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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: March 11, 1997
Date of Earliest Event Reported: March 11, 1997
TCI COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-5550 84-0588868
(Commission File Number) (I.R.S. Employer Identification No.)
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (303) 267-5500
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Item 5. Other Events.
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Pursuant to a Registration Statement on Form S-3 (File No. 333-16985)
(the "Registration Statement") filed with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Act"), and
declared effective by the Commission on January 21, 1997, the Registrant and
four Delaware business trusts (the "Business Trusts") registered subordinated
debt securities of the Registrant, preferred securities of the Business Trusts,
guarantees of such preferred securities by the Registrant and certain back-up
undertakings of the Registrant, for delayed or continuous offering to the public
pursuant to Rule 415 under the Act, having a maximum aggregate initial offering
price of $500 million.
The Registrant is filing this Current Report on Form 8-K in order to
incorporate by reference into the prospectus, dated January 21, 1997, which
forms part of the Registration Statement, the documents filed as exhibits hereto
and, where applicable, to qualify certain of such documents under the Trust
Indenture Act of 1939, as amended.
Item 7. Financial Statements and Exhibits.
The following exhibits are being filed with this Form 8-K:
4.1 Form of Third Supplemental Indenture between
the Registrant and The Bank of New York, as
trustee.
4.2 Form of Amended and Restated Declaration of
Trust of TCI Communications Financing III.
4.3 Form of Guarantee Agreement with respect to
Capital Securities of TCI Communications
Financing III.
25.1 Statement of Eligibility of The Bank of New
York, as Trustee for Capital Securities of TCI
Communications Financing III, on Form T-1.
25.2 Statement of Eligibility of The Bank of New
York, as Trustee for Guarantee of Capital
Securities of TCI Communications Financing III,
on Form T-1.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: March 11, 1997
TCI COMMUNICATIONS, INC.
(Registrant)
By: /s/ Stephen M. Brett
--------------------------------
Name: Stephen M. Brett
Title: Senior Vice President
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EXHIBIT 4.1
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TCI COMMUNICATIONS, INC.
AND
THE BANK OF NEW YORK,
Trustee
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THIRD SUPPLEMENTAL
INDENTURE
TO
INDENTURE
Dated as of March 14, 1997
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____% Subordinated Deferrable Interest Notes due March 31, 2027
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TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS
Section 1.1. Definition of Terms......................2
Section 1.2. Interpretation...........................5
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE NOTES
Section 2.1. Designation and Principal Amount.........5
Section 2.2. Maturity.................................5
Section 2.3. Form and Payment.........................5
Section 2.4. Global Note..............................6
Section 2.5. Interest.................................6
ARTICLE III
REDEMPTION OF THE NOTES
Section 3.1. Tax Event Redemption.....................7
Section 3.2. Optional Redemption by Company...........8
Section 3.3. No Sinking Fund..........................9
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
Section 4.1. Extension of Interest Payment Period.....9
Section 4.2. Notice of Extension.....................10
ARTICLE V
EXPENSES
Section 5.1. Payment of Expenses.....................10
ARTICLE VI
SUBORDINATION
Section 6.1. Agreement to Subordinate................11
Section 6.2. Default on Senior Indebtedness..........12
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Section 6.3. Liquidation; Dissolution; Bankruptcy....12
Section 6.4. Subrogation.............................13
Section 6.5. Trustee to Effectuate Subordination.....14
Section 6.6. Notice by the Company...................14
Section 6.7. Rights of the Trustee; Holders of
Senior Indebtedness.....................15
Section 6.8. Subordination May Not Be Impaired.......16
Section 6.9. Pari Passu Debt.........................16
ARTICLE VII
RESERVED
ARTICLE VIII
FORM OF NOTE
Section 8.1. Form of Note............................16
ARTICLE IX
ORIGINAL ISSUE OF NOTES
Section 9.1. Original Issue of Notes.................24
ARTICLE X
CERTAIN COVENANTS
Section 10.1. Limitation on Dividends and Other
Payments................................24
Section 10.2. Covenants as to the Trust...............25
ARTICLE XI
CERTAIN EVENTS OF DEFAULT
Section 11.1. Additional Events of Default............25
Section 11.2. Waiver of Existing Defaults.............25
ARTICLE XII
MISCELLANEOUS
Section 12.1. Supplemental Indenture Incorporated
Into Indenture..........................26
Section 12.2. Trustee Not Responsible for Recitals;
Disclaimer..............................26
Section 12.3. Governing Law. .........................26
Section 12.4. Separability............................26
Section 12.5. Counterparts............................26
Section 12.6. Acknowledgment of Rights of Holders
of Capital Securities...................26
ii
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THIS THIRD SUPPLEMENTAL INDENTURE, dated as of March 14, 1997 (this
"Third Supplemental Indenture"), between TCI Communications, Inc., a Delaware
corporation (the "Company"), and The Bank of New York, a New York banking
corporation, not in its individual capacity but solely as trustee (the
"Trustee"), under the Indenture dated as of January 29, 1996 between the Company
and the Trustee (the "Indenture").
W I T N E S S E T H:
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of the Company's unsecured
subordinated Securities, to be issued from time to time in one or more series as
might be determined by the Company in accordance with the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered as
provided in the Indenture; and
WHEREAS, pursuant to the terms of the Indenture, the Company desires
to provide for the establishment of a new series of its Securities to be known
as its 9.65% Subordinated Deferrable Interest Notes due March 31, 2027 (the
"Notes"), the form and substance of such Notes and the terms, provisions and
conditions thereof to be as set forth in the Indenture and this Third
Supplemental Indenture; and
WHEREAS, TCI Communications Financing III, a Delaware statutory
business trust (the "Trust"), has offered to the public $300,000,000 aggregate
liquidation amount of its 9.65% Capital Securities (the "Capital Securities")
and has offered to the Company $9,279,000 aggregate liquidation amount of its
Common Securities (the "Common Securities" and, together with the Capital
Securities, the "Trust Securities"), such Trust Securities representing
undivided beneficial interests in the assets of the Trust, and proposes to
invest the proceeds from such offering in $309,279,000 aggregate principal
amount of the Notes; and
WHEREAS, the Company has requested the Trustee to execute and deliver
this Third Supplemental Indenture, and all requirements necessary to make this
Third Supplemental Indenture a valid instrument, in accordance with its terms,
and to make the Notes, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company, have been
performed, and the execution and delivery of this Third Supplemental Indenture
has been duly authorized in all respects.
NOW THEREFORE, in consideration of the purchase and acceptance of the
Notes by the holders thereof, and for the purpose of setting forth, as provided
in the Indenture, the form and substance of the Notes and the terms, provisions
and conditions thereof, the Company covenants and agrees with the Trustee as
follows:
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ARTICLE
I
DEFINITIONS
Section 1.1. Definition of Terms. Unless the context otherwise
requires, (a) a term defined in the Indenture has the same meaning when used in
this Third Supplemental Indenture, (b) a term defined anywhere in this Third
Supplemental Indenture has the same meaning throughout and (c) the following
terms have the meanings given to them in the Declaration (including, without
limitation, Annex I thereto):
Capital Securities Guarantee
Capital Security Certificate
Clearing Agency
Delaware Trustee
Pro Rata
Property Trustee
Purchase Agreement
Regular Trustee
Special Event
In addition, the following terms have the following respective
meanings:
"Adjusted Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to (i) the yield, under the heading which represents
the average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15 (519)" or any successor
publication which is published weekly by the Board of Governors of the Federal
Reserve System and which establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption "Treasury
Constant Maturities," for the maturity corresponding to the Remaining Life (if
no maturity is within three months before or after the Remaining Life, yields
for the two published maturities most closely corresponding to the Remaining
Life shall be determined and the Adjusted Treasury Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding to the nearest
month) or (ii) if such release (or any successor release) is not published
during the week preceding the calculation date or does not contain such yields,
the rate per annum equal to the quarterly equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date, in each case calculated on
the third Business Day preceding the redemption date, plus in each case (a)
1.75% if such redemption date occurs on or prior to March 31, 1998, and (b)
1.00% in all other cases.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Remaining
Life of the
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Subordinated Debt Securities to be redeemed that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity with the Remaining
Life of the Subordinated Debt Securities. If no United States Treasury security
has a maturity which is within a period from three months before to three months
after March 31, 2007, the two most closely corresponding United States Treasury
securities shall be used as the Comparable Treasury Issue, and the Adjusted
Treasury Rate shall be interpolated or extrapolated on a straight-line basis,
rounding to the nearest month using such securities.
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of three Reference Treasury Dealer Quotations for such
redemption date, after excluding the highest and lowest of five Reference
Treasury Dealer Quotations or (ii) if the Trustee obtains fewer than five
Reference Treasury Dealer Quotations, the average of all such quotations.
"Declaration" means the Amended and Restated Declaration of Trust of
TCI Communications Financing III, a Delaware business trust, dated as of March
14, 1997.
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Declaration and the Notes held by the Property Trustee are to be distributed
to the holders of the Trust Securities Pro Rata in accordance with the
Declaration.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel experienced in practice under the
1940 Act (as hereinafter defined) to the effect that, as a result of the
occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" which is required to be registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), which Change in 1940 Act Law
becomes effective on or after March 11, 1997.
"Maturity Date" means the date on which the Notes mature and on which
the principal shall be due and payable together with all accrued and unpaid
interest thereon including Additional Interest, if any.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Company for this purpose.
"Reference Treasury Dealer" means: (i) Lehman Brothers Inc. and its
respective successors; provided, however, that if the foregoing shall cease to
be a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another Primary
Treasury Dealer; and (ii) any other Primary Treasury Dealer selected by the
Company.
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"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day preceding such redemption date.
"Remaining Life" means the period from the redemption date of the
Subordinated Debt Securities (which are redeemed prior to March 31, 2007) to and
including March 31, 2007.
"Senior Indebtedness" means: (i) any payment in respect of (A)
indebtedness of the Company for money borrowed and (B) indebtedness evidenced by
securities, debentures, bonds, notes or other similar instruments issued by the
Company; (ii) all capital lease obligations of the Company; (iii) all
obligations of the Company issued or assumed as the deferred purchase price of
property, all conditional sale obligations of the Company and all obligations of
such obligor under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business); (iv) all obligations of the
Company for reimbursement on any letter of credit, banker's acceptance, security
purchase facility or similar credit transaction; (v) all obligations of the type
referred to in clauses (i) through (iv) of other Persons for the payment of
which the Company is responsible or liable as obligor, guarantor or otherwise;
and (vi) all obligations of the type referred to in clauses (i) through (v) of
other Persons secured by any lien on any property or asset of the Company
(whether or not such obligation is assumed by the Company), except for any such
indebtedness that is by its terms subordinated to or pari passu with the Notes,
as the case may be. For greater certainty, "Senior Indebtedness" includes all
indebtedness for money borrowed between or among the Company and its Affiliates,
except for such indebtedness that is by its terms subordinated to or pari passu
with the Notes, as the case may be.
"Tax Event" means that the Regular Trustees shall have received an
opinion from independent tax counsel experienced in such matters to the effect
that, on or after March __, 1997, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative
body, court, governmental agency or regulatory authority, in each case which
amendment or change is enacted, promulgated, issued or announced or which
interpretation is issued or announced or which action is taken, on or after
March __, 1997, there is more than an insubstantial risk that (i) the Trust is,
or will be within 90 days of the date thereof, subject to United States federal
income tax with respect to interest accrued or received on the Subordinated Debt
Securities, (ii) interest payable to the Trust on the Subordinated Debt
Securities is not, or will not be within 90 days of the date thereof, deductible
in whole or in part by the Company for United States federal income tax purposes
or (iii) the Trust is, or will be within 90 days of the date thereof, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
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Section 1.2. Interpretation. Each definition in this Third
Supplemental Indenture includes the singular and the plural, and references to
the neuter gender include the masculine and feminine where appropriate. Terms
which relate to accounting matters shall be interpreted in accordance with
generally accepted accounting principles in effect from time to time.
References to any statute mean such statute as amended at the time and include
any successor legislation. The word "or" is not exclusive, and the words
"herein," "hereof" and "hereunder" refer to this Third Supplemental Indenture as
a whole. References to Articles and Sections are to the Articles and Sections
of this Third Supplemental Indenture. The headings to the Articles and Sections
are for convenience of reference and shall not affect the meaning or
interpretation of this Third Supplemental Indenture.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE NOTES
Section 2.1. Designation and Principal Amount. There is hereby
authorized a series of Securities designated the "9.65% Subordinated Deferrable
Interest Notes due March 31, 2027." The aggregate principal amount of Notes
which may be authenticated and delivered under the Indenture is limited to
$309,279,000 (except for Notes authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections
2.08, 2.09, 2.11, 3.07 or 9.05 of the Indenture and except for any Notes which
pursuant to Section 2.04 of the Indenture are deemed not to have been
authenticated and delivered pursuant to the Indenture).
Section 2.2. Maturity. The Maturity Date will be March 31, 2027.
Section 2.3. Form and Payment. Except as provided in Section 2.4,
the Notes shall be issued in fully registered certificated form without interest
coupons. Principal of and premium, if any, and interest (including Additional
Interest, if any) on the Notes issued in certificated form will be payable, the
transfer of such Notes will be registrable and such Notes will be exchangeable
for Notes bearing identical terms and provisions at the office or agency of the
Trustee in New York, New York, provided, however, that payment of interest may
be made at the option of the Company by check mailed to the registered Holder at
such address as shall appear in the security register maintained by the
Registrar. Notwithstanding the foregoing, so long as the registered Holder of
any Notes is the Property Trustee, the payment of the principal of and premium,
if any, and interest (including Additional Interest, if any) on such Notes held
by the Property Trustee will be made at such place and to such account as may be
designated by the Property Trustee.
Section 2.4. Global Note. In connection with a Dissolution Event:
(a) Notes in certificated form may be presented to the Trustee by
the Property Trustee in exchange for a global Note in an aggregate
principal amount
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equal to the aggregate principal amount of the Notes so presented, to
be registered in the name of The Depository Trust Company ("DTC"), as
the initial Clearing Agency for the Notes, or the nominee of DTC, and
delivered by the Trustee to DTC for crediting to the accounts of its
participants pursuant to the instructions of the Regular Trustees; the
Company, upon any such presentation, shall execute a global Note in
such aggregate principal amount and deliver the same to the Trustee
for authentication and delivery in accordance with the Indenture and
this Third Supplemental Indenture; and payments on the Notes issued as
a global Note will be made in immediately available funds to DTC (or a
successor Clearing Agency); and
(b) If any Capital Securities are held in certificated form
(i.e., not in book entry form), Notes in certificated form may be
presented to the Trustee by the Property Trustee and any Capital
Security Certificate which represents Capital Securities (other than
Capital Securities held by DTC (or a successor Clearing Agency) or its
nominee) ("Non Book-Entry Capital Securities") will be deemed to
represent beneficial interests in Notes in certificated form presented
to the Trustee by the Property Trustee having an aggregate principal
amount equal to the aggregate liquidation amount of the Non Book-Entry
Capital Securities until such Capital Security Certificates are
presented to the Registrar for transfer or reissuance, at which time
such Capital Security Certificates will be canceled and a Note in
certificated form, registered in the name of the holder of such
Capital Security Certificate or the transferee of the holder of such
Capital Security Certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the
Capital Security Certificate canceled, will be executed by the Company
and delivered to the Trustee for authentication and delivery in
accordance with the Indenture and this Third Supplemental Indenture;
and upon issuance of such Notes, Notes in certificated form with an
equivalent aggregate principal amount that were presented by the
Property Trustee to the Trustee will be deemed to have been canceled.
Section 2.5. Interest. (a) Each Note will bear interest at the
rate of 9.65% per annum (the "Coupon Rate") from the original date of issuance
until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable under
applicable law) on any overdue installment of interest at the Coupon Rate,
compounded quarterly, payable (subject to the provisions of Article IV)
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year (each, an "Interest Payment Date"), commencing on June 30, 1997, to the
Person in whose name such Note or any predecessor Note is registered, at the
close of business on the Regular Record Date for such interest installment,
which shall be the close of business on the Business Day next preceding that
Interest Payment Date. If pursuant to the provisions of Section 2.08 of the
Indenture the Notes are no longer represented by a global Security, the Company
may select a regular record date for such interest installment which shall be
any date at least fifteen days before an Interest Payment Date.
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(b) The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any date
on which interest is payable on the Notes is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. The amount of
interest payable for any period shorter than a full quarterly period for which
interest is computed will be computed on the basis of the actual number of days
elapsed in such a 90-day quarter.
(c) If at any time while the Property Trustee is the Holder of any
Notes, the Trust or the Property Trustee is required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
case, the Company will pay as additional interest ("Additional Interest") on the
Notes held by the Property Trustee such additional amounts as shall be required
so that the net amounts received and retained by the Trust and the Property
Trustee after paying such taxes, duties, assessments or other governmental
charges will be equal to the amounts the Trust and the Property Trustee would
have received had no such taxes, duties, assessments or other governmental
charges been imposed.
ARTICLE III
REDEMPTION OF THE NOTES
Section 3.1. Tax Event Redemption.
Prior to March 31, 2007, if a Tax Event has occurred then,
notwithstanding Section 3.2, the Company shall have the right, upon not less
than 30 nor more than 60 days notice to the registered Holders of the Notes, to
redeem the Notes, in whole but not in part, for cash within 90 days following
the occurrence of such Tax Event (the "90 Day Period") at the Tax Event
Redemption Price (as defined herein), provided that, if at the time there is
available to the Company the opportunity to eliminate, within the 90 Day Period,
the Tax Event by taking some ministerial action ("Ministerial Action"), such as
filing a form or making an election, or pursuing some other similar reasonable
measure that has no adverse effect on the Company, the Trust or the holders of
the Trust Securities, the Company shall pursue such Ministerial Action in lieu
of redemption; and provided further, that the Company shall have no right to
redeem the Notes while the Trust is pursuing any Ministerial Action pursuant to
its obligations under the Declaration. The "Tax Event Redemption Price" shall
mean the greater of (i) 100% of the principal amount of the Subordinated Debt
Securities or (ii) the sum, as determined by a Quotation Agent, of the present
values of the principal amount and premium payable with respect to an optional
redemption of the Subordinated Debt Securities on March 31, 2007 pursuant to
Section 3.2, together with scheduled payments of interest from the redemption
date
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to and including March 31, 2007, in each case discounted to the redemption
date on a quarterly basis (assuming a 360-day year consisting of 30-day months)
at the Adjusted Treasury Rate, plus accrued and unpaid interest on the
Subordinated Debt Securities to the date fixed for redemption. The Tax
Redemption Price shall be paid prior to 12:00 noon, New York City time, on the
date of such redemption or at such earlier time as the Company determines and
specifies in the notice of redemption, provided the Company shall deposit with
the Trustee an amount sufficient to pay the Tax Event Redemption Price by 11:00
a.m., New York City time, on the date such Tax Event Redemption Price is to be
paid.
