts, Jr.
Orrick, Herrington & Sutcliffe
600 Montgomery Street, 12th Floor
San Francisco, California 94111
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<PAGE>
If to the Shareholders or the Representatives:
Marshall Naify
Robert A. Naify
c/o United Artists Communications, Inc.
172 Golden Gate Avenue
San Francisco, California 94102
with a copy to:
John M. Sherwood
c/o United Artists Communications, Inc.
172 Golden Gate Avenue
San Francisco, California 94102
If to TCI:
Tele-Communications, Inc.
55 Denver Technological Center
5455 South Valentia Way
Englewood, Colorado 80111
Attention: President
with copies to:
Tele-Communications, Inc.
55 Denver Technological Center
5455 South Valentia Way
Englewood, Colorado 80111
Attention: General Counsel
Jerome H. Kern, P.C.
Shea & Gould
330 Madison Avenue
New York, New York 10017
or such other address as shall be furnished in writing by such party, and any
such notice or communication shall be effective and be deemed to have been given
as of the date so delivered or mailed; provided, however, that any notice or
-------- -------
communication changing any of the addresses set forth above shall be effective
and deemed given only upon its receipt.
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<PAGE>
12.7 Binding Effect; Benefit. This Agreement shall inure to the
-----------------------
benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties thereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
12.8 Assignability. This Agreement shall not be assignable by any
-------------
of the parties hereto without the prior written consent of each of the other
parties.
12.9 Complete Agreement. This Agreement (including the Schedules and
------------------
Exhibits hereto) contains the entire understanding of the parties with respect
to the transactions contemplated hereby and supersedes all prior written or oral
commitments, arrangements or understandings with respect thereto. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein.
12.10 Counterparts. This Agreement may be executed in two or more
------------
counterparts all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
12.11 Governing Law. This Agreement shall be governed by the laws of
-------------
the State of Maryland (regardless of the laws that might be applicable under
principles of conflicts
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<PAGE>
of law) as to all matters, including but not limited to matters of validity,
construction, effect and performance.
12.12 Accounting Terms. All accounting terms used herein which are
----------------
not expressly defined in this Agreement shall have the respective meanings given
to them in accordance with generally accepted accounting principles on the date
hereof.
12.13 Certain Definitions. For purposes of this Agreement, (i) the terms
-------------------
"affiliate" and "associate" shall have the respective meanings ascribed to such
terms under the rules and regulations promulgated by the SEC under the Exchange
Act and (ii) the term "person" shall include natural persons, corporations,
partnerships, associations, trusts, joint ventures, unincorporated organizations
and entities of every kind, as well as groups consisting of any of the foregoing
formed for any purpose.
12.14 Rights in Shares. On and after the Closing, Acquiror shall be
----------------
entitled to all the rights of beneficial ownership of the Acquired Shares,
including, without limitation, the right to exercise any and all voting rights
pertaining to the Acquired Shares at any meeting of shareholders of the Company
held on or after the Closing Date and to receive any and all dividends and other
distributions with respect to the Acquired Shares, the record date for which is
on or after the Closing Date. In furtherance of the foregoing,
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<PAGE>
each Shareholder agrees to deliver to Acquiror, promptly upon receipt by
such Shareholder, any dividend or other distribution with respect to
Acquired Shares, received by such Shareholder on or after the Closing Date,
the record date for which is on or after the Closing Date.
12.15 Further Assurances. Each party hereto shall perform such further
------------------
acts and execute such further documents as may reasonably be required to
carry out the provisions of this Agreement, including instruments necessary
or desirable to complete the transfer, sale and assignment of the Acquired
Shares.
12.16 Disclosure. The Shareholders will not, except as and to the
----------
extent required by applicable law and after consultation with TCI, disclose
to any other person the existence of this Agreement, or any of the terms
hereof, prior to any public announcement by TCI of the existence of the
Agreement or such terms. TCI agrees to consult with the Representatives
concerning the form and content of any such public announcement by TCI.
12.17 Specific Performance. The parties recognize that any breach of
--------------------
the terms of this Agreement may give rise to irreparable harm for which
money damages would not be an adequate remedy, and accordingly agree that,
in addition to other remedies, any non-breaching party shall be entitled to
enforce the terms of this Agreement by a decree of specific
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<PAGE>
performance without the necessity of proving the inadequacy as a remedy of money
damages.
12.18 Effective Date. This Agreement shall become effective and binding
--------------
upon the signatories hereto upon its execution by TCI and Shareholders owning
50.1% of the Company Common Stock. Prior to the close of business on July 23,
1986 any Shareholder who has not previously executed the Agreement may become a
party to and be bound by the Agreement by executing it.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
TELE-COMMUNICATIONS, INC.
By [SIGNATURE APPEARS HERE]
------------------------------------
/s/ Marshall Naify
------------------------------------
(Marshall Naify)
/s/ R. A. Naify
------------------------------------
(Robert A. Naify)
/s/ Valerie Naify
------------------------------------
(Valerie Naify)
/s/ Leslie C. Naify
------------------------------------
(Leslie C. Naify)
/s/ Christie M. Naify
------------------------------------
(Christie M. Naify)
/s/ Robert J. Naify
------------------------------------
(Robert J. Naify)
/s/ Mark S. Naify
------------------------------------
(Mark S. Naify)
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<PAGE>
/s/ Marshall Naify
- ----------------------------------------
(Marshall Naify,
Custodian for Michael
Stephen Naify)
/s/ Marshall Naify
- ----------------------------------------
(Marshall Naify,
Custodian for Christina
Elizabeth Naify)
/s/ Marshall Naify,
- ----------------------------------------
(Marshall Naify as trustee with
investment powers under the
Michael N. Naify Testamentary
Trust for the Benefit of Marshall Naify)
/s/ John M. Sherwood
- ----------------------------------------
(John M. Sherwood as trustee under
the following Trusts: (i) the Leslie
C. Naify 1981 Trust, dated December
22, 1981; (ii) the Christie M. Naify
1981 Trust, dated December 22, 1981;
(iii) the Robert J. Naify 1981 Trust,
dated December 22, 1981; (iv) the Mark
S. Naify 1983 Trust, dated December 21,
1983; (v) the Christina Cortese 1983
Trust, dated December 21, 1983;
(vi) the Acela Cortese 1983 Trust,
dated December 21, 1983; (vii) the
Christina E. Naify 1985 Trust, dated
June 26, 1985; (viii) the Drew Michael
Andrade 1986 Trust, dated April 25,
1986; (ix) the Marsha J. Naify 1981
Trust, dated December 29, 1981; (x)
the Michael S. Naify 1981 Trust,
dated December 29, 1981; (xi) and
the Christina E. Naify 1981 Trust,
dated December 29, 1981)
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<PAGE>
/s/ Marshall Naify
- ------------------------------------
(Marshall Naify as trustee
under the Michael Stephen Naify
Trust, dated January 21, 1986)
EXCELSIOR AMUSEMENT CO.
By /s/ R. A. Naify - Pres.
----------------------------------
/s/ James C. Naify
----------------------------------
(James Naify)
/s/ Josephine Naify
----------------------------------
(Josephine Naify)
/s/ Richard R. Naify
----------------------------------
(Richard R. Naify)
/s/ Georgette N. Rosekrans
- ----------------------------------
(Georgette N. Rosekrans as trustee
with investment powers under the
Michael N. Naify Testamentary
Trust for the Benefit of
Georgette N. Rosekrans)
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