In connection with a redemption described in this Section 3.1, the
Company shall take all actions necessary to calculate the Tax Event Redemption
Price, including without limitation, selecting and notifying the Quotation Agent
of such redemption and selecting Reference Treasury Dealers in order to provide
Reference Treasury Dealer Quotations to the Trustee.
Section 3.2. Optional Redemption by Company. Subject to the
provisions of Article Three of the Indenture, the Company shall have the right
to redeem the Notes, in whole or in part, from time to time, on or after March
31, 2007, at the following redemption prices (expressed in percentages of
principal amount), plus in each case accrued and unpaid interest thereon to the
date of such redemption (the "Optional Redemption Price"), if redeemed during
the 12-month period beginning March 31 of each year indicated below:
Optional
--------
Year Redemption Price
---- ----------------
2007 ................................ 104.8250%
2008 ................................ 104.3425
2009 ................................ 103.8600
2010 ................................ 103.3775
2011 ................................ 102.8950
2012 ................................ 102.4125
2013 ................................ 101.9300
2014 ................................ 101.4475
2015 ................................ 100.9650
2016 ................................ 100.4825
2017 and thereafter ................. 100.0000
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Any redemption pursuant to this Section 3.2 shall be made upon not less than 30
nor more than 60 days notice to the registered Holder of the Notes, at the
Optional Redemption Price. If the Notes are only partially redeemed pursuant to
this Section 3.2, the Notes will be redeemed pro rata or by lot or by any other
method utilized by the Trustee. The Optional Redemption Price shall be paid
prior to 12:00 noon, New York City time, on the date of such redemption or at
such earlier time as the Company determines and specifies in the notice of
redemption, provided the Company shall deposit with the Trustee an amount
sufficient to pay the Optional Redemption Price by 11:00 a.m., New York City
time, on the date such Optional Redemption Price is to be paid.
Section 3.3. No Sinking Fund. The Notes are not entitled to the
benefit of any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
Section 4.1. Extension of Interest Payment Period. The Company
shall have the right, at any time and from time to time prior to the Maturity
Date, to extend the interest payment period of such Notes for up to twenty (20)
consecutive quarters (the "Extended Interest Payment Period"). To the extent
permitted by applicable law, interest, the payment of which has been deferred
because of the extension of the interest payment period pursuant to this Section
4.1, will bear interest compounded quarterly at the Coupon Rate for each quarter
of the Extended Interest Payment Period ("Compounded Interest"). At the end of
the Extended Interest Payment Period, the Company shall pay all interest accrued
and unpaid on the Notes, including any Additional Interest ("Deferred
Interest"), which shall be payable to the Holders of the Notes in whose names
the Notes are registered in the security register maintained by the Registrar on
the first Regular Record Date after the end of the Extended Interest Payment
Period. Before the termination of any Extended Interest Payment Period, the
Company may further extend such period, provided that such period together with
all such further extensions thereof shall not exceed twenty (20) consecutive
quarters or extend beyond the Maturity Date. Upon the termination of any
Extended Interest Payment Period and upon the payment of all Deferred Interest
then due, the Company may select a new Extended Interest Payment Period, subject
to the foregoing requirements. No interest shall be due and payable during an
Extended Interest Payment Period, except at the end thereof.
Section 4.2. Notice of Extension. (a) If the Property Trustee is
the only registered Holder of the Notes at the time the Company selects an
Extended Interest Payment Period, the Company shall give written notice to both
the Regular Trustees and the Property Trustee of its selection of such Extended
Interest Payment Period one Business Day before the earlier of (i) the next
succeeding date on which Distributions on the Trust Securities are payable, or
(ii) the date the Trust is required to give notice of the record or payment date
for such
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Distributions to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Capital Securities, but in any event at least
one Business Day before such record date.
(b) If the Property Trustee is not the only Holder of the Notes at the
time the Company selects an Extended Interest Payment Period, the Company shall
give the Holders of the Notes and the Trustee written notice of its selection of
such Extended Interest Payment Period ten (10) Business Days before the earlier
of (i) the next succeeding Interest Payment Date, or (ii) the date the Company
is required to give notice of the record or payment date of such interest
payment to the New York Stock Exchange or other applicable self-regulatory
organization or to Holders of the Notes.
(c) The quarter in which any notice is given pursuant to paragraphs
(a) or (b) of this Section 4.2 shall be counted as one of the twenty quarters
permitted in the maximum Extended Interest Payment Period permitted under
Section 4.1.
ARTICLE V
EXPENSES
Section 5.1. Payment of Expenses. In connection with the offering,
sale and issuance of the Notes to the Property Trustee in connection with the
sale of the Trust Securities by the Trust, and in connection with the
maintenance of the Trust for so long as the Trust Securities are outstanding,
the Company shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Notes, including compensation to the underwriters payable
pursuant to the Purchase Agreement and compensation of the Trustee under the
Indenture in accordance with the provisions of Section 7.07 of the Indenture;
(b) pay all costs and expenses of the Trust (including, but not
limited to, costs and expenses relating to the organization of the Trust, the
offering, sale and issuance of the Trust Securities (including commissions to
the underwriters payable pursuant to the Purchase Agreement), the fees and
expenses of the Property Trustee and the Delaware Trustee, the costs and
expenses relating to the operation of the Trust, including without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s), any Clearing Agency
for the Capital Securities, duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets), other than
obligations of the trust in respect of the Trust Securities;
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(c) be primarily liable for any indemnification obligations arising
with respect to the Declaration;
(d) pay any and all taxes, duties, assessments or governmental charges
of whatever nature (other than United States withholding taxes attributable to
the Trust or its assets) imposed on the Trust or its assets and all liabilities,
costs and expenses of the Trust with respect to such taxes, duties, assessments
or governmental charges; and
(e) pay any and all fees and expenses related to the enforcement by
the Property Trustee of the rights of the holders of the Capital Securities.
ARTICLE VI
SUBORDINATION
Section 6.1. Agreement to Subordinate. The Company covenants and
agrees, and each holder of Notes issued hereunder by such holder's acceptance
thereof likewise covenants and agrees, that all Notes shall be issued subject to
the provisions of this Article VI; and each holder of a Note, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions.
The payment by the Company of the principal of, premium, if any, and
interest on all Notes issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness, whether outstanding at the
date of this Third Supplemental Indenture or thereafter incurred.
This Article shall constitute a continuing offer to all Persons who,
in reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness and such holders are made obligees hereunder and they and/or
each of them may enforce such provisions.
No provision of this Article VI shall prevent the occurrence of any
default or Event of Default with respect to the Notes.
Section 6.2. Default on Senior Indebtedness. In the event and
during the continuation of any default by the Company in the payment of
principal, premium, interest or any other amount due on any Senior Indebtedness,
or in the event that the maturity of any Senior Indebtedness has been
accelerated because of a default, then, in either case, no payment shall be made
by the Company to the Holders of the Notes with respect to the principal
(including redemption and sinking fund payments) of, premium, if any, interest
on, or any other amount owing in respect of, the Notes.
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In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee or any Holder of the Notes when such payment is
prohibited by the preceding paragraph of this Section 6.2, such payment shall be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee within 90
days of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.
Section 6.3. Liquidation; Dissolution; Bankruptcy. Upon any payment
by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any
dissolution or winding-up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due upon all Senior Indebtedness shall first be
paid in full, or payment thereof provided for in money in accordance with its
terms, before any payment or distribution is made by the Company to the Holders
of the Notes on account of the principal of, premium, if any, interest on, or
any other amount owing in respect of, the Notes; and upon any such dissolution
or winding-up or liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Notes or the Trustee would
be entitled to receive from the Company, except for the provisions of this
Article VI, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Notes or by the Trustee under this
Indenture if received by them or it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay such Senior Indebtedness in full, in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the Holders of Notes or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee or the Holders of the Notes before all Senior Indebtedness is paid in
full, or provision is made for such payment in money in accordance with its
terms, such payment or distribution shall be held in trust for the benefit of
and shall be paid over or delivered to the holders of such Senior Indebtedness
or their representative or representatives, or to the trustee or trustees under
any indenture pursuant to which any instruments evidencing such Senior
Indebtedness may have been issued, as their respective interests may appear, as
calculated by the Company, for application to the payment of
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<PAGE>
all Senior Indebtedness remaining unpaid to the extent necessary to pay such
Senior Indebtedness in full in money in accordance with its terms, after giving
effect to any concurrent payment or distribution to or for the benefit of the
holders of such Senior Indebtedness.
For purposes of this Article VI, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article VI with respect
to the Notes to the payment of all Senior Indebtedness that may at the time be
outstanding, provided that (i) such Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Senior Indebtedness are not, without the
consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
corporation or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for in
Article Five of the Indenture shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 6.3 if such other
corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Five of the Indenture.
Nothing in Section 6.2 or in this Section 6.3 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07 of the Indenture.
Section 6.4. Subrogation. Subject to the payment in full of all
Senior Indebtedness, the rights of the Holders of the Notes shall be subrogated
to the rights of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company applicable to such
Senior Indebtedness until the principal of, premium, if any, and interest on,
and all other amounts owing in respect of, the Notes shall be paid in full; and,
for the purposes of such subrogation, no payments or distributions to the
holders of such Senior Indebtedness of any cash, property or securities to which
the Holders of the Notes or the Trustee would be entitled except for the
provisions of this Article VI, and no payment over pursuant to the provisions of
this Article VI, to or for the benefit of the holders of such Senior
Indebtedness by Holders of the Notes or the Trustee, shall, as between the
Company, its creditors other than holders of Senior Indebtedness, and the
Holders of the Notes be deemed to be a payment by the Company to or on account
of such Senior Indebtedness. It is understood that the provisions of this
Article VI are and are intended solely for the purposes of defining the relative
rights of the Holders of the Notes, on the one hand, and the holders of Senior
Indebtedness on the other hand.
Nothing contained in this Article VI or elsewhere in this Third
Supplemental Indenture or the Indenture or in the Notes is intended to or shall
impair, as between the Company, its creditors other than the holders of Senior
Indebtedness, and the Holders of the Notes, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Notes the principal
of (and premium, if any) and interest on and all other amounts owing
13
<PAGE>
in respect of the Notes as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Notes and creditors of the Company, other than the
holders of Senior Indebtedness, nor shall anything herein or therein prevent the
Trustee or the Holder of any Note from exercising all remedies otherwise
permitted by applicable law upon default under the Indenture, as amended and
supplemented by this Third Supplemental Indenture, subject to the rights, if
any, under this Article VI of the holders of such Senior Indebtedness in respect
of cash, property or securities of the Company received upon the exercise of any
such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article VI, the Trustee, subject to the provisions of Section 7.01 of
the Indenture, and the Holders of the Notes, shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders of the Notes, for the purposes of ascertaining the
Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article VI.
Section 6.5. Trustee to Effectuate Subordination. Each Holder of a
Note by such holder's acceptance thereof authorizes and directs the Trustee on
such holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination provided in this Article VI and appoints the
Trustee as such holder's attorney-in-fact for any and all such purposes.
Section 6.6. Notice by the Company. The Company shall give prompt
written notice to a Trust Officer of any fact known to the Company that would
prohibit the making of any payment of monies to or by the Trustee in respect of
the Notes pursuant to the provisions of this Article VI. Notwithstanding the
provisions of this Article VI or any other provision of the Indenture and this
Third Supplemental Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment of
monies to or by the Trustee in respect of the Notes pursuant to the provisions
of this Article VI unless and until a Trust Officer shall have received written
notice thereof from the Company or a holder or holders of Senior Indebtedness or
from any representative or trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 7.01 of the
Indenture, shall be entitled in all respects to assume that no such facts exist;
provided, however, that if the Trustee shall not have received the notice
provided for in this Section 6.6 at least two Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any Note) then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to
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<PAGE>
apply the same to the purposes for which they were received, and shall not be
affected by any notice to the contrary that may be received by it within two
Business Days prior to such date.
The Trustee, subject to the provisions of Section 7.01 of the
Indenture, shall be entitled to rely on the delivery to it of a written notice
by a Person representing himself to be a holder of Senior Indebtedness (or a
representative or trustee on behalf of such holder) to establish that such
notice has been given by a holder of such Senior Indebtedness or a
representative or trustee on behalf of any such holder or holders. In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of such Senior Indebtedness to
participate in any payment or distribution pursuant to this Article VI, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article VI, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
Section 6.7. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the rights set
forth in this Article VI in respect of any Senior Indebtedness at any time held
by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article VI, and no implied covenants or
obligations with respect to the holders of such Senior Indebtedness shall be
read into the Indenture or this Third Supplemental Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and, subject to the provisions of Section 7.01 of
the Indenture, the Trustee shall not be liable to any holder of Senior
Indebtedness if it shall pay over or deliver to Holders of Notes, the Company or
any other Person money or assets to which any holder of Senior Indebtedness
shall be entitled by virtue of this Article VI or otherwise.
Section 6.8. Subordination May Not Be Impaired. No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of the Indenture or this Third
Supplemental Indenture, regardless of any knowledge thereof that any such holder
may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice
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<PAGE>
to the Trustee or the Holders of the Notes, without incurring responsibility to
the Holders of the Notes and without impairing or releasing the subordination
provided in this Article VI or the obligations hereunder of the Holders of the
Notes to the holders of such Senior Indebtedness, do any one or more the
following: (i) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend
or supplement in any manner such Senior Indebtedness or any instrument
evidencing the same or any agreement under which such Senior Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such senior Indebtedness; (iii) release
any Person liable in any manner for the collection of such Senior Indebtedness;
and (iv) exercise or refrain from exercising any rights against the Company and
any other Person.
Section 6.9. Pari Passu Debt. The payment by the Company of the
principal of, premium, if any, and interest on all Notes issued hereunder shall
rank pari passu with the payment by the Company of the principal of, premium, if
any, and interest on the Company's (i) 8.72% Subordinated Deferrable Interest
Notes due January 31, 2045 and (ii) 10% Subordinated Deferrable Interest Notes
due May 31, 2045 (each of which are a series of Securities issued under the
Indenture).
ARTICLE VII
[RESERVED]
ARTICLE VII
FORM OF NOTE
Section 8.1. Form of Note. The Notes and the Trustee's Certificate
of Authentication to be endorsed thereon are to be substantially in the
following forms:
(FORM OF FACE OF NOTE)
[IF THE NOTE IS TO BE A GLOBAL SECURITY, INSERT: This Note is a
global Note within the meaning of the Indenture hereinafter referred to and is
registered in the name of a depositary or a nominee of a depositary. Unless and
until it is exchanged in whole or in part for Notes in definitive form, this
Note may not be transferred except as a whole by the depositary to a nominee of
the depositary or another nominee of the depositary or by the depositary or any
such nominee to a successor depositary or a nominee of such successor
depositary.
Unless this Note is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any Note issued
is registered in the name of Cede & Co. or such other name as requested by an
authorized representative of The Depository Trust Company and any payment hereon
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede Co.,
has an interest herein.]
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No. $
CUSIP No.
TCI COMMUNICATIONS, INC.
9.65% SUBORDINATED DEFERRABLE INTEREST NOTE
DUE MARCH 31, 2027
TCI COMMUNICATIONS, INC., a Delaware corporation (the "Company", which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ________________ or
registered assigns, the principal sum of ________________ Dollars on March 31,
2027, and to pay interest on said principal sum from March 14, 1997, or from
the most recent interest payment date (each such date, an "Interest Payment
Date") to which interest has been paid or duly provided for, quarterly (subject
to deferral as set forth herein) in arrears on March 31, June 30, September 30
and December 31 of each year, commencing June 30, 1997, at the rate of 9.65% per
annum until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest, compounded quarterly, at the same rate per
annum. The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year of twelve 30-day months. In the event
that any date on which interest is payable on this Note is not a Business Day,
then payment of interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. The amount of interest payable for any period shorter than a full
quarterly period for which interest is computed will be computed on the basis of
the actual number of days elapsed in such 90 day quarter. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the Person
in whose name this Note (or one or more Predecessor Securities, as defined in
said Indenture) is registered at the close of business on the regular record
date for such interest installment [which shall be the close of business on the
Business Day next preceding such Interest Payment Date.] [IF PURSUANT TO THE
PROVISIONS OF SECTION 2.08 OF THE INDENTURE THE NOTES ARE NO LONGER REPRESENTED
BY A GLOBAL SECURITY -- which shall be [insert date (to be selected by the
Company) which is not less than 15 days prior to each Interest Payment Date.]]
Any such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the registered Holders on such regular record
date, and may be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on a special
record date to be fixed by the Company for the payment of such defaulted
interest, notice whereof shall be given to the registered Holders of the Notes
not less than fifteen (15) days prior to such special record date, or may be
paid at any time in any other lawful manner not
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inconsistent with the requirements of any securities exchange on which the Notes
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in the Indenture. The principal of (and premium, if any) and
the interest on this Note shall be payable at the office or agency of the
Trustee maintained for that purpose in New York, New York, in any coin or
currency of the United States of America which at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
registered Holder at such address as shall appear in the security register
maintained by the Registrar. Notwithstanding the foregoing, so long as the
Holder of this Note is the Property Trustee, the payment of the principal of
(and premium, if any) and interest on this Note will be made at such place and
to such account as may by designated by the Property Trustee.
The indebtedness evidenced by this Note is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Note is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes. Each Holder hereof, by his acceptance hereof, hereby waives all
notice of the acceptance of the subordination provisions contained herein and in
the Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
This Note shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Note are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
TCI COMMUNICATIONS, INC.
By
-------------------------
[Title]
Attest:
By
-------------------------
Name:
Title:
18
<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
Date:
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By
-------------------------
Authorized Signatory
(FORM OF REVERSE OF NOTE)
This Note is one of a duly authorized series of Securities of the
Company designated its "9.65% Subordinated Deferrable Interest Notes due March
31, 2027" (herein sometimes referred to as the "Notes"), issued under and
pursuant to an Indenture dated as of January 29, 1996, duly executed and
delivered between the Company and The Bank of New York, not in its individual
capacity but solely as trustee (the "Trustee"), as supplemented by a Third
Supplemental Indenture dated as of March 14, 1997, between the Company and the
Trustee (such Indenture as so supplemented, the "Indenture"), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the Notes.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as in effect
on the date of the Indenture (the "TIA"). This Note is subject to all such
terms and the Holder of this Note is referred to the Indenture and the TIA for a
statement of those terms.
The Notes are general unsecured obligations of the Company and are
limited (except as otherwise provided in the Indenture) to $309,279,000 in
aggregate principal amount.
Prior to March 31, 2007, upon the occurrence of a Tax Event, this Note
may be redeemed, in whole but not in part, by the Company at the Tax Redemption
Price which shall be the greater of (i) 100% of the principal amount of the
Subordinated Debt Securities or (ii) the sum, as determined by a Quotation
Agent, of the present values of the principal amount and premium payable with
respect to an optional redemption of the Subordinated Debt Securities on
19
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March 31, 2007, together with scheduled payments of interest from the redemption
date to and including March 31, 2007, in each case discounted to the redemption
date on a quarterly basis (assuming a 360-day year consisting of 30-day months)
at the Adjusted Treasury Rate, plus accrued and unpaid interest on the
Subordinated Debt Securities to the date fixed for redemption. The Tax
Redemption Price shall be paid prior to 12:00 noon, New York City time, on the
date of such redemption or at such earlier time as the Company determines. The
Company shall also have the right to redeem this Note at the option of the
Company, without penalty, in whole or in part at any time on or after March 31,
2007 (an "Optional Redemption"), at the following redemption prices (expressed
in percentages of principal amount), plus in each case accrued and unpaid
interest thereon to the date of such redemption (the "Optional Redemption
Price"), if redeemed during the 12-month period beginning March 31 of the years
indicated below:
Optional
--------
Year Redemption Price
---- ----------------
2007 ................................ 104.8250%
2008 ................................ 104.3425
2009 ................................ 103.8600
2010 ................................ 103.3775
2011 ................................ 102.8950
2012 ................................ 102.4125
2013 ................................ 101.9300
2014 ................................ 101.4475
2015 ................................ 100.9650
2016 ................................ 100.4825
2017 and thereafter ................. 100.0000
Any Optional Redemption pursuant to this paragraph shall be made upon not less
than 30 nor more than 60 days notice to the registered holders of this Note. If
the Notes are only partially redeemed by the Company pursuant to an Optional
Redemption, the Notes will be redeemed pro rata or by lot or by any other method
utilized by the Trustee. If the Notes are only partially redeemed by the Company
pursuant to an Optional Redemption, the Notes will be redeemed pro rata or by
lot or by any other method utilized by the Trustee; provided that if at the time
of redemption the Notes are registered as a global Note, the depositary shall
determine by lot the interest of each of its participants in such global Note
to be redeemed.
In the event of redemption of this Note in part only, a new Note or
Notes of this series for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Notes may be declared,
and upon such declaration shall
20
<PAGE>
become, due and payable, in the manner, with the effect and subject to the
conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of a majority in aggregate principal
amount of the Securities of each series affected at the time outstanding, as
defined in the Indenture, to amend or supplement the Indenture or the Securities
of any series (including the Notes) for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of modifying in any manner the rights of the Holders of the Securities
(including the Notes); provided, however, that no such amendment or supplement
shall (i) extend the fixed maturity of any Securities of any series, or reduce
the principal amount thereof, or reduce the rate or extend the time for payment
of interest thereon, without the consent of the Holder of each Security of such
series so affected or (ii) reduce the aforesaid percentage in aggregate
principal amount of Securities, the Holders of which are required to consent to
any such amendment or supplement, without the consent of the Holders of each
Security then outstanding and affected thereby. The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount of
the Securities of any series at the time outstanding affected thereby, on behalf
of all of the Holders of the Securities of such series, to waive any past
default in the performance of any of the covenants contained in the Indenture,
or established pursuant to the Indenture with respect to such series, and its
consequences, except a default in the payment of the principal of or interest,
if any, on any of the Securities of such series. Any such consent or waiver by
the registered Holder of this Note (unless revoked as provided in the Indenture)
shall be conclusive and binding upon such Holder and upon all future Holders and
owners of this Note and of any Note issued in exchange herefor or in place
hereof (whether by registration of transfer or otherwise), irrespective of
whether or not any notation of such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the time and place and at the rate and in the money
herein prescribed.
The Company shall have the right at any time during the term of the
Notes, and from time to time, to extend the interest payment period of the Notes
for up to twenty (20) consecutive quarters (an "Extended Interest Payment
Period"), at the end of which period the Company shall pay all interest then
accrued and unpaid (together with interest thereon at the rate specified for the
Notes to the extent that payment of such interest is enforceable under
applicable law). Before the termination of any such Extended Interest Payment
Period, the Company may further extend such Extended Interest Payment Period,
provided that such Extended Interest Payment Period together with all such
further extensions thereof shall not exceed twenty (20) consecutive quarters or
extend beyond the maturity of the Notes. At the termination of any such
Extended Interest Payment Period and upon the payment of all accrued and unpaid
interest and
21
<PAGE>
any additional amounts then due, the Company may select a new Extended Interest
Payment Period, subject to the foregoing requirements.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is transferable by the registered Holder hereof on
the security register of the Company maintained by the Registrar, upon surrender
of this Note for registration of transfer at the office or agency of the Trustee
in New York, New York accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by the
registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Notes of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Note,
the Company, the Trustee, any Paying Agent and the Registrar may deem and treat
the registered Holder hereof as the absolute owner hereof (whether or not this
Note shall be overdue and notwithstanding any notice of ownership or writing
hereon made by anyone other than the Registrar) for the purpose of receiving
payment of principal of and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any Paying Agent nor the Registrar shall
be affected by any notice to the contrary.
No past, present or future director, officer, employee or stockholder,
as such, of the Company or the Trustee or any successor of either thereof shall
have any liability for any obligations of the Company or the Trustee under the
Notes or this Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
[The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.] [This
global Note is exchangeable for Notes in definitive form only under certain
limited circumstances set forth in the Indenture. Notes so issued are issuable
only in registered form without coupons in denominations of $1,000 and any
integral multiple thereof.] As provided in the Indenture and subject to certain
limitations therein set forth, Notes so issued are exchangeable for a like
aggregate principal amount of Notes of a different authorized denomination, as
requested by the Holder surrendering the same.
This Note shall be governed by the internal laws of the State of New
York, and for all purposes shall be construed in accordance with the laws of
said State.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
22
<PAGE>
ARTICLE IX
ORIGINAL ISSUE OF NOTES
Section 9.1. Original Issue of Notes. Notes in the aggregate
principal amount of $309,279,000 may, upon execution of this Third Supplemental
Indenture, be executed by the Company and delivered to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver said
Notes to or upon the written order of the Company, signed by its Chairman, its
President, or any Vice President and its Treasurer, an Assistant Treasurer, or
Secretary without any further action by the Company.
ARTICLE X
CERTAIN COVENANTS
The following covenants shall apply to the Notes (but not with respect
to any other series of Securities), and are in addition to the covenants set
forth in Article Four of the Indenture.
Section 10.1. Limitation on Dividends and Other Payments. If (i)
there shall have occurred any event that constitutes an Event of Default or (ii)
the Company shall be in default with respect to its payment of any obligations
under the Capital Securities Guarantee, then (a) the Company shall not declare
or pay any dividend on, make any distributions with respect to, or redeem,
purchase or make a liquidation payment with respect to, any of its capital
stock, (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Company which rank pari passu with or junior to the Notes, and (c) the
Company shall not make any guarantee payments with respect to the foregoing
(other than pursuant to the Capital Securities Guarantee).
If the Company shall have given notice of its election to defer
payments of interest on the Notes by extending the interest payment period as
provided in Article IV and such period, or any extension thereof, shall be
continuing, then (i) the Company shall not declare or pay any dividend or, make
any distributions with respect to, or redeem, purchase or make a liquidation
payment with respect to, any of its capital stock, (ii) the Company shall not
make any payment of interest, principal, premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Company which rank pari
passu with or junior to the Notes, and (iii) the Company shall not make any
guarantee payments with respect to the foregoing (other than pursuant to the
Capital Securities Guarantee).
23
<PAGE>
Notwithstanding the foregoing restrictions, nothing in this Section
10.1 shall prevent the Company, in any event, from making dividend, redemption,
liquidation or guarantee payments on capital stock, or interest, principal,
redemption or guarantee payments on debt securities issued by the Company
ranking pari passu with or junior to the Notes, where the payment is made by way
of (i) securities (including capital stock) that rank junior to the securities
on which such payment is being made or (ii) securities (including capital stock)
of Tele-Communications, Inc., a Delaware corporation (or any successor of such
corporation).
Section 10.2. Covenants as to the Trust. For so long as the Trust
Securities remain outstanding, the Company will (i) maintain 100% direct or
indirect ownership of the Common Securities; provided, however, that any
permitted successor of the Company under the Indenture may succeed to the
Company's ownership of the Common Securities, (ii) not cause, as sponsor of
the Trust, or permit, as the holder of the Common Securities of the Trust,
the termination, dissolution or winding-up of the Trust, except in connection
with a distribution of the Notes as provided in the Declaration and in
connection with certain mergers, consolidations or amalgamations as permitted by
the Declaration, (iii) use its reasonable efforts to cause the Trust (a) to
remain a statutory business trust, except in connection with a distribution of
Notes to the holders of the Capital Securities in liquidation of the Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration, and (b) to otherwise continue to be treated as a grantor trust for
United States federal income tax purposes and (iv) use its reasonable efforts to
cause each holder of Trust Securities to be treated as owning an individual
beneficial interest in the Notes.
ARTICLE XI
CERTAIN EVENTS OF DEFAULT
Section 11.1. Additional Events of Default. An Event of Default with
respect to the Notes shall include those events described in Section 6.01 of the
Indenture and, with respect to the Notes only, the occurrence of any of the
following events: the voluntary or involuntary dissolution, winding up or
termination of the Trust, except in connection with (i) the distribution of
Notes to holders of Capital Securities in liquidation or redemption of their
interests in the Trust, (ii) the redemption of all of the outstanding Capital
Securities, or (iii) certain mergers, consolidations or amalgamations, each as
permitted by the provisions of the Declaration.
Section 11.2. Waiver of Existing Defaults. Notwithstanding Section
6.04 of the Indenture, the Holders of a majority in aggregate principal amount
of the Notes may not waive a Default or an existing Event of Default (i) in the
payment of the principal of or accrued interest on the Notes, unless the Company
has paid or deposited with the Trustee a sum sufficient to pay all matured
installments of interest (with interest on overdue interest at the rate
specified in Section 2.5(a)) upon all of the Notes and the principal of the
Notes that shall have become due otherwise than by acceleration or (ii) that
arise out of a breach by the Company of Section 10.1.
24
<PAGE>
Section 6.02 of the Indenture shall, in all other respects and as modified by
this Section 11.2, apply to the Notes.
ARTICLE XII
MISCELLANEOUS
Section 12.1. Supplemental Indenture Incorporated Into Indenture.
This Third Supplemental Indenture is executed by the Company and the Trustee
pursuant to the provisions of Sections 2.01 and 2.02 of the Indenture, and the
terms and conditions hereof shall be deemed to be part of the Indenture for all
purposes relating to the Notes. The provisions of the Indenture, as modified by
this Third Supplemental Indenture, are effective with respect to the Notes, and
are not effective with respect to any series of Securities to be issued pursuant
to any subsequent supplemental indenture or resolution of the Board of
Directors. The Indenture, as supplemented by this Third Supplemental Indenture,
is in all respects adopted, ratified and confirmed.
Section 12.2. Trustee Not Responsible for Recitals; Disclaimer. The
recitals herein contained are made by the Company and not by the Trustee, and
the Trustee assumes no responsibility for the correctness thereof. The Trustee
makes no representation as to the validity or sufficiency of this Third
Supplemental Indenture.
Section 12.3. Governing Law. This Third Supplemental Indenture and
each Note shall be deemed to be a contract made under the internal laws of the
State of New York, and for all purposes shall be construed in accordance with
the laws of said State.
Section 12.4. Separability. In case any one or more of the
provisions contained in this Third Supplemental Indenture or in the Notes shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of this Third Supplemental Indenture or of the Notes, but this Third
Supplemental Indenture and the Notes shall be construed as if such invalid or
illegal or unenforceable provision had never been contained herein or therein.
Section 12.5. Counterparts. This Third Supplemental Indenture may be
executed in any number of counterparts each of which shall be an original; but
such counterparts shall together constitute but one and the same instrument.
Section 12.6. Acknowledgment of Rights of Holders of Capital
Securities. The Company hereby acknowledges the right of each holder of Capital
Securities, upon and during the continuance of an Event of Default under the
Declaration that results from the failure of the Company to pay principal of or
premium, if any, or interest on the Notes when due, to directly institute
proceedings against the Company to obtain payment to such holder of an amount
equal to the principal, premium or
25
<PAGE>
interest so defaulted on with respect to Notes in a principal amount equal to
the aggregate liquidation amount of the Capital Securities owned by such holder.
26
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, as of the day and year first above written.
TCI COMMUNICATIONS, INC.
[Seal] By
------------------------------
Name:
Title:
Attest:
------------------------------
Title:
THE BANK OF NEW YORK,
as Trustee
[Seal]
By
------------------------------
Name:
Title:
Attest:
------------------------------
Title:
27
<PAGE>
STATE OF )
COUNTY OF ) ss:
On the ___ day of March, 1997 before me personally came
______________, to me known, who, being by me duly sworn, did depose and say
that he is the ____________ of TCI COMMUNICATIONS, INC., one of the corporations
described in and which executed the above instrument; that he knows the
corporate seal of said corporation; that the seal affixed to the said instrument
is such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
NOTARY PUBLIC
[seal] Commission expires
STATE OF )
COUNTY OF ) ss:
On the ___ day of March, 1997 before me personally came _____________,
to me known, who, being by me duly sworn, did depose and say that he is the
____________ of THE BANK OF NEW YORK, one of the corporations described in and
which executed the above instrument; that he knows the corporate seal of said
corporation; that the seal affixed to the said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
NOTARY PUBLIC
[seal] Commission expires
28
<PAGE>
EXHIBIT 4.2
==================================================
AMENDED AND RESTATED DECLARATION
OF TRUST
TCI COMMUNICATIONS FINANCING III
Dated as of March __, 1997
==================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 INTERPRETATION AND DEFINITIONS........................1
SECTION 1.1 Definitions.................................1
ARTICLE 2 TRUST INDENTURE ACT...................................7
SECTION 2.1 Trust Indenture Act; Application............7
SECTION 2.2 Lists of Holders of Securities..............8
SECTION 2.3 Reports by the Property Trustee.............8
SECTION 2.4 Periodic Reports to Property Trustee........8
SECTION 2.5 Evidence of Compliance with Conditions
Precedent..............................8
SECTION 2.6 Events of Default; Waiver...................9
SECTION 2.7 Event of Default; Notice...................10
ARTICLE 3 ORGANIZATION.........................................11
SECTION 3.1 Name.......................................11
SECTION 3.2 Office.....................................11
SECTION 3.3 Purpose....................................11
SECTION 3.4 Authority..................................11
SECTION 3.5 Title to Property of the Trust.............12
SECTION 3.6 Powers and Duties of the Regular Trustees..12
SECTION 3.7 Prohibition of Actions by the Trust and
the Trustees..........................15
SECTION 3.8 Powers and Duties of the Property Trustee..15
SECTION 3.9 Certain Duties and Responsibilities of
the Property Trustee..................17
SECTION 3.10 Certain Rights of the Property Trustee.....19
SECTION 3.11 Delaware Trustee...........................21
SECTION 3.12 Execution of Documents.....................21
SECTION 3.13 Not Responsible for Recitals or Issuance
of Securities.........................21
SECTION 3.14 Duration of Trust..........................21
SECTION 3.15 Mergers....................................22
ARTICLE 4 SPONSOR..............................................23
SECTION 4.1 Sponsor's Purchase of Common Securities....23
SECTION 4.2 Responsibilities of the Sponsor............23
SECTION 4.3 Expenses...................................24
ARTICLE 5 TRUSTEES.............................................25
SECTION 5.1 Number of Trustees.........................25
SECTION 5.2 Delaware Trustee...........................25
SECTION 5.3 Property Trustee; Eligibility..............25
SECTION 5.4 Qualifications of Regular Trustees and
Delaware Trustee Generally............26
i
<PAGE>
SECTION 5.5 Initial Trustees...........................26
SECTION 5.6 Appointment, Removal and Resignation of
Trustees..............................27
SECTION 5.7 Vacancies among Trustees...................28
SECTION 5.8 Effect of Vacancies........................28
SECTION 5.9 Meetings...................................29
SECTION 5.10 Delegation of Power........................29
ARTICLE 6 DISTRIBUTIONS........................................30
SECTION 6.1 Distributions..............................30
ARTICLE 7 ISSUANCE OF SECURITIES...............................30
SECTION 7.1 General Provisions Regarding Securities....30
ARTICLE 8 TERMINATION OF TRUST.................................31
SECTION 8.1 Termination of Trust.......................31
ARTICLE 9 TRANSFER OF INTERESTS................................32
SECTION 9.1 Transfer of Securities.....................32
SECTION 9.2 Transfer of Certificates...................32
SECTION 9.3 Deemed Security Holders....................33
SECTION 9.4 Book Entry Interests.......................33
SECTION 9.5 Notices to Clearing Agency.................34
SECTION 9.6 Appointment of Successor Clearing Agency...34
SECTION 9.7 Definitive Capital Security Certificates...34
SECTION 9.8 Mutilated, Destroyed, Lost or
Stolen Certificates...................35
ARTICLE 10 LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
TRUSTEES OR OTHERS..................................35
SECTION 10.1 Liability..................................35
SECTION 10.2 Exculpation................................36
SECTION 10.3 Fiduciary Duty.............................36
SECTION 10.4 Indemnification............................37
SECTION 10.5 Outside Businesses.........................38
ARTICLE 11 ACCOUNTING..........................................38
SECTION 11.1 Fiscal Year................................38
SECTION 11.2 Certain Accounting Matters.................38
SECTION 11.3 Banking....................................39
SECTION 11.4 Withholding................................39
ARTICLE 12 AMENDMENTS AND MEETINGS.............................40
SECTION 12.1 Amendments.................................40
SECTION 12.2 Meetings of the Holders; Action by
Written Consent.......................42
ii
<PAGE>
ARTICLE 13 REPRESENTATIONS OF PROPERTY TRUSTEE AND
DELAWARE TRUSTEE.....................................43
SECTION 13.1 Representations and Warranties of
Property Trustee......................43
SECTION 13.2 Representations and Warranties of
Delaware Trustee......................44
ARTICLE 14 MISCELLANEOUS.......................................44
SECTION 14.1 Notices....................................44
SECTION 14.2 Governing Law..............................46
SECTION 14.3 Intention of the Parties...................46
SECTION 14.4 Headings...................................46
SECTION 14.5 Successors and Assigns.....................46
SECTION 14.6 Partial Enforceability.....................46
SECTION 14.7 Counterparts...............................46
ANNEX I TERMS OF SECURITIES.......................I-1
EXHIBIT A-1 FORM OF CAPITAL SECURITY CERTIFICATE.....A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE......A2-1
EXHIBIT B SPECIMEN OF SUBORDINATED NOTE.............B-1
EXHIBIT C PURCHASE AGREEMENT........................C-1
iii
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
310(a).................................................... 5.3(a)
310(b).................................................... 5.3(c), 5.3(d)
310(c).................................................... Inapplicable
311(a).................................................... 2.2(b)
311(b).................................................... 2.2(b)
311(c).................................................... Inapplicable
312(a).................................................... 2.2(a)
312(b).................................................... 2.2(b)
313....................................................... 2.3
314(a).................................................... 2.4
314(b).................................................... Inapplicable
314(c).................................................... 2.5
314(d).................................................... Inapplicable
314(e).................................................... 1.1, 2.5
314(f).................................................... Inapplicable
315(a).................................................... 3.9(b)
315(c).................................................... 3.9(a)
315(d).................................................... 3.9(b)
316(a).................................................... Annex I
316(c).................................................... 3.6(e)
317(a).................................................... 3.8(d)
317(b).................................................... 3.8(h)
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
iv
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
TCI COMMUNICATIONS FINANCING III
March __, 1997
DECLARATION OF TRUST ("Declaration"), dated and effective as of March
__, 1997, by the Trustees (as defined herein), the Sponsor (as defined herein)
and by the holders, from time to time, of undivided beneficial interests in the
Trust to be issued pursuant to this Declaration.
W I T N E S S E T H:
-------------------
WHEREAS, the Trustees and the Sponsor established TCI Communications
Financing III (the "Trust"), as a business trust under the Delaware Business
Trust Act pursuant to a Declaration of Trust dated as of November 21, 1995 (the
"Original Declaration") and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on November 21, 1995, for the exclusive purposes
of issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust, investing the proceeds thereof in certain
Subordinated Notes of the Subordinated Note Issuer (as defined herein) and
engaging in activities necessary or incidental thereto;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE 1
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
-----------
Unless the context otherwise requires:
<PAGE>
(a) capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference in this Declaration to the singular includes the
plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
---------
the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized
------------------
to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
-------------------
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday, a Sunday or any
------------
other day on which banking institutions in New York, New York are authorized or
required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
------------------
Code, 12 Del. Code (S)3801 et seq., as it may be amended from time to time.
------------ -- ---
"Capital Securities Guarantee" means the guarantee agreement, dated as
----------------------------
of March __, 1997, of the Sponsor in respect of the Capital Securities.
"Capital Security" has the meaning specified in Section 7.1.
----------------
"Capital Security Beneficial Owner" means, with respect to a Book
---------------------------------
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the
2
<PAGE>
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Capital Security Certificate" means a certificate representing a
----------------------------
Capital Security substantially in the form of Exhibit A-1.
"Certificate" means a Common Security Certificate or a Capital
-----------
Security Certificate.
"Clearing Agency" means an organization registered as a "clearing
---------------
agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Capital Securities and in whose name or in the name of a nominee of that
organization shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of the Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank or other
---------------------------
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means March __, 1997.
------------
"Code" means the Internal Revenue Code of 1986 as amended from time to
----
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
----------
"Common Securities Guarantee" means the guarantee agreement, dated as
---------------------------
of March __, 1997, of the Sponsor in respect of the Common Securities.
"Common Security" has the meaning specified in Section 7.1.
---------------
"Common Security Certificate" means a definitive certificate in fully
---------------------------
registered form representing a Common Security substantially in the form of
Exhibit A-2.
"Covered Person" means: (a) any officer, director, shareholder,
--------------
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Delaware Trustee" has the meaning set forth in Section 5.2.
----------------
"Definitive Capital Security Certificates" has the meaning set forth
----------------------------------------
in Section 9.4.
"Direction" by a Person means a written direction signed:
---------
3
<PAGE>
(a) if the Person is a natural Person, by that Person; or
(b) in any other case, in the name of such Person by one or more
Authorized Officers of that Person.
"Distribution" means a distribution payable to Holders of Securities
------------
in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
---
"Event of Default" in respect of the Securities means an Event of
----------------
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Subordinated Notes.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
------------
from time to time, or any successor legislation.
"Global Certificate" has the meaning set forth in Section 9.4.
------------------
"Holder" means a Person in whose name a Certificate representing a
------
Security is registered, such Person being a beneficial owner within the meaning
of the Business Trust Act.
"Indemnified Person" means (a) any Trustee; (b) any Affiliate of any
------------------
Trustee; (c) any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee; or (d) any employee or
agent of the Trust or its Affiliates.
"Indenture" means the Indenture dated as of January 29, 1996, as
---------
amended and supplemented by a Third Supplemental Indenture, dated as of March
__, 1997 (the "Supplemental Indenture"), among the Subordinated Note Issuer and
the Subordinated Note Trustee, and any further indenture supplemental thereto
relating to the Subordinated Notes.
"Investment Company" means an investment company (as defined in the
------------------
Investment Company Act) that is required to register as such under the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
----------------------
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex I
------------------------
hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
------------
"Majority in liquidation amount of the Securities" means, except as
------------------------------------------------
provided in the terms of the Capital Securities and by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Capital
4
<PAGE>
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Ministerial Action" has the meaning set forth in the terms of the
------------------
Securities as set forth in Annex I.
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 3.8(h).
------------
"Person" means a legal person, including any individual, corporation,
------
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association or government or any agency
or political subdivision thereof, or any other entity of whatever nature.
"Property Trustee" means the Trustee meeting the eligibility
----------------
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section
------------------------
3.8(c).
"Purchase Agreement" means the Purchase Agreement among the Trust, the
------------------
Subordinated Note Issuer and the underwriters designated by the Regular Trustees
with respect to the offer and sale of the Capital Securities.
5
<PAGE>
"Quorum" means a majority of the Regular Trustees or, if there are
------
only two Regular Trustees, both of them.
"Regular Trustee" means any Trustee other than the Property Trustee
---------------
and the Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or
-------------
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
-------------------
vice president, any assistant vice president, any assistant secretary, the
treasurer, any assistant treasurer, any trust officer or assistant trust officer
or any other officer in the corporate trust department of the Property Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
---------
"Securities" means the Common Securities and the Capital Securities.
----------
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time, or any successor legislation.
"Securities Guarantees" means the Capital Securities Guarantee and the
---------------------
Common Securities Guarantee.
"Special Event" has the meaning set forth in Annex I hereto.
-------------
"Sponsor" means TCI Communications, Inc., a Delaware corporation, or
-------
any successor entity in a merger, consolidation or amalgamation, in its capacity
as sponsor of the Trust.
"Subordinated Note Issuer" means the Sponsor in its capacity as issuer
------------------------
of the Subordinated Notes.
"Subordinated Note Trustee" means The Bank of New York, as trustee
-------------------------
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.
"Subordinated Notes" means the __% Subordinated Deferrable Interest
------------------
Notes Due March 31, 2027 to be issued by the Subordinated Note Issuer under the
Indenture and held by the Property Trustee. A specimen certificate representing
a Subordinated Note is attached hereto as
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Exhibit B. The Subordinated Notes will be subordinate and junior in right of
payment to certain other indebtedness of the Subordinated Note Issuer as set
forth in the Indenture.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
--------------
"Supplemental Indenture" has the meaning ascribed thereto in the
----------------------
definition of "Indenture."
"Tax Event" has the meaning set forth in Annex I hereto.
---------
"10% in liquidation amount of the Securities" means, except as
-------------------------------------------
provided in the terms of the Capital Securities or by the Trust Indenture Act,
Holders of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Capital Securities or Holders of
outstanding Common Securities, voting separately as a class, representing 10% of
the aggregate liquidation amount (including the stated amount that would be paid
on redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of all outstanding
Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
--------------------
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
------- --------
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended to the date hereof.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
--------------------------------
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee that is a
Trustee for the purposes of the Trust Indenture Act.
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(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by (S)(S) 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
------------------------------
(a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Property Trustee
may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders") as of such record date, provided that neither the
-------------
Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request therefor, a
List of Holders as of a date no more than 14 days before such List of Holders is
given to the Property Trustee. The Property Trustee shall preserve, in as
current a form as is reasonably practicable, all information contained in Lists
of Holders given to it or which it receives in the capacity of Paying Agent (if
acting in such capacity); provided that the Property Trustee may destroy any
-------------
List of Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
(S)(S) 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
-------------------------------
Within 60 days after May 15 of each year or at such other time as
required under (S) 313(b) of the Trust Indenture Act, the Property Trustee shall
provide to the Holders of the Capital Securities such reports as are required by
(S) 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by (S) 313 of the Trust Indenture Act. The Property Trustee shall also
comply with the requirements of (S) 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
------------------------------------
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by (S) 314 of the Trust Indenture Act (if any) and the compliance
certificate required by (S) 314 of the Trust Indenture Act in the form, in the
manner and at the times required by (S) 314 of the Trust Indenture Act.
8
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SECTION 2.5 Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in (S) 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to (S)
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
-------------------------
(a) The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital Securities
and its consequences, provided that, if the underlying Event of Default under
-------- ----
the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Subordinated Notes (a "Super
Majority") to be waived under the Indenture, the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least the
proportion in liquidation amount of the Capital Securities outstanding that
the relevant Super Majority represents of the aggregate principal amount of
the Subordinated Notes outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of (S)
316(a)(1)(B) of the Trust Indenture Act and such (S) 316(a)(1)(B) of the Trust
Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Capital Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
-------------
Default under the Indenture:
9
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(i) is not waivable under the Indenture, except where the Holders
of the Common Securities are deemed to have waived such Event of Default
under the Declaration as provided below in this Section 2.6(b), the Event
of Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have waived
such Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration may only be
waived by the vote of the Holders of at least the proportion in liquidation
amount of the Common Securities outstanding that the relevant Super
Majority represents of the aggregate principal amount of the Subordinated
Notes outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
- -------- -------
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences until all Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated, and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Capital Securities and only the Holders of the Capital Securities will have
the right to direct the Property Trustee in accordance with the terms of the
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
(S)(S) 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such (S)(S)
316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act. Subject to the foregoing provisions of this Section 2.6(b), upon
such waiver, any such default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Capital Securities
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu
of (S) 316(a)(1)(B) of the Trust Indenture Act and such (S) 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
------------------------
(a) The Property Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of all defaults with respect
to the Securities known to the Property Trustee, unless such defaults have been
cured before the giving of such notice (the term "defaults" for the purposes of
this Section 2.7(a) being hereby defined to be an Event of Default as defined in
the Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein);
10
<PAGE>
provided that, except for a default in the payment of principal of (or premium,
- -------------
if any) or interest on any of the Subordinated Notes, the Property Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors and/or
Responsible Officers of the Property Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 6.01(a) and 6.01(b) of the Indenture; or
(ii) any default as to which the Property Trustee shall have received
written notice or a Responsible Officer charged with the administration of
the Declaration shall have obtained written notice.
ARTICLE 3
ORGANIZATION
SECTION 3.1 Name.
----
The Trust is named "TCI Communications Financing III," as such name
may be modified from time to time by the Regular Trustees following written
notice to the Holders of the Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Regular Trustees.
SECTION 3.2 Office.
------
The address of the principal office of the Trust is c/o TCI
Communications, Inc., Terrace Tower II, 5619 DTC Parkway, Englewood, Colorado
80111-3000. On ten Business Days written notice to the Holders of the
Securities, the Regular Trustees may designate another principal office.
SECTION 3.3 Purpose.
-------
The exclusive purposes and functions of the Trust are (a) to issue and
sell the Securities and use the proceeds from such sale to purchase and hold the
Subordinated Notes and the Capital Securities Guarantee, and (b) except as
otherwise limited herein, to engage in only those other activities necessary or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds derived from investments, pledge any of its assets, or otherwise
undertake (or permit to be undertaken) any activity that would cause the Trust
not to be classified for United States federal income tax purposes as a grantor
trust.
11
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SECTION 3.4 Authority.
---------
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee in accordance with its powers shall constitute the act of and
serve to bind the Trust. In dealing with the Trustees acting on behalf of the
Trust, no person shall be required to inquire into the authority of the Trustees
to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.
SECTION 3.5 Title to Property of the Trust.
------------------------------
Except as provided in Section 3.8 with respect to the Subordinated
Notes and the Property Trustee Account or as otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the
Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
-----------------------------------------
The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Capital Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
-------- -------
Trust may issue no more than one series of Capital Securities and no more than
one series of Common Securities, and, provided further, that there shall be no
-------- -------
interests in the Trust other than the Securities, and the issuance of Securities
shall be limited to a one-time, simultaneous issuance of both Capital Securities
and Common Securities on the Closing Date;
(b) in connection with the issue and sale of the Capital
Securities, at the direction of the Sponsor, to:
(i) execute and file with the Commission the registration statement
on Form S-3 prepared by the Sponsor, including any amendments thereto,
pertaining to the Capital Securities;
(ii) execute and file any documents prepared by the Sponsor, or take
any acts as determined by the Sponsor to be necessary in order to qualify
or register all or part of the Capital Securities in any State in which the
Sponsor has determined to qualify or register such Capital Securities for
sale;
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<PAGE>
(iii) , to the extent the Sponsor deems it advisable, execute and
file an application, prepared by the Sponsor, to any national securities
exchange or with The Nasdaq Stock Market for listing upon notice of
issuance of any Capital Securities;
(iv) , to the extent the Sponsor deems it necessary or advisable,
execute and file with the Commission a registration statement on Form 8-A,
including any amendments thereto, prepared by the Sponsor, relating to the
registration of the Capital Securities under Section 12(b) of the Exchange
Act; and
(v) execute and enter into the Purchase Agreement providing for
the sale of the Capital Securities;
(c) to acquire the Subordinated Notes and the Capital Securities
Guarantee with the proceeds of the sale of the Capital Securities and the Common
Securities; provided, however, that the Regular Trustees shall cause legal title
-------- -------
to the Subordinated Notes to be held of record in the name of the Property
Trustee for the benefit of the Holders of the Capital Securities and the Holders
of the Common Securities;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular Trustees
-------- ----
shall consult with the Sponsor and the Property Trustee before taking or
refraining from taking any Ministerial Action in relation to a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of (S)316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of Common Securities as
to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee
has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
13
<PAGE>
(j) to give the certificate required by (S) 314(a)(4) of the Trust
Indenture Act to the Property Trustee, which certificate may be executed by any
Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry
out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities
of any notice received from the Subordinated Note Issuer of its election to
defer payments of interest on the Subordinated Notes by extending the interest
payment period under the Indenture;
(n) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(p) to take any action, not inconsistent with this Declaration or
with applicable law, that the Regular Trustees determine in their discretion to
be necessary or desirable in carrying out the activities of the Trust as set out
in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company;
(ii) causing the Trust to be classified for United States federal
income tax purposes as a grantor trust; and
(iii) cooperating with the Subordinated Note Issuer to ensure that
the Subordinated Notes will be treated as indebtedness of the Subordinated
Note Issuer for United States federal income tax purposes,
provided that such action does not adversely affect the interests of
-------- ----
Holders; and
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Regular Trustees, on behalf of
the Trust.
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The Regular Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
----------------------------------------------------
(a) The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. In particular, the Trust shall not and the Trustees
(including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding the
Subordinated Notes or the Capital Securities Guarantee, but shall
distribute all such proceeds to Holders of Securities pursuant to the terms
of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Subordinated Notes;
(v) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration, (A) direct the
time, method and place of exercising any trust or power conferred upon the
Subordinated Note Trustee with respect to the Subordinated Notes, (B) waive
any past default that is waivable under Section 6.04 of the Indenture, (C)
exercise any right to rescind or annul any declaration that the principal
of all the Subordinated Notes shall be due and payable, or (D) consent to
any amendment, modification or termination of the Indenture or the
Subordinated Notes where such consent shall be required unless the Trust
shall have received an opinion of counsel to the effect that such amendment
or modification will not cause more than an insubstantial risk that for
United States federal income tax purposes the Trust will not be classified
as a grantor trust.
15
<PAGE>
SECTION 3.8 Powers and Duties of the Property Trustee.
-----------------------------------------
(a) The legal title to the Subordinated Notes shall be owned by
and held of record in the name of the Property Trustee in trust for the benefit
of the Holders of the Securities. The right, title and interest of the Property
Trustee to the Subordinated Notes shall vest automatically in each Person who
may hereafter be appointed as Property Trustee in accordance with Section 5.6.
Such vesting (and cessation as to the resigning Property Trustee) of title shall
be effective whether or not conveyancing documents with regard to the
Subordinated Notes have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Subordinated Notes to the Regular Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders of the
Securities and, upon the receipt of payments of funds made in respect of
the Subordinated Notes held by the Property Trustee, deposit such funds
into the Property Trustee Account and make payments to the Holders of the
Capital Securities and Holders of the Common Securities from the Property
Trustee Account in accordance with Section 6.1. Funds in the Property
Trustee Account shall be held uninvested until disbursed in accordance with
this Declaration. The Property Trustee Account shall be an account that is
maintained with a banking institution the rating on whose long-term
unsecured indebtedness is at least equal to the rating assigned to the
Capital Securities by a "nationally recognized statistical rating
organization", as that term is defined for purposes of Rule 436(g)(2) under
the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Capital Securities and the
Common Securities to the extent the Subordinated Notes are redeemed or
mature; and
(iii) upon notice of distribution issued by the Regular Trustees in
accordance with the terms of the Securities, engage in such ministerial
activities as shall be necessary or appropriate to effect the distribution
of the Subordinated Notes to Holders of Securities upon the occurrence of
certain special events (as may be defined in the terms of the Securities)
arising from a change in law or a change in legal interpretation or other
specified circumstances pursuant to the terms of the Securities.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities.
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<PAGE>
(e) The Property Trustee shall take any Legal Action which arises
out of or in connection with an Event of Default or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act.
(f) The Property Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders of Securities pursuant to the
terms of the Securities; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Subordinated Notes under
the Indenture and, if an Event of Default occurs and is continuing, the Property
Trustee shall, for the benefit of Holders of the Securities, enforce its rights
as holder of the Subordinated Notes subject to the rights of the Holders
pursuant to the terms of such Securities.
(h) The Property Trustee may authorize one or more Persons (each,
a "Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with (S) 317(b) of the Trust Indenture Act. Any Paying
Agent may be removed by the Property Trustee at any time and a successor Paying
Agent or additional Paying Agents may be appointed at any time by the Property
Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular Trustees
set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee.
-----------------------------------------------------------
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Property Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.6), the Property Trustee
shall exercise such of the rights and powers vested in it by this Declaration,
and use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.
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(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this Declaration and
the Property Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Declaration, and no implied covenants or obligations shall be read
into this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration; but in
the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of
this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in liquidation
amount of the Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under
this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or adequate
indemnity against such risk or liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Subordinated Notes and the
Property Trustee Account shall be to deal with such property in a similar
manner as the Property Trustee deals with similar
18
<PAGE>
property for its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Declaration, the
Trust Indenture Act and Rule 3a-7;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Subordinated Notes or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree in writing with
the Sponsor; and money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Property Trustee
Account maintained by the Property Trustee pursuant to Section 3.8(c)(i)
and except to the extent otherwise required by law; and
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with their respective
duties under this Declaration, nor shall the Property Trustee be liable for
the default or misconduct of the Regular Trustees or the Sponsor.
SECTION 3.10 Certain Rights of the Property Trustee.
--------------------------------------
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees
contemplated by this Declaration shall be sufficiently evidenced by a
Direction or an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and rely upon an
Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or reregistration thereof;
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(v) the Property Trustee may consult with counsel or other experts
of its selection and the advice or opinion of such counsel and experts with
respect to legal matters or advice within the scope of such experts' area
of expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such counsel may be
counsel to the Sponsor or any of its Affiliates, and may include any of the
Sponsor's or its Affiliates' employees; and the Property Trustee shall have
the right at any time to seek instructions concerning the administration of
this Declaration from any court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request
or direction of any Holder, unless such Holder shall have provided to the
Property Trustee adequate security and indemnity, which would satisfy a
reasonable person in the position of the Property Trustee, against the
costs, expenses (including attorneys' fees and expenses) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Property
Trustee provided, that, nothing contained in this Section 3.10(a)(vi) shall
be taken to relieve the Property Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in
it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Property Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders, and the signature of the
Property Trustee or its agents alone shall be sufficient and effective to
perform any such action and no third party shall be required to inquire as
to the authority of the Property Trustee to so act or as to its compliance
with any of the terms and provisions of this Declaration, both of which
shall be conclusively evidenced by the Property Trustee's or its agent's
taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the
Holders of the Securities which instructions may only be given by the
Holders of the same
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proportion in liquidation amount of the Securities as would be entitled to
direct the Property Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are received,
and (iii) shall be protected in acting in accordance with such
instructions; and
(xi) except as otherwise expressly provided by this Declaration,
the Property Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 Delaware Trustee.
----------------
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities, of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 5.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of (S) 3807 of the
Business Trust Act.
SECTION 3.12 Execution of Documents.
----------------------
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, a majority of or, if there are
only two, any Regular Trustee or, if there is only one, such Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that, the registration statement referred to in Section 3.6(b)(i),
- -------- ----
including any amendments thereto, shall be signed by all of the Regular
Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
21
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SECTION 3.14 Duration of Trust.
-----------------
The Trust, unless terminated pursuant to the provisions of Article 8
hereof, shall have existence for fifty-five (55) years from the Closing Date.
SECTION 3.15 Mergers.
-------
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders, the Delaware Trustee or the Property Trustee,
consolidate, amalgamate, merge with or into, or be replaced by a trust organized
as such under the laws of any State; provided that:
-------- ----
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Capital Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the
Capital Securities rank with respect to Distributions and payments
upon liquidation, redemption and otherwise;
(ii) the Subordinated Note Issuer expressly acknowledges a trustee
of the Successor Entity that possesses the same powers and duties as the
Property Trustee as the Holder of the Subordinated Notes;
(iii) , if the Capital Securities or any Successor Securities are at
such time listed on any national securities exchange or with The Nasdaq
Stock Market, the Capital Securities or any Successor Securities shall be
listed or will be listed, upon notification of issuance, on such national
securities exchange or with The Nasdaq Stock Market, as the case may be;
(iv) such merger, consolidation, amalgamation or replacement does
not cause the Capital Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the Holders
of the Securities (including any Successor Securities) in any material
respect (other than with respect to any
22
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dilution of such Holders' interests in the Capital Securities as a result
of such merger, consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the
Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally recognized
independent counsel to the Trust experienced in such matters to the effect
that:
(A) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of
the Holders of the Securities (including any Successor Securities) in
any material respect (other than with respect to any dilution of the
Holders' interest in the new entity); and
(B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor the Successor Entity will be
required to register as an Investment Company; and
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities at least to the extent provided by
the Capital Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.
ARTICLE 4
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
---------------------------------------
On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust, in an amount equal to at least 3% of the capital
of the Trust, at the same time as the Capital Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
-------------------------------
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
23
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(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Capital Securities,
including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to
do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) , if the Sponsor deems it advisable to list the Capital
Securities on a national securities exchange or with The Nasdaq Stock
Market, to prepare for filing by the Trust an application to such national
securities exchange or with The Nasdaq Stock Market for listing upon notice
of issuance of any Capital Securities;
(d) , if the Sponsor deems it necessary or advisable, to prepare
for filing by the Trust with the Commission a registration statement on
Form 8-A relating to the registration of the Capital Securities under
Section 12(b) of the Exchange Act, including any amendments thereto; and
(e) to negotiate the terms of the Purchase Agreement providing for
the sale of the Capital Securities.
SECTION 4.3 Expenses.
--------
(a) The Sponsor shall be responsible for and shall pay for all
debts and obligations (other than with respect to the Securities) and all
costs and expenses of the Trust (including, but not limited to, costs and
expenses relating to the organization of the Trust, the issuance and sale
of the Capital Securities, the fees and expenses (including reasonable
counsel fees and expenses) of the Trustees, the costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, Paying
Agent(s), registrar(s), transfer agent(s), duplication, travel and
telephone and other telecommunications expenses and costs and expenses
incurred in connection with the disposition of Trust assets).
(b) The Sponsor will pay any and all taxes (other than United
States withholding taxes attributable to the Trust or its assets) and all
liabilities, costs and expenses with respect to such taxes of the Trust.
(c) The Sponsor's obligations under this Section 4.3 shall be for
the benefit of, and shall be enforceable by, the Property Trustee and any
Person to whom any such debts, obligations, costs, expenses and taxes are
owed (a "Creditor") whether or not such Creditor
24
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has received notice hereof. The Property Trustee and any such Creditor may
enforce the Sponsor's obligations under this Section 4.3 directly against
the Sponsor and the Sponsor irrevocably waives any right or remedy to
require that the Property Trustee or any such Creditor take any action
against the Trust or any other Person before proceeding against the
Sponsor. The Sponsor agrees to execute such additional agreements as may be
necessary or desirable in order to give full effect to the provisions of
this Section 4.3.
ARTICLE 5
TRUSTEES
SECTION 5.1 Number of Trustees.
------------------
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a majority in
liquidation amount of the Common Securities voting as a class at a meeting
of the Holders of the Common Securities,
provided that, if the Property Trustee does not also act as Delaware Trustee,
- -------- ----
the number of Trustees shall be at least three (3).
SECTION 5.2 Delaware Trustee.
----------------
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware;
or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the
requirements of applicable law,
provided that, if the Property Trustee has its principal place of business in
- -------- ----
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application. The Delaware Trustee may be an Affiliate of the
Property Trustee.
SECTION 5.3 Property Trustee; Eligibility.
-----------------------------
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
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(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published;
and
(iii) if the Trust is excluded from the definition of an Investment
Company solely by means of Rule 3a-7 and to the extent Rule 3a-7 requires a
trustee having certain qualifications to hold title to the "eligible
assets" of the Trust, the Property Trustee shall possess those
qualifications.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of (S) 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in (S) 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of (S) 310(b) of the Trust Indenture Act.
(d) The Capital Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in (S) 310(b) of the Trust Indenture Act.
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally.
-----------------------------------------------------------------
Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 5.5 Initial Trustees.
----------------
The initial Regular Trustees shall be:
Bernard W. Schotters
26
<PAGE>
Stephen M. Brett
Gary K. Bracken
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
The initial Property Trustee shall be:
The Bank of New York
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
------------------------------------------------
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the Holders of
a Majority in liquidation amount of the Common Securities voting as a class
at a meeting of the Holders of the Common Securities or by unanimous
written consent.
(b)(i) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 5.6(a) until a successor Property Trustee has been
appointed and has accepted such appointment by written instrument executed by
such successor Property Trustee and delivered to the Regular Trustees and the
Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with this Section 5.6(a) until a successor Trustee possessing
the qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
-------- -------
that:
(i) no such resignation of the Trustee that acts as the Property
Trustee shall be effective:
27
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(A) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Sponsor and the
resigning Property Trustee; or
(B) if the Trust is deemed not to be an Investment Company
solely by reason of Rule 3a-7, until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to the
holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
SECTIOIN 5.7 Vacancies among Trustees.
------------------------
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
SECTION 5.8 Effect of Vacancies.
-------------------
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.6, the Regular Trustees in office,
28
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regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.
SECTION 5.9 Meetings.
--------
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before such meeting. Notices shall contain a brief statement
of the time, place and anticipated purposes of the meeting. The presence
(whether in person or by telephone) of a Regular Trustee at a meeting shall
constitute a waiver of notice of such meeting except where a Regular Trustee
attends a meeting for the express purpose of objecting to the transaction of any
activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the
Regular Trustees may be taken at a meeting by vote of a majority of the Regular
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that a Quorum is present, or without a meeting
by the unanimous written consent of the Regular Trustees. In the event there is
only one Regular Trustee, any and all action of such Regular Trustee shall be
evidenced by a written consent of such Regular Trustee.
SECTION 5.10 Delegation of Power.
-------------------
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
29
<PAGE>
ARTICLE 6
DISTRIBUTIONS
SECTION 6.1 Distributions.
-------------
Holders shall receive Distributions (as defined herein) in accordance
with the applicable terms of the relevant Holder's Securities. Distributions
shall be made on the Capital Securities and the Common Securities in accordance
with the preferences set forth in their respective terms. If and to the extent
that the Subordinated Note Issuer makes a payment of interest (including
Additional Interest (as defined in the Indenture)), premium and/or principal on
the Subordinated Notes held by the Property Trustee (the amount of any such
payment being a "Payment Amount"), the Property Trustee shall and is directed,
to the extent funds are available for that purpose, to make a distribution (a
"Distribution") of the Payment Amount to Holders.
ARTICLE 7
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
---------------------------------------
(a) The Regular Trustees shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the "Capital
Securities") and one class of common securities representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the "Common Securities.") The Trust shall not issue any
securities or other interests in respect of the assets of the Trust other than
the Capital Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by two
Regular Trustees. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case any Regular Trustee of the
Trust who shall have signed any of the Certificates shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Certificate, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
Securities may be listed, or to conform to usage.
30
<PAGE>
(c) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
(f) Every Person who becomes a Holder or a Capital Security
Beneficial Owner shall be deemed to have agreed to treat the Subordinated Notes
as indebtedness for United States federal income tax purposes and the Capital
Securities as evidence of an indirect beneficial ownership in the Subordinated
Notes.
ARTICLE 8
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
--------------------
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Holder of the Common Securities or
the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Holder of the Common Securities or the
Sponsor; the filing of a certificate of cancellation with respect to the
Trust or the revocation of the Holder of the Common Securities or the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of the
Holder of the Common Securities, the Sponsor or the Trust;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been
paid to the Holders in accordance with the terms of the Securities;
(v) upon the occurrence and continuation of a Special Event
pursuant to which the Trust shall have been dissolved in accordance with
the terms of the Securities and all of the Subordinated Notes in accordance
with the terms thereof shall have been distributed to the Holders of
Securities in exchange for all of the Securities; or
31
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(vi) before the issuance of any Securities, with the consent of all
of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Trustees shall file a certificate of
cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article 10 shall survive the
termination of the Trust.
ARTICLE 9
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
----------------------
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the Securities. Any transfer or purported transfer of any Security not made in
accordance with this Declaration and these Securities shall be null and void.
(b) Subject to this Article 9, Capital Securities shall be freely
transferable.
(c) Subject to this Article 9, (x) the Sponsor may only transfer
Common Securities to a Related Party and (y) a Related Party may only transfer
Common Securities to the Sponsor or another Related Party; provided that, any
-------- ----
such transfer is subject to the condition precedent that the transferor obtain
the written opinion of nationally recognized independent counsel experienced in
such matters that such transfer would not cause more than an insubstantial risk
that:
(i) the Trust would no longer be classified for United States
federal income tax purposes as a grantor trust; or
(ii) the Trust would become an Investment Company or the transferee
would become an Investment Company.
SECTION 9.2 Transfer of Certificates.
------------------------
The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges that may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be
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accompanied by a written instrument of transfer in form satisfactory to the
Regular Trustees duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Certificate surrendered for registration of transfer
shall be canceled by the Regular Trustees. A transferee of a Certificate shall
be entitled to the rights and subject to the obligations of a Holder hereunder
upon the receipt by such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration and the terms of the Securities represented by such Certificate.
SECTION 9.3 Deemed Security Holders.
-----------------------
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
--------------------
Unless otherwise specified in the terms of the Capital Securities, the
Capital Securities Certificates, on original issuance, will be issued in the
form of one or more, fully registered, global Capital Security Certificates
(each a "Global Certificate"), to be delivered to DTC, the initial Clearing
Agency, by, or on behalf of, the Trust. Such Global Certificates shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Capital Security Beneficial Owner will
receive a definitive Capital Security Certificate representing such Capital
Security Beneficial Owner's interests in such Global Certificates, except as
provided in Section 9.7. Unless and until definitive, fully registered Capital
Security Certificates (the "Definitive Capital Security Certificates") have been
issued to the Capital Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Certificates and receiving approvals, votes or
consents hereunder) as the Holder of the Capital Securities and the sole holder
of the Global Certificates and shall have no obligation to the Capital Security
Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this Section
9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements
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between such Capital Security Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants. The Clearing Agency will make book entry
transfers among the Clearing Agency Participants and receive and transmit
payments of Distributions on the Global Certificates to such Clearing Agency
Participants.
SECTION 9.5 Notices to Clearing Agency.
--------------------------
Whenever a notice or other communication to the Capital Security
Holders is required under this Declaration, unless and until Definitive Capital
Security Certificates shall have been issued to the Capital Security Beneficial
Owners pursuant to Section 9.7, the Regular Trustees shall give all such notices
and communications specified herein to be given to the Capital Security Holders
to the Clearing Agency, and shall have no notice obligations to the Capital
Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
----------------------------------------
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to the Capital Securities.
SECTION 9.7 Definitive Capital Security Certificates.
----------------------------------------
If:
(a) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Capital Securities and a successor
Clearing Agency is not appointed within 90 days after such election pursuant to
Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor
to terminate the book entry system through the Clearing Agency with respect to
the Capital Securities,
then:
(c) Definitive Capital Security Certificates shall be prepared by
the Regular Trustees on behalf of the Trust with respect to the Capital
Securities; and
(d) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees shall
cause Definitive Capital Security Certificates to be delivered to Capital
Security Beneficial Owners in accordance with the instructions of the Clearing
Agency. Neither the Trustees nor the Trust shall be liable for any delay in
delivery of such instructions and each of them may conclusively rely on and
shall be protected in relying on, said instructions of the Clearing Agency. The
Definitive Capital Security Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably
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acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Capital Securities may be listed, or to conform to usage.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates.
-------------------------------------------------
If:
(a) any mutilated Certificate should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of them harmless,
then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 9.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
ARTICLE 10
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability.
---------
(a) Except as expressly set forth in this Declaration, the
Securities Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders, which shall be made
solely from assets of the Trust; or
(ii) required to pay to the Trust or to any Holder any deficit upon
dissolution of the Trust or otherwise.
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(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to (S) 3803(a) of the Business Trust Act, the Holders
of the Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation.
-----------
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence (or, in
the case of the Property Trustee, negligence) or willful misconduct with respect
to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty.
--------------
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
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(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a manner
that is, or provide terms that are, fair and reasonable to the Trust or any
Holder,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors
as it desires, including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4 Indemnification.
---------------
(a) To the fullest extent permitted by applicable law, the Sponsor
shall indemnify and hold harmless each Indemnified Person from and against any
loss, damage, liability, tax, penalty, expense or claim of any kind or nature
whatsoever incurred by such Indemnified Person by reason of the creation,
operation or termination of the Trust or any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of
authority conferred on such Indemnified Person by this Declaration, except that
no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of gross
negligence (or, in the case of the Property Trustee, negligence) or willful
misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees and expenses) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding (whether such claim,
demand, action, suit or proceeding arises between the parties hereto or results
from suits involving third parties) shall, from time to time, be advanced by the
Sponsor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt
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by the Sponsor of an undertaking by or on behalf of the Indemnified Person to
repay such amount if it shall be determined that the Indemnified Person is not
entitled to be indemnified as authorized in Section 10.4(a). The indemnification
shall survive the termination of this Declaration.
SECTIONI 10.5 Outside Businesses.
------------------
Any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee may engage in or possess an interest in other business ventures of any
nature or description, independently or with others, similar or dissimilar to
the business of the Trust, and the Trust and the Holders shall have no rights by
virtue of this Declaration in and to such independent ventures or the income or
profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor, the Delaware Trustee, or the Property
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and any Covered Person, the
Sponsor, the Delaware Trustee and the Property Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE 11
ACCOUNTING
SECTION 11.1 Fiscal Year.
-----------
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
--------------------------
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents which shall reflect, in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.
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(b) The Regular Trustees shall cause to be prepared and delivered
to each of the Holders, within 90 days after the end of each Fiscal Year of the
Trust, annual financial statements of the Trust, including a balance sheet of
the Trust as of the end of such Fiscal Year, and the related statements of
income or loss.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each Holder, any annual United States federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by such Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver
all such statements within 30 days after the end of each Fiscal Year of the
Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority an annual United States federal income tax
return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 Banking.
-------
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds in
-------- -------
respect of the Subordinated Notes held by the Property Trustee shall be made
directly to the Property Trustee Account and no other funds of the Trust shall
be deposited in the Property Trustee Account. The sole signatories for such
accounts shall be designated by the Regular Trustees; provided, however, that
-------- -------
the Property Trustee shall designate the signatories for the Property Trustee
Account.
SECTION 11.4 Withholding.
-----------
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustee shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to such
Holder to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to such Holder. In the event of
any claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
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ARTICLE 12
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
----------
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular
Trustees, a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee;
and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any purported amendment shall
be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from each of the
Trust and the Sponsor that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which affects
the rights, powers, duties, obligations or immunities of the Property
Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the Securities);
and
(iii) to the extent the result of such amendment would be to:
(A) cause the trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor trust;
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(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act.
(c) If the Trust has any Securities outstanding, any amendment
that would adversely affect the rights, privileges or preferences of any Holder
of such Securities may be effected only with such additional requirements as may
be set forth in the terms of such Securities.
(d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities.
(e) Article 4 shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities.
(f) The rights of the holders of the Common Securities under
Article 5 to increase or decrease the number of, and appoint and remove,
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Common Securities.
(g) Notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) in the event the Trust is deemed not to be an Investment
Company solely by reason of Rule 3a-7, conform to any change in Rule 3a-7
or written change in interpretation or application of Rule 3a-7 by any
legislative body, court, government agency or regulatory authority which
amendment does not have a material adverse effect on the rights,
preferences or privileges of the Holders; and
(v) cause the Trust to continue to be classified for purposes of
United States federal income taxation as a grantor trust; provided, such
--------
amendment does not have a material adverse effect on the rights,
preferences or privileges of the Holders.
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SECTION 12.2 Meetings of the Holders; Action by Written Consent.
--------------------------------------------------
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders wish to call a meeting and indicating
the general or specific purpose for which the meeting is to be called. Any
Holders calling a meeting shall specify in writing the Security Certificates
held by the Holders exercising the right to call a meeting and only those
Securities specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has been
met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of any
class of Securities:
(i) notice of any such meeting shall be given to all the Holders
of Securities having a right to vote thereat at least 7 days and not more
than 60 days before the date of such meeting. Whenever a vote, consent or
approval of Holders is permitted or required under this Declaration or the
rules of any stock exchange on which the Capital Securities are listed or
admitted for trading, such vote, consent or approval may be given at a
meeting of such Holders. Any action that may be taken at a meeting of
Holders may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by Holders owning not less than the
minimum amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders of
Securities having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given to the
Holders of Securities entitled to vote who have not consented in writing.
The Regular Trustees may specify that any written consent submitted to
Holders for the purpose of taking any action without a meeting shall be
returned to the Trust within the time specified by the Regular Trustees;
(ii) each Holder may authorize any Person to act for it by proxy on
all matters in which such Holder is entitled to participate, including
waiving notice of any meeting, or voting or participating at a meeting. No
proxy shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the Holder executing it. Except as otherwise
provided herein, all matters relating to the giving, voting or validity of
proxies shall be governed by the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations thereunder, as
if the Trust were a Delaware corporation and the Holders were stockholders
of a Delaware corporation;
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(iii) each meeting of Holders shall be conducted by the Regular
Trustees or by such other Person that the Regular Trustees may designate;
and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Capital Securities are then listed or trading
otherwise provides, the Regular Trustees, in their sole discretion, shall
establish all other provisions relating to meetings of Holders, including
notice of the time, place or purpose of any meeting at which any matter is
to be voted on by any Holders, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
ARTICLE 13
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.
--------------------------------------------------
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the successor Property Trustee's acceptance of its
appointment as Property Trustee, that:
(a) the Property Trustee is a banking corporation or association
with trust powers, duly organized, validly existing and in good standing under
the laws of a state of the United States or of the United States, with trust
power and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration;
(b) the execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The Declaration has been duly
executed and delivered by the Property Trustee, and it constitutes a legal,
valid and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
(c) the execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Property Trustee; and
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(d) no consent, approval or authorization of, or registration with
or notice to, any State or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of the Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
--------------------------------------------------
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee, that:
(a) the Delaware Trustee is a Delaware banking corporation with
trust powers, duly organized, validly existing and in good standing under the
laws of the State of Delaware, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, the
Declaration;
(b) the Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration. The Declaration
under Delaware law constitutes a legal, valid and binding obligation of the
Delaware Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency, and other
similar laws affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the enforcement of
such remedies is considered in a proceeding in equity or at law);
(c) no consent, approval or authorization of, or registration with
or notice to, any State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of the Declaration;
and
(d) the Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware.
ARTICLE 14
MISCELLANEOUS
SECTION 14.1 Notices.
-------
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
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(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders):
TCI Communications Financing III
c/o TCI Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Attention: Stephen M. Brett
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Holders):
The Bank of New York (Delaware)
400 White Clay Center, Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
(c) if given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may give notice of to
the Holders):
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice of to the Trust):
TCI Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Attention: Chief Financial Officer
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of
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which no notice was given, such notice or other document shall be deemed to have
been delivered on the date of such refusal or inability to deliver.
SECTION 14.2 Governing Law.
-------------
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3 Intention of the Parties.
------------------------
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 14.4 Headings.
--------
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
SECTION 14.5 Successors and Assigns.
----------------------
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6 Partial Enforceability.
----------------------
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 Counterparts.
------------
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Declaration to be
executed as of the day and year first above written.
Bernard W. Schotters, as Regular Trustee
---------------------------------------------
Stephen M. Brett, as Regular Trustee
---------------------------------------------
Gary K. Bracken, as Regular Trustee
---------------------------------------------
THE BANK OF NEW YORK
(DELAWARE),
as Delaware Trustee
By:
------------------------------------------
Name:
Title:
47
<PAGE>
THE BANK OF NEW YORK,
as Property Trustee
By:
------------------------------------------
Name:
Title:
TCI COMMUNICATIONS, INC.,
as Sponsor
By:
------------------------------------------
Name:
Title:
48
<PAGE>
ANNEX I
TERMS OF
___% CAPITAL SECURITIES
___% COMMON SECURITIES
Further to Section 7.1 of the Declaration of Trust, dated as of March
__, 1997 (as amended from time to time, the "Declaration"), the designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities and the Common Securities are set out below (each
capitalized term used but not defined herein has the meaning set forth in the
Declaration or, if not defined in such Declaration, as defined in the Prospectus
referred to below):
1. Designation and Amount.
----------------------
(a) Capital Securities. Three Hundred Thousand (300,000) preferred
------------------
securities of the Trust with an aggregate liquidation amount with respect to the
assets of the Trust of Three Hundred Million dollars ($300,000,000) and a
liquidation amount with respect to the assets of the Trust of $1,000 per
preferred security, are hereby designated for the purposes of identification
only as "_____% Capital Securities" (the "Capital Securities"). The Capital
Security Certificates evidencing the Capital Securities shall be substantially
in the form of Exhibit A-1 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice or to conform to the rules of any stock exchange on which the Capital
Securities are listed.
(b) Common Securities. Nine Thousand Two-Hundred Seventy-Nine (9,279)
-----------------
common securities of the Trust with an aggregate liquidation amount with respect
to the assets of the Trust of Nine Million Two-Hundred Seventy-Nine Thousand
dollars ($9,279,000) and a liquidation amount with respect to the assets of the
Trust of $1,000 per common security, are hereby designated for the purposes of
identification only as "______% Common Securities" (the "Common Securities").
The Common Security Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.
2. Distributions.
-------------
(a) Distributions payable on each Security will be fixed at a rate per
annum of ______% (the "Coupon Rate") of the liquidation amount of $1,000 per
Security, such rate being the rate of interest payable on the Subordinated Notes
to be held by the Property Trustee. Distributions in arrears for more than one
quarter will bear interest thereon compounded quarterly at the Coupon Rate (to
the extent permitted by applicable law). The term "Distributions" as used
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<PAGE>
herein includes such cash distributions and any such interest payable unless
otherwise stated. A Distribution is payable only to the extent that payments
are made in respect of the Subordinated Notes held by the Property Trustee and
to the extent the Property Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue
from the date of original issuance, and will be payable quarterly in arrears, on
March 31, June 30, September 30, and December 31 of each year, commencing on
June 30, 1997, except as otherwise described below. The Subordinated Note Issuer
has the right under the Indenture to defer payments of interest by extending the
interest payment period from time to time on the Subordinated Notes for a period
not exceeding 20 consecutive quarters (each an "Extension Period"), provided
--------
that no Extension Period shall last beyond the date of maturity of the
- ----
Subordinated Notes. As a consequence of such deferral, Distributions will also
be deferred. Despite such deferral, quarterly Distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at the
Coupon Rate compounded quarterly during any such Extension Period. Prior to the
termination of any such Extension Period, the Subordinated Note Issuer may
further extend such Extension Period; provided that such Extension Period
-------- ----
together with all such previous and further extensions thereof may not exceed 20
consecutive quarters or last beyond the date of maturity of the Subordinated
Notes. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date for the
payment of Distributions after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Subordinated Note Issuer may commence a new Extension Period, subject to the
above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. While the Capital Securities remain in book-entry only form, the
relevant record dates shall be one Business Day prior to the relevant payment
dates which payment dates correspond to the interest payment dates on the
Subordinated Notes. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Capital
Securities will be made as described under the heading "Description of the
Capital Securities -- Book-Entry Only Issuance -- The Depository Trust Company"
in the Prospectus Supplement dated March __, 1997 (the "Prospectus Supplement"),
to the Prospectus, dated January 21, 1997 (the "Base Prospectus," and
collectively with the Prospectus Supplement, the "Prospectus"), included in the
Registration Statement on Form S-3 of the Sponsor (in its capacity as the
Subordinated Note Issuer and the issuer of the Capital Securities Guarantee) and
the Trust (Reg. No. 333-16985). The relevant record dates for the Common
Securities shall be the same record dates as for the Capital Securities. If the
Capital Securities shall not continue to remain in book-entry only form, the
relevant record dates for the Capital Securities shall conform to the rules of
any securities exchange on which such securities are listed and, if none, shall
be selected by the Regular Trustees, which dates shall be at least one
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<PAGE>
Business Day but less than 60 Business Days before the relevant payment dates,
which payment dates correspond to the interest payment dates on the Subordinated
Notes. Distributions payable on any Securities that are not punctually paid on
any Distribution payment date, as a result of the Subordinated Note Issuer
having failed to make a payment under the Subordinated Notes, will cease to be
payable to the Person in whose name such Securities are registered on the
relevant regular record date, and such defaulted Distribution will instead be
payable to the Person in whose name such Securities are registered on the
special record date or other specified date determined in accordance with the
Indenture for the making of such payment. If any date on which Distributions are
payable on the Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
-----------------------------------------
In the event of any voluntary or involuntary dissolution, winding-up
or termination of the Trust, the Holders on the date of the dissolution,
winding-up or termination, as the case may be, will be entitled to receive out
of the assets of the Trust available for distribution to Holders after
satisfaction of liabilities of creditors an amount equal to the aggregate of the
liquidation amount of $1,000 per Security plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless, in connection with such dissolution, winding-up or
termination, Subordinated Notes in an aggregate principal amount equal to the
aggregate liquidation amount of such Securities, with an interest rate equal to
the Coupon Rate of, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on, such Securities, shall be
distributed on a Pro Rata basis to the Holders of the Securities in exchange for
such Securities.
If, upon any such dissolution, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
---------------------------
(a) Upon the repayment of the Subordinated Notes in whole or in part,
whether at maturity or upon redemption, the proceeds from such repayment or
payment shall be simultaneously applied to redeem Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Subordinated
Notes so repaid or redeemed at the Redemption
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<PAGE>
Price (as defined below) payable in cash. In the case of a redemption of the
Subordinated Notes pursuant to Section 3.1 of the Supplemental Indenture, the
"Redemption Price" shall be a redemption price equal to the Tax Event Redemption
Price (as such term is defined in Section 3.1 of the Supplemental Indenture). In
the case of a redemption of the Subordinated Notes pursuant to Section 3.2 of
the Supplemental Indenture, the "Redemption Price" shall be a redemption price
equal to the Optional Redemption Price (as such term is defined in Section 3.2
of the Supplemental Indenture). Holders will be given not less than 30 nor more
than 60 days notice of such redemption. In the case of a redemption of the
Subordinated Notes at maturity, the "Redemption Price" shall be $1,000 per
Security plus accrued and unpaid Distributions thereon to and including March
31, 2027.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Capital Securities will be redeemed Pro
Rata and the procedure for redeeming Capital Securities will be as described in
Section 4(f)(ii) below.
(c) If, at any time, a Tax Event or an Investment Company Event (each
as defined below, and each a "Special Event") shall occur and be continuing, the
Regular Trustees shall, except as otherwise described in this Section 4(c) and
unless the Subordinated Note Issuer redeems all of the Subordinated Notes
pursuant to Section 3.2 of the Supplemental Indenture, dissolve the Trust and,
after satisfaction of creditors, cause Subordinated Notes held by the Property
Trustee, having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the Coupon Rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on,
and having the same record date for payment, as the Securities, to be
distributed to the Holders in liquidation of such Holders' interests in the
Trust on a Pro Rata basis, within 90 days following the occurrence of such
Special Event (the "90 Day Period"); provided, however, that, if at the time
-------- -------
there is available to the Trust the opportunity to eliminate, within the 90 Day
Period, the Special Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar reasonable measure
that has no adverse effect on the Trust, the Subordinated Note Issuer, the
Sponsor or the Holders ("Ministerial Action"), the Trust will pursue such
Ministerial Action in lieu of dissolution.
In the event of a Tax Event prior to March 31, 2007, the Subordinated
Note Issuer shall have the right, upon not less than 30 nor more than 60 days
notice, to redeem the Subordinated Notes in whole but not in part for cash
within 90 days following the occurrence of such Tax Event, and, following such
redemption, Securities with an aggregate liquidation amount equal to the
aggregate principal amount of the Subordinated Notes so redeemed shall be
redeemed by the Trust at a redemption price equal to the Tax Event Redemption
Price; provided, however, that, if at the time there is available to the Trust
-------- -------
the opportunity to eliminate, within such 90 day period, the Special Event by
taking some Ministerial Action, the Trust or the Subordinated Note Issuer will
pursue such Ministerial Action in lieu of redemption. In the event of a Tax
Event on or after March 31, 2007, the Subordinated Note Issuer shall have the
right, upon not less than 30 nor more than 60 days notice, to redeem the
Subordinated Notes in whole or in part for cash pursuant to Section 3.2 of the
Supplemental Indenture and, following such redemption, Securities shall be
redeemed by the Trust in accordance with Section 4(a) above.
"Tax Event" means that the Regular Trustees shall have received an
opinion from independent tax counsel experienced in such matters to the effect
that, on or after the date of the Prospectus Supplement, as a result of (a) any
amendment to, or change (including any announced
I-4
<PAGE>
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein or
(b) any amendment to, or change in, an interpretation or application of any such
laws or regulations by any legislative body, court, governmental agency or
regulatory authority, in each case which amendment or change is enacted,
promulgated, issued or announced or which interpretation or pronouncement is
issued or announced or which action is taken, on or after the date of the
Prospectus Supplement, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days of the date thereof, subject to United
States federal income tax with respect to interest accrued or received on the
Subordinated Notes, (ii) interest payable by the Subordinated Note Issuer to the
Trust on the Subordinated Notes is not, or within 90 days of the date thereof
will not be, deductible, in whole or in part, by the Subordinated Note Issuer
for United States federal income tax purposes, or (iii) the Trust is, or will be
within 90 days of the date thereof, subject to more than a de minimis amount of
taxes, duties or other governmental charges.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel experienced in practice under the
Investment Company Act that, as a result of the occurrence of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is a more than an insubstantial
risk that the Trust is or will be considered an Investment Company which is
required to be registered under the Investment Company Act, which Change in 1940
Act Law becomes effective on or after the date of the Prospectus Supplement.
On and from the date fixed by the Regular Trustees for any
distribution of Subordinated Notes and dissolution of the Trust: (i) the
Securities will no longer be deemed to be outstanding and (ii) DTC (the
"Depository") or its nominee (or any successor Clearing Agency or its nominee),
as the record Holder of the Capital Securities, will receive a registered global
certificate or certificates representing the Subordinated Notes to be delivered
upon such distribution and any certificates representing Securities, except for
certificates representing Capital Securities held by the Depository or its
nominee (or any successor Clearing Agency or its nominee), will be deemed to
represent beneficial interests in the Subordinated Notes having an aggregate
principal amount equal to the aggregate liquidation amount of, with an interest
rate identical to the Coupon Rate of, and accrued and unpaid interest equal to
accrued and unpaid Distributions on such Securities until such certificates are
surrendered or presented to the Subordinated Note Issuer or its agent for
transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all Securities for
all quarterly Distribution periods terminating on or before the date of
redemption.
(e) If the Subordinated Notes are distributed to holders of the
Securities pursuant to the terms of the Indenture and if the Capital Securities
are at such time listed on any national securities exchange or with The Nasdaq
Stock Market, the Subordinated Note Issuer will use
I-5
<PAGE>
its best efforts to have the Subordinated Notes listed on such national
securities exchange or with the Nasdaq Stock Market as the Capital Securities
were listed immediately prior to the distribution of the Subordinated Notes.
(f) The following provisions shall apply to any call for redemption of
Securities or any distribution of Subordinated Notes to Holders:
(i) Notice of any redemption of, or notice of distribution of
Subordinated Notes in exchange for, Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of Securities to
be redeemed or exchanged not fewer than 30 nor more than 60 days before the
date fixed for redemption or exchange thereof which, in the case of a
redemption, will be the date fixed for redemption of the Subordinated
Notes. For purposes of the calculation of the date of redemption or
exchange and the dates on which notices are given pursuant to this Section
4(f)(i), a Redemption/Distribution Notice shall be deemed to be given on
the day such notice is first mailed by first-class mail, postage prepaid,
to Holders. Each Redemption/Distribution Notice shall be addressed to each
Holder at the address of such Holder appearing in the books and records of
the Trust. No defect in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any
other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Capital Securities, it being understood that, in
respect of Capital Securities registered in the name of and held of record
by the Depository or its nominee (or any successor Clearing Agency or its
nominee), the distribution of the proceeds of such redemption will be made
to each Clearing Agency Participant (or Person on whose behalf such
Clearing Agency or nominee holds such securities) in accordance with the
procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Subordinated Notes are redeemed as set out in this Section 4 (which notice
will be irrevocable), then (A) while the Capital Securities are in book-
entry only form, with respect to the Capital Securities, by 12:00 noon, New
York City time, on the redemption date, the Property Trustee will deposit
irrevocably with the Depository or its nominee (or successor Clearing
Agency or its nominee) immediately available funds sufficient to pay the
applicable Redemption Price with respect to the Capital Securities and will
give the Depository irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Capital Securities, provided that
--------
the Subordinated Note Issuer has deposited with the Property Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Subordinated Notes prior to such time, and (B) with respect
to Capital Securities issued in definitive form and Common Securities, the
Property Trustee will pay the relevant Redemption Price to the Holders of
such Securities
I-6
<PAGE>
by check mailed to the address of the relevant Holder appearing on the
books and records of the Trust on the redemption date, provided that the
Subordinated Note Issuer has deposited with the Property Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Subordinated Notes, prior to such mailing. If a
Redemption/Distribution Notice shall have been given and funds deposited
with the Property Trustee on or before the redemption date as required,
then immediately prior to the close of business on the redemption date
Distributions will cease to accrue on the Securities so called for
redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of such Securities
to receive the Redemption Price, but without interest on such Redemption
Price. Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that have
been so called for redemption. If any date fixed for redemption of
Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such date fixed
for redemption. If payment of the Redemption Price in respect of any
Securities is improperly withheld or refused and not paid on the redemption
date either by the Property Trustee or by the Sponsor as guarantor pursuant
to the relevant Securities Guarantee, Distributions on such Securities will
continue to accrue from the original redemption date to the actual date of
payment, in which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Capital
Securities, the Depository or its nominee (or any successor Clearing Agency
or its nominee) if the Global Certificates have been issued or, if
Definitive Capital Security Certificates have been issued, to the Holders
thereof at their addresses appearing on the books and records of the Trust,
and (B) in respect of the Common Securities, to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), provided the acquiror
is not the Holder of the Common Securities or the obligor under the
Indenture, the Sponsor or any of its subsidiaries may at any time and from
time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement.
5. Voting Rights - Capital Securities.
----------------------------------
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities will
have no voting rights.
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(b) Subject to the requirements set forth in this paragraph, the
Holders of a Majority in liquidation amount of the Capital Securities, voting
separately as a class, may direct the time, method, and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under the Declaration,
including (i) directing the time, method, place of conducting any proceeding for
any remedy available to the Subordinated Note Trustee, or exercising any trust
or power conferred on the Subordinated Note Trustee with respect to the
Subordinated Notes, (ii) waive any past default and its consequences that is
waivable under Section 6.04 of the Indenture, or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Subordinated Notes
shall be due and payable, provided, however, that, where a consent under the
-------- -------
Indenture would require the consent or act of the Holders of greater than a
majority in principal amount of Subordinated Notes affected thereby (a "Super
Majority"), the Property Trustee may only give such consent or take such action
at the direction of the Holders of at least the proportion in liquidation amount
of the Capital Securities outstanding which the relevant Super Majority
represents of the aggregate principal amount of the Subordinated Notes
outstanding. The Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital Securities.
Other than with respect to directing the time, method and place of conducting
any remedy available to the Property Trustee or the Subordinated Note Trustee as
set forth above, the Property Trustee shall not take any action in accordance
with the directions of the Holders of the Capital Securities under this
paragraph unless the Property Trustee has obtained an opinion of tax counsel to
the effect that for the purposes of United States federal income tax the Trust
will not be classified as other than a grantor trust on account of such action.
If the Property Trustee fails to enforce its rights under the Declaration, any
Holder of Capital Securities may institute a legal proceeding directly against
any Person to enforce the Property Trustee's rights under the Declaration
without first instituting a legal proceeding against the Property Trustee or any
other Person. If an Event of Default occurs that results from the failure of
the Subordinated Note Issuer to pay principal of or interest on the Subordinated
Notes when due, then during the continuance of such Event of Default each Holder
of Capital Securities may directly institute proceedings against the
Subordinated Note Issuer to obtain payment to such Holder of an amount equal to
the principal or interest so defaulted on with respect to Subordinated Notes in
a principal amount equal to the aggregate liquidation amount of the Capital
Securities owned by such Holder. No Holder of Capital Securities will be
entitled to exercise directly against the Subordinated Note Issuer any other
remedy available to the Property Trustee, as the record holder of the
Subordinated Notes, unless the Property Trustee first fails to exercise such
remedy.
Any approval or direction of Holders of Capital Securities may be
given at a separate meeting of Holders of Capital Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Capital Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
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No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to distribute
the Subordinated Notes in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
---------------------------------
(a) Except as provided under Sections 6(b), (c) and 7 or as otherwise
required by law and the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article 5 of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after all
Events of Default with respect to the Capital Securities have been cured,
waived, or otherwise eliminated and subject to the requirements of the
penultimate sentence of this paragraph, the Holders of a Majority in liquidation
amount of the Common Securities, voting separately as a class, may direct the
time, method, and place of conducting any proceeding for any remedy available to
the Property Trustee, or exercising any trust or power conferred upon the
Property Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to the
Subordinated Note Trustee, or exercising any trust or power conferred on the
Subordinated Note Trustee with respect to the Subordinated Notes, (ii) waive any
past default and its consequences that is waivable under Section 6.04 of the
Indenture, or (iii) exercise any right to rescind or annul a declaration that
the principal of all the Subordinated Notes shall be due and payable, provided
--------
that, where a consent or action under the Indenture would require the consent or
- ----
act of the Holders of a Super Majority, the Property Trustee may only give such
consent or take such action at the direction of the Holders of at least the
proportion in liquidation amount of the Common Securities outstanding which the
relevant Super Majority represents of the aggregate principal amount of the
Subordinated Notes outstanding. Notwithstanding any vote pursuant to this
Section 6(c), the Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital Securities.
Other than with respect to directing the time, method and place of conducting
any remedy available to the Property Trustee or the Subordinated Note Trustee as
set forth above, the Property Trustee shall not take any action in accordance
with the directions of the Holders of the Common Securities under this paragraph
unless the Property Trustee has obtained an opinion of tax counsel to the effect
that for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Property Trustee fails to enforce its rights under the Declaration, any Holder
of Common Securities may institute a legal proceeding directly against any
Person to enforce the Property Trustee's rights
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under the Declaration, without first instituting a legal proceeding against the
Property Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to
each Holder of record of Common Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Subordinated Notes in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
---------------------------------------
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than under the
circumstances described in Section 8.1 of the Declaration, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal
(but not on any other amendment or proposal) and such amendment or proposal
shall not be effective except with the approval of the Holders of at least a
Majority in liquidation amount of the Securities, voting together as a single
class; provided, however, if any amendment or proposal referred to in clause (i)
above would adversely affect only the Capital Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Property Trustee as the holder of
the Subordinated Notes is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Subordinated
Notes, the Property Trustee shall request the direction of the Holders of the
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by
a Majority in liquidation amount of the Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
-------- -------
the consent of the holders of a Super Majority, the Property Trustee may only
give such consent at the direction of the Holders of at least the proportion in
liquidation amount of the Securities which the relevant Super Majority
I-10
<PAGE>
represents of the aggregate principal amount of the Subordinated Notes
outstanding; provided, further, that the Property Trustee shall not take any
-------- -------
action in accordance with the directions of the Holders of the Securities under
this Section 7(b) unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action.
8. Pro Rata.
--------
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration in respect of the Capital Securities has occurred and is
continuing, in which case any funds available to make such payment shall be paid
first to each Holder of the Capital Securities pro rata according to the
aggregate liquidation amount of Capital Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Capital Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Capital Securities, then to each Holder of Common Securities pro rata
according to the aggregate liquidation amount of Common Securities held by the
relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.
9. Ranking.
-------
The Capital Securities rank pari passu, and payment thereon shall be
---- -----
made Pro Rata, with the Common Securities except that, where an Event of Default
occurs and is continuing under the Indenture in respect of the Subordinated
Notes held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights to payment of the
Holders of the Capital Securities.
10. Agreement of Holders and Capital Security Beneficial Owners.
-----------------------------------------------------------
Every Person who becomes a Holder or a Capital Security Beneficial
Owner shall be deemed to have agreed to treat the Subordinated Notes as
indebtedness for United States federal income tax purposes and the Capital
Securities as evidence of an indirect beneficial ownership in the Subordinated
Notes.
11. Acceptance of Securities Guarantee and Indenture.
------------------------------------------------
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities Guarantee
and the Common Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture.
I-11
<PAGE>
12. No Preemptive Rights.
--------------------
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
-------------
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee or the Common Securities Guarantee (as may be appropriate)
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
I-12
<PAGE>
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[IF THE CAPITAL SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT -This
Capital Security is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The Depository Trust
Company (the "Depositary") or a nominee of the Depositary. This Capital
Security is exchangeable for Capital Securities registered in the name of a
person other than the Depositary or its nominee only in the limited
circumstances described in the Declaration and no transfer of this Capital
Security (other than a transfer of this Capital Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except in
limited circumstances.
Unless this Capital Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Capital Security issued is registered in the name of Cede & Co.
or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number Number of Capital Securities
CUSIP NO. 87228T AA7
Certificate Evidencing Capital Securities
of
TCI Communications Financing III
____% Capital Securities
(liquidation amount $1,000 per Capital Security)
TCI Communications Financing III, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of ______________________
capital securities of the Trust having an aggregate liquidation amount of
$________ and representing a preferred undivided beneficial interest in the
A1-1
<PAGE>
assets of the Trust designated the _____% Capital Securities (liquidation amount
$1,000 per Capital Security) (the "Capital Securities"). The Capital Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Capital Securities are set
forth in, and this certificate and the Capital Securities represented hereby are
issued and shall in all respects be subject to the terms and provisions of, the
Amended and Restated Declaration of Trust of the Trust dated as of March __,
1997, as the same may be amended from time to time (the "Declaration") including
the designation of the terms of Capital Securities as set forth in Annex I to
the Declaration. The Capital Securities and the Common Securities issued by the
Trust pursuant to the Declaration represent undivided beneficial interests in
the assets of the Trust, including the Subordinated Notes (as defined in the
Declaration) issued by TCI Communications, Inc., a Delaware corporation
("TCIC"), to the Trust pursuant to the Indenture referred to in the Declaration.
The Holder is entitled to the benefits of the Capital Securities Guarantee
Agreement of TCIC dated as of March __, 1997 (the "Guarantee") to the extent
provided therein. The Trust will furnish a copy of the Declaration, the
Guarantee and the Indenture to the Holder without charge upon written request to
the Trust at its principal place of business or registered office.
The Holder of this certificate, by accepting this certificate, is deemed to
have: (i) agreed to the terms of the Indenture and the Subordinated Notes,
including that the Subordinated Notes are subordinate and junior in right to
payment to all Senior Indebtedness (as defined in the Indenture) as and to the
extent provided in the Indenture; (ii) agreed to the terms of the Guarantee,
including that the Guarantee is (x) subordinate and junior in right to payment
to all other liabilities of TCIC, including the Subordinated Notes, except those
made pari passu or subordinated by their terms, (y) pari passu with the most
senior preferred or preference stock now or hereafter issued by TCIC and with
any guarantee now or hereafter entered into by TCIC in respect of any preferred
or preference stock of any affiliate of TCIC and (z) prior to TCIC's common
stock; and (iii) agreed to treat the Subordinated Notes as indebtedness for
United States federal income tax purposes and the Capital Securities as evidence
of an indirect beneficial ownership the Subordinated Notes.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A1-2
<PAGE>
IN WITNESS WHEREOF, the Regular Trustees of the Trust have executed
this certificate for and on behalf of the Trust.
Dated:
COUNTERSIGNED AND REGISTERED:
THE BANK OF NEW YORK
(New York, New York)
Transfer Agent and Registrar
By:
--------------------------------
Authorized Signature
TCI COMMUNICATIONS FINANCING III
By:
--------------------------------
Regular Trustee
By:
--------------------------------
Regular Trustee
A1-3
<PAGE>
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM --as tenants in common UNIF GIFT ACT --_______Custodian________
TEN ENT --as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with right of Under Uniform Gifts to Minors
survivorship and not as tenants Act _____________________
in common (State)
Additional abbreviations may also be used though not in the above list.
A1-4
<PAGE>
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFICATION NUMBER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please print or typewrite name(s) and address(es)
including postal zip code(s), of assignee(s)
and irrevocably appoints
of the Capital Securities represented by this Certificate
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
attorney to transfer
- -------------------------------------------------------
such Capital Securities on the books of the Trust. The attorney may substitute
another to act for him or her.
Date:
-----------------------
Signature:
------------------
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature:
------------------
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
*IMPORTANT READ CAREFULLY!
The signature(s) to this assignment must correspond with the name(s)
as written upon the face of the certificate in every particular without
alteration, enlargement or change whatsoever. The signature(s) of the person(s)
executing this power must be guaranteed by an eligible guarantor institution
which, at the time of issuing the guarantee, is a member of, or a
A1-5
<PAGE>
participant in the medallion signature guarantee program recognized by the
Securities Transfer Association.
A1-6
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
TCI Communications Financing III
______% Common Securities
(liquidation amount $1,000 per Common Security)
TCI Communications Financing III, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
_________________ (the "Holder") is the registered owner of
__________________________________ common securities of the Trust having an
aggregate liquidation amount of $_______________ and representing undivided
beneficial interests in the assets of the Trust designated the ______% Common
Securities (liquidation amount $1,000 per Common Security) (the "Common
Securities"). The Common Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of March __, 1997, as the same may be amended from time to
time (the "Declaration"), including the designation of the terms of the Common
Securities as set forth in Annex I to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Common Securities Guarantee to the
extent provided therein. The Sponsor will provide a copy of the Declaration,
the Common Securities Guarantee and the Indenture to a Holder without charge
upon written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Subordinated Notes as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Subordinated
Notes.
A2-1
<PAGE>
IN WITNESS WHEREOF, the Regular Trustees of Trust have executed this
certificate for and on behalf of the Trust this __ day of March, 1997.
TCI COMMUNICATIONS FINANCING III
By:
--------------------------------
Regular Trustee
By:
--------------------------------
Regular Trustee
A2-2
<PAGE>
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------
(Insert assignee's name and social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ----------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
--------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Common Security
- -----------------------------------
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date:
-----------------------
Signature:
------------------
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-3
<PAGE>
EXHIBIT B
SPECIMEN OF SUBORDINATED NOTE
B-1
<PAGE>
EXHIBIT C
PURCHASE AGREEMENT
C-1
<PAGE>
Exhibit 4.3
====================================
CAPITAL SECURITIES GUARANTEE AGREEMENT
TCI Communications, Inc.
Dated as of March 14, 1997
====================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATION
<S> <C>
SECTION 1.1 Definitions and Interpretation..........................1
------------------------------
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application........................5
--------------------------------
SECTION 2.2 Lists of Holders of Securities..........................5
------------------------------
SECTION 2.3 Reports by the Capital Guarantee Trustee................5
----------------------------------------
SECTION 2.4 Periodic Reports to Capital Guarantee Trustee...........5
---------------------------------------------
SECTION 2.5 Evidence of Compliance with Conditions Precedent........6
------------------------------------------------
SECTION 2.6 Events of Default; Waiver...............................6
-------------------------
SECTION 2.7 Events of Default; Notice...............................6
-------------------------
SECTION 2.8 Conflicting Interests...................................6
---------------------
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Guarantee Trustee......7
--------------------------------------------------
SECTION 3.2 Certain Rights of Capital Guarantee Trustee.............8
-------------------------------------------
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee..10
-----------------------------------------------------
ARTICLE IV
CAPITAL GUARANTEE TRUSTEE
SECTION 4.1 Capital Guarantee Trustee; Eligibility.................10
--------------------------------------
SECTION 4.2 Appointment, Removal and Resignation
------------------------------------
of Capital Guarantee Trustees..........................11
-----------------------------
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee..............................................12
---------
SECTION 5.2 Waiver of Notice and Demand............................12
---------------------------
SECTION 5.3 Obligations Not Affected...............................12
------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Page
<S> <C> ----
SECTION 5.4 Rights of Holders.......................................13
-----------------
SECTION 5.5 Guarantee of Payment....................................14
--------------------
SECTION 5.6 Subrogation.............................................14
-----------
SECTION 5.7 Independent Obligations.................................14
-----------------------
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions..............................14
--------------------------
SECTION 6.2 Ranking.................................................15
-------
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.............................................15
-----------
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation.............................................15
-----------
SECTION 8.2 Indemnification.........................................16
---------------
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns..................................17
----------------------
SECTION 9.2 Amendments..............................................17
----------
SECTION 9.3 Notices.................................................17
-------
SECTION 9.4 Benefit.................................................18
-------
SECTION 9.5 Governing Law...........................................18
-------------
SECTION 9.6 No Recourse Against Certain Persons.....................18
-----------------------------------
</TABLE>
ii
<PAGE>
CAPITAL SECURITIES GUARANTEE AGREEMENT
This CAPITAL SECURITIES GUARANTEE AGREEMENT (the "Capital
Securities Guarantee"), dated as of March 14, 1997, is executed and delivered
by TCI Communications, Inc., a Delaware corporation (the "Guarantor"), and The
Bank of New York, a New York banking corporation, as trustee (the "Capital
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Capital Securities (as defined herein) of TCI Communications
Financing III, a Delaware statutory business trust (the "Issuer").
WITNESSETH:
----------
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of March 14, 1997, among the trustees of
the Issuer named therein, the Guarantor, as sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer is issuing on the date hereof capital securities, having an aggregate
liquidation amount of $300,000,000 designated the 9.65% Capital Securities (the
"Capital Securities");
WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Capital Securities Guarantee, to pay to the Holders
of the Capital Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein;
WHEREAS, the Guarantor is also executing and delivering a
guarantee agreement (the "Common Securities Guarantee") with substantially
identical terms as this Capital Securities Guarantee for the benefit of the
holders of the Common Securities (as defined herein) except that if an
Indenture Event of Default (as defined herein) has occurred and is continuing,
the rights of holders of the Common Securities to receive Guarantee Payments
under the Common Securities Guarantee are subordinated to the rights of Holders
of Capital Securities to receive Guarantee Payments under this Capital
Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each
Holder of Capital Securities, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Capital
Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
------------------------------
In this Capital Securities Guarantee, unless the context
otherwise requires:
<PAGE>
(a) capitalized terms used in this Capital Securities Guarantee but
not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) a term defined anywhere in this Capital Securities Guarantee has
the same meaning throughout;
(c) all references to "the Capital Securities Guarantee" or "this
Capital Securities Guarantee" are to this Capital Securities
Guarantee as modified, supplemented or amended from time to
time;
(d) all references in this Capital Securities Guarantee to Articles
and Sections are to Articles and Sections of this Capital
Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Capital Securities Guarantee, unless otherwise
defined in this Capital Securities Guarantee or unless the
context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule
----------
405 of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday, a Sunday or any
-------------
other day on which banking institutions in New York, New York are authorized or
required by law to close.
"Capital Guarantee Trustee" means The Bank of New York, until
--------------------------
a Successor Capital Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Capital Securities Guarantee and
thereafter means each such Successor Capital Guarantee Trustee.
"Common Securities" means the securities representing common
-----------------
undivided beneficial interests in the assets of the Issuer.
"Covered Person" means any Holder or beneficial owner of Capital
--------------
Securities.
"Event of Default" means a default by the Guarantor on any of
----------------
its payment or other obligations under this Capital Securities Guarantee.
"Guarantee Payments" means the following payments or
------------------
distributions, without duplication, with respect to the Capital Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
2
<PAGE>
such Capital Securities, to the extent the Issuer has funds available therefor,
(ii) the redemption price, including all accrued and unpaid Distributions to the
date of redemption (the "Redemption Price"), to the extent the Issuer has funds
available therefor, with respect to any Capital Securities called for redemption
by the Issuer, and (iii) upon a voluntary or involuntary dissolution, winding-up
or termination of the Issuer (other than in connection with the distribution of
Subordinated Notes to the Holders in exchange for Capital Securities as provided
in the Declaration), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid Distributions on the Capital Securities to the date
of payment, to the extent the Issuer shall have funds available therefor, and
(b) the amount of assets of the Issuer remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution"). If an Indenture Event of Default has occurred and is continuing,
the rights of holders of the Common Securities to receive payments under the
Common Securities Guarantee are subordinated to the rights of Holders of Capital
Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
------
records of the Issuer, of any Capital Securities; provided, however, that, in
-------- -------
determining whether the holders of the requisite percentage of Capital
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Capital Guarantee Trustee, any
------------------
Affiliate of the Capital Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives or agents of the
Capital Guarantee Trustee.
"Indenture" means the Indenture dated as of January 29, 1996,
---------
among the Guarantor and The Bank of New York, as trustee, and the Third
Supplemental Indenture thereto pursuant to which certain subordinated debt
securities of the Guarantor are to be issued to the Property Trustee (as defined
in the Declaration).
"Indenture Event of Default" has the same meaning as that
--------------------------
given to the term "Event of Default" in the Indenture.
"Majority in liquidation amount of the Securities" means,
------------------------------------------------
except as provided by the Trust Indenture Act, a vote by Holder(s) of Capital
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Capital Securities
outstanding as of the date of determination.
"Officers' Certificate" means, with respect to any Person, a
---------------------
certificate signed by two Authorized Officers (as defined in the Declaration) of
such Person. Any Officers' Certificate delivered with respect to compliance with
a condition or covenant provided for in this Capital Securities Guarantee shall
include:
3
<PAGE>
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
------
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" means, with respect to the Capital
-------------------
Guarantee Trustee, any vice president, any assistant vice president, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or assistant trust officer or any other officer of the corporate trust
department of the Capital Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Subordinated Notes" means the series of subordinated debt
------------------
securities of the Guarantor designated the 9.65% Subordinated Deferrable
Interest Notes due March 31, 2027 held by the Property Trustee.
"Successor Capital Guarantee Trustee" means a successor
-----------------------------------
Capital Guarantee Trustee possessing the qualifications to act as Capital
Guarantee Trustee under Section 4.1.
"TCI" means Tele-Communications, Inc., a Delaware corporation.
---
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
-------------------
amended.
4
<PAGE>
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
--------------------------------
(a) This Capital Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Capital Securities Guarantee and shall, to the extent applicable, be governed by
such provisions.
(b) If and to the extent that any provision of this Capital
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders of Securities
------------------------------
(a) The Guarantor shall provide the Capital Guarantee
Trustee with a list, in such form as the Capital Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the Capital
Securities ("List of Holders") (i) as of January 1 and June 30 of each year,
within one Business Day thereafter, and (ii) at any other time within 30 days of
receipt by the Guarantor of a written request from the Capital Guarantee Trustee
for a List of Holders, which shall be as of a date no more than 14 days before
such List of Holders is given to the Capital Guarantee Trustee; provided, that
--------
the Guarantor shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders given
to the Capital Guarantee Trustee by the Guarantor. The Capital Guarantee Trustee
may destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Capital Guarantee Trustee shall comply with its
obligations under Section 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Capital Guarantee Trustee
----------------------------------------
Within 60 days after May 15 of each year, the Capital
Guarantee Trustee shall provide to the Holders of the Capital Securities such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Capital Guarantee Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Capital Guarantee Trustee
---------------------------------------------
The Guarantor shall provide to the Capital Guarantee Trustee
such documents, reports and information as required by Section 314 of the Trust
Indenture Act (if any) and the compliance certificate required by
5
<PAGE>
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
------------------------------------------------
The Guarantor shall provide to the Capital Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Capital Securities Guarantee that relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) of the Trust
Indenture Act may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
-------------------------
The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Capital Securities Guarantee, but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right consequent thereon.
SECTION 2.7 Events of Default; Notice
-------------------------
(a) The Capital Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Capital Securities, notices of all Events of
Default known to the Capital Guarantee Trustee, unless such defaults have been
cured before the giving of such notice; provided, that the Capital Guarantee
--------
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Capital Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Capital Securities.
(b) The Capital Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Capital Guarantee Trustee shall
have received written notice, or a Responsible Officer charged with the
administration of the Declaration shall have obtained written notice, of such
Event of Default.
SECTION 2.8 Conflicting Interests
---------------------
The Declaration shall be deemed to be specifically described
in this Capital Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Capital Guarantee Trustee
--------------------------------------------------
(a) This Capital Securities Guarantee shall be held by the
Capital Guarantee Trustee for the benefit of the Holders of the Capital
Securities, and the Capital Guarantee Trustee shall not transfer this Capital
Securities Guarantee to any Person except a Holder of Capital Securities
exercising his or her rights pursuant to Section 5.4(b) or to a Successor
Capital Guarantee Trustee on acceptance by such Successor Capital Guarantee
Trustee of its appointment to act as Successor Capital Guarantee Trustee. The
right, title and interest of the Capital Guarantee Trustee shall automatically
vest in any Successor Capital Guarantee Trustee, and such vesting (and cessation
as to the Capital Guarantee Trustee) of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing,
the Capital Guarantee Trustee shall enforce this Capital Securities Guarantee
for the benefit of the Holders of the Capital Securities.
(c) The Capital Guarantee Trustee, before the occurrence of
any Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Capital Securities Guarantee, and no implied covenants shall be
read into this Capital Securities Guarantee against the Capital Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6), the Capital Guarantee Trustee shall exercise
such of the rights and powers vested in it by this Capital Securities Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(d) No provision of this Capital Securities Guarantee shall
be construed to relieve the Capital Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Capital
Guarantee Trustee shall be determined solely by the express
provisions of this Capital Securities Guarantee, and the Capital
Guarantee Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in
this Capital Securities
7
<PAGE>
Guarantee, and no implied covenants or obligations shall be
read into this Capital Securities Guarantee against the
Capital Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Capital Guarantee Trustee, the Capital Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Capital Guarantee
Trustee and conforming to the requirements of this Capital
Securities Guarantee; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Capital Guarantee
Trustee, the Capital Guarantee Trustee shall be under a duty
to examine the same to determine whether or not they conform
to the requirements of this Capital Securities Guarantee;
(ii) the Capital Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Capital Guarantee Trustee, unless it shall be proved that the Capital
Guarantee Trustee was negligent in ascertaining the pertinent facts
upon which such judgment was made;
(iii) the Capital Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Capital Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Capital Guarantee Trustee, or exercising any trust or
power conferred upon the Capital Guarantee Trustee under this Capital
Securities Guarantee; and
(iv) no provision of this Capital Securities Guarantee shall
require the Capital Guarantee Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers, if
the Capital Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Capital Securities
Guarantee or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 3.2 Certain Rights of Capital Guarantee Trustee
-------------------------------------------
(a) Subject to the provisions of Section 3.1:
(i) The Capital Guarantee Trustee may rely, and shall be
fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties.
8
<PAGE>
(ii) Any direction or act of the Guarantor contemplated by
this Capital Securities Guarantee shall be sufficiently evidenced by a
Direction (as defined in the Declaration) or an Officers' Certificate.
(iii) Whenever, in the administration of this Capital
Securities Guarantee, the Capital Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Capital Guarantee
Trustee (unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and rely upon an
Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Guarantor.
(iv) The Capital Guarantee Trustee shall have no duty to see
to any recording, filing or registration of any instrument (or any
rerecording, refiling or reregistration thereof).
(v) The Capital Guarantee Trustee may consult with counsel
of its selection, and the advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees. The Capital Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Capital Securities Guarantee from any court of
competent jurisdiction.
(vi) The Capital Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Capital Securities Guarantee at the request or direction of any Holder,
unless such Holder shall have provided to the Capital Guarantee Trustee
such adequate security and indemnity as would satisfy a reasonable
person in the position of the Capital Guarantee Trustee, against the
costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request
or direction, including such reasonable advances as may be requested by
the Capital Guarantee Trustee; provided that, nothing contained in this
--------
Section 3.2(a)(vi) shall be taken to relieve the Capital Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Capital
Securities Guarantee.
(vii) The Capital Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Capital Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(viii) The Capital Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys,
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<PAGE>
and the Capital Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(ix) Any action taken by the Capital Guarantee Trustee or its
agents hereunder shall bind the Holders of the Capital Securities, and
the signature of the Capital Guarantee Trustee or its agents alone
shall be sufficient and effective to perform any such action. No third
party shall be required to inquire as to the authority of the Capital
Guarantee Trustee to so act or as to its compliance with any of the
terms and provisions of this Capital Securities Guarantee, both of
which shall be conclusively evidenced by the Capital Guarantee
Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Capital
Securities Guarantee the Capital Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Capital Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Capital Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in acting in
accordance with such instructions.
(b) No provision of this Capital Securities Guarantee shall
be deemed to impose any duty or obligation on the Capital Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Capital Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Capital Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
-----------------------------------------------------
The recitals contained in this Capital Securities Guarantee
shall be taken as the statements of the Guarantor, and the Capital Guarantee
Trustee does not assume any responsibility for their correctness. The Capital
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Capital Securities Guarantee.
ARTICLE IV
CAPITAL GUARANTEE TRUSTEE
SECTION 4.1 Capital Guarantee Trustee; Eligibility
--------------------------------------
(a) There shall at all times be a Capital Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
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<PAGE>
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then, for the
purposes of this Section 4.1(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Capital Guarantee Trustee shall cease
to be eligible to so act under Section 4.1(a), the Capital Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Capital Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Capital Guarantee Trustee and Guarantor shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Capital Guarantee
---------------------------------------------------------
Trustees
- --------
(a) Subject to Section 4.2(b), the Capital Guarantee Trustee
may be appointed or removed without cause at any time by the Guarantor.
(b) The Capital Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Capital Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Capital Guarantee Trustee and delivered to the Guarantor.
(c) The Capital Guarantee Trustee appointed to office shall
hold office until a Successor Capital Guarantee Trustee shall have been
appointed or until its removal or resignation. The Capital Guarantee Trustee may
resign from office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Capital Guarantee Trustee and delivered to
the Guarantor, which resignation shall not take effect until a Successor Capital
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Capital Guarantee Trustee and
delivered to the Guarantor and the resigning Capital Guarantee Trustee.
(d) If no Successor Capital Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery of an instrument of resignation or removal, the Capital
Guarantee Trustee resigning or being removed may petition
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any court of competent jurisdiction for appointment of a Successor Capital
Guarantee Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Capital Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
---------
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
---------------------------
The Guarantor hereby waives notice of acceptance of this
Capital Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 Obligations Not Affected
------------------------
The obligations, covenants, agreements and duties of the
Guarantor under this Capital Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relat ing to the Capital Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of
all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Capital Securities
or the extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Capital Securities (other than an
extension of time for payment of Distributions or other sum payable that results
from the extension of any interest payment period on the Subordinated Notes
permitted by the Indenture);
12
<PAGE>
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Capital
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer or any of the
assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Capital Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obliga tions of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
-----------------
(a) The Holders of a Majority in liquidation amount of the
Capital Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Capital Guarantee
Trustee in respect of this Capital Securities Guarantee or exer cising any trust
or power conferred upon the Capital Guarantee Trustee under this Capital
Securities Guarantee.
(b) If the Capital Guarantee Trustee fails to enforce this
Capital Securities Guarantee, any Holder of Capital Securities may institute a
legal proceeding directly against the Guarantor to enforce its rights under this
Capital Securities Guarantee, without first instituting a legal proceeding
against the Issuer, the Capital Guarantee Trustee or any other Person.
(c) Notwithstanding subsection 5.4(b), any Holder of Capital
Securities may directly institute proceedings against the Guarantor to obtain
Guarantee Payments in respect of the Capital Securities owned by such Holder,
without first waiting to determine if the Capital Guarantee Trustee has enforced
this Capital Securities Guarantee or first instituting a legal proceeding
against the Issuer, the Capital Guarantee Trustee or any other Person.
13
<PAGE>
SECTION 5.5 Guarantee of Payment
--------------------
This Capital Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 Subrogation
-----------
The Guarantor shall be subrogated to all (if any) rights of
the Holders of Capital Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Capital Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Capital
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Capital Securities Guarantee. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Holders.
SECTION 5.7 Independent Obligations
-----------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
--------------------------
(a) So long as any Capital Securities remain outstanding, if
there shall have occurred an Event of Default or Indenture Event of Default,
then (a) the Guarantor shall not declare or pay any dividend on, or make any
distribution with respect to, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its capital stock, and (b) the Guarantor shall
not make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Guarantor which rank pari
passu with or junior to the Subordinated Notes.
(b) Notwithstanding subsection 6.1(a) or any other language
to the contrary contained in this Capital Securities Guarantee, nothing shall
prevent the Guarantor from: (i) de claring or paying any dividend on, or making
any distribution with respect to, or redeeming,
14
<PAGE>
purchasing, acquiring or making a liquidation payment with respect to, any of
its capital stock in or with (x) securities of the Guarantor (including capital
stock) that rank junior to such capital stock or (y) securities (including
capital stock) of TCI or (ii) paying any interest, principal or premium on, or
repaying, repurchasing or redeeming, any debt securities issued by the Guarantor
which rank pari passu with or junior to the Subordinated Notes, with (x)
securities of the Guarantor (including capital stock) that rank junior to such
debt securities or (y) securities (including capital stock) of TCI.
SECTION 6.2 Ranking
-------
This Capital Securities Guarantee constitutes an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with (x) the
most senior preferred or preference stock issued by the Guarantor from time to
time and with any guarantee now or hereafter entered into by the Guarantor in
respect of any preferred or preference stock of any Affiliate of the Guarantor
and (y) the guarantees of the Guarantor with respect to the 8.72% Subordinated
Deferrable Interest Notes due January 31, 2045 and the 10% Subordinated
Deferrable Interest Notes due May 31, 2045 of the Guarantor, and (iii) senior to
the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
-----------
This Capital Securities Guarantee shall terminate upon the
earliest to occur of (i) the full payment of the Redemption Price of all Capital
Securities, (ii) the distribution of Subordinated Notes to the Holder(s) of all
of the Capital Securities or (iii) full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Issuer. Notwithstanding
the foregoing, this Capital Securities Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any Holder of Capital
Securities must restore payment of any sums paid under the Capital Securities or
under this Capital Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
-----------
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this Capital
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Capital Securities Guarantee or by law, except that an
Indemnified Person shall be liable for
15
<PAGE>
any such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omission.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Guarantor and upon such
information, opinions, reports or statements presented to the Guarantor by any
Person as to matters the Indemnified Person reasonably believes are within such
other Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions, the Redemption Price or the
Liquidation Distribution to Holders of Capital Securities might properly be
paid.
(c) The provisions of this Section 8.1 shall survive the
termination of this Capital Securities Guarantee.
SECTION 8.2 Indemnification
---------------
(a) To the fullest extent permitted by applicable law, the
Guarantor shall indemnify and hold harmless each Indemnified Person from and
against any loss, damage or claim incurred by such Indemnified Person by reason
of any act or omission performed or omitted by such Indemnified Person in good
faith in accordance with this Capital Securities Guarantee and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person in accordance with this Capital Securities
Guarantee, except that no Indemnified Person shall be entitled to be indemnified
in respect of any loss, damage or claim incurred by such Indemnified Person by
reason of negligence or willful misconduct with respect to such acts or
omissions.
(b) To the fullest extent permitted by applicable law,
expenses (including legal fees and expenses) incurred by an Indemnified Person
in defending any claim, demand, action, suit or proceeding (whether such claim,
demand, action, suit or proceeding arises between the parties hereto or results
from suits involving third parties) shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
8.2(a).
(c) The provisions of this Section 8.2 shall survive the
termination of this Capital Securities Guarantee.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
----------------------
All guarantees and agreements contained in this Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Capital Securities then outstanding.
SECTION 9.2 Amendments
----------
Except with respect to any changes that do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Capital Securities Guarantee may only be amended with the prior
approval of the Holders of at least a Majority in liquidation amount of the
Capital Securities. The provisions of Section 12.2 of the Declaration with
respect to meetings of Holders of the Securities apply to the giving of such
approval.
SECTION 9.3 Notices
-------
All notices provided for in this Capital Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Capital Guarantee Trustee, at the
Capital Guarantee Trustee's mailing address set forth below (or such other
address as the Capital Guarantee Trustee may give notice of to the Holders of
the Capital Securities):
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10256
Attention: Corporate Trust Trustee Administration
(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give notice
of to the Holders of the Capital Securities):
TCI Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Attention: Chief Financial Officer
(c) If given to any Holder of Capital Securities, at the
address set forth on the books and records of the Issuer.
17
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All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 9.4 Benefit
-------
This Capital Securities Guarantee is solely for the benefit of
the Holders of the Capital Securities and, subject to Section 3.1(a), is not
separately transferable from the Capital Securities.
SECTION 9.5 Governing Law
-------------
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
SECTION 9.6 No Recourse Against Certain Persons
-----------------------------------
No past, present or future director, officer, employee or
stockholder, as such, of the Guarantor or any successor thereof shall have any
liability for any obligations of the Guarantor under this Capital Securities
Guarantee or for any claim based on, in respect of, or by reason of, such
obligations or their creation and all such liability is hereby waived and
released. Such waiver and release are part of the consideration for the issue of
this Capital Securities Guarantee and the Capital Securities.
18
<PAGE>
THIS CAPITAL SECURITIES GUARANTEE AGREEMENT is executed as of
the day and year first above written.
TCI COMMUNICATIONS, INC., as
Guarantor
By:
--------------------------
Name:
Title:
THE BANK OF NEW YORK, as
Capital Guarantee Trustee
By:
---------------------------
Name:
Title:
19
<PAGE>
Exhibit 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [__]
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
TCI COMMUNICATIONS FINANCING III
(Exact name of obligor as specified in its charter)
Delaware 84-6289177
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
(Address of principal executive offices) (Zip code)
----------------------
Capital Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-
29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with
Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 25th day of February, 1997.
THE BANK OF NEW YORK
By: /S/ PAUL J. SCHMALZEL
----------------------------
Name: PAUL J. SCHMALZEL
Title: ASSISTANT TREASURER
-4-
<PAGE>
- --------------------------------------------------------------------------------
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances and
currency and coin...................... $ 4,404,522
Interest-bearing balances.............. 732,833
Securities:
Held-to-maturity securities............ 789,964
Available-for-sale securities.......... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold..................... 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ....................28,728,602
LESS: Allowance for loan and
lease losses .................584,525
LESS: Allocated transfer risk
reserve...........................429
Loans and leases, net of unearned
income, allowance, and reserve....... 28,143,648
Assets held in trading accounts.......... 1,004,242
Premises and fixed assets (including
capitalized leases).................... 605,668
Other real estate owned.................. 41,238
Investments in unconsolidated
subsidiaries and associated
companies.............................. 205,031
Customers' liability to this bank on
acceptances outstanding................ 949,154
Intangible assets........................ 490,524
Other assets............................. 1,305,839
-----------
Total assets............................. $44,043,010
===========
LIABILITIES
Deposits:
In domestic offices.................... $20,441,318
Noninterest-bearing ..........8,158,472
Interest-bearing ............12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 11,710,903
Noninterest-bearing .............46,182
Interest-bearing ............11,664,721
Federal funds purchased in
domestic offices of the bank:
Federal funds purchased................ 1,565,288
Demand notes issued to the U.S.
Treasury............................... 293,186
Trading liabilities...................... 826,856
Other borrowed money:
With original maturity of one year
or less.............................. 2,103,443
With original maturity of more than
one year............................. 20,766
Bank's liability on acceptances executed
and outstanding........................ 951,116
Subordinated notes and debentures........ 1,020,400
Other liabilities........................ 1,522,884
-----------
Total liabilities........................ 40,456,160
-----------
EQUITY CAPITAL
Common stock............................. 942,284
Surplus.................................. 525,666
Undivided profits and capital
reserves............................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities............................. ( 2,073)
Cumulative foreign currency translation
adjustments............................ ( 8,403)
-----------
Total equity capital..................... 3,586,850
-----------
Total liabilities and equity
capital ............................... $44,043,010
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi )- Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 25.2
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [__]
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
TCI COMMUNICATIONS, INC.
(Exact name of obligor as specified in its charter)
Delaware 84-0588868
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
(Address of principal executive offices) (Zip code)
----------------------
Guarantee of Capital Securities of
TCI Communications Financing III
(Title of the indenture securities)
=============================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-
29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee
of all facts on which to base a responsive answer to Item 2, the answer to said
Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an amendment
to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 25th day of February, 1997.
THE BANK OF NEW YORK
By: /s/ PAUL J. SCHMALZEL
------------------------------
Name: PAUL J. SCHMALZEL
Title: ASSISTANT TREASURER
-4-
<PAGE>
- --------------------------------------------------------------------------------
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository
institutions:
Noninterest-bearing balances and
currency and coin...................... $ 4,404,522
Interest-bearing balances.............. 732,833
Securities:
Held-to-maturity securities............ 789,964
Available-for-sale securities.......... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold..................... 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ....................28,728,602
LESS: Allowance for loan and
lease losses .................584,525
LESS: Allocated transfer risk
reserve...........................429
Loans and leases, net of unearned
income, allowance, and reserve....... 28,143,648
Assets held in trading accounts.......... 1,004,242
Premises and fixed assets (including
capitalized leases).................... 605,668
Other real estate owned.................. 41,238
Investments in unconsolidated
subsidiaries and associated
companies.............................. 205,031
Customers' liability to this bank on
acceptances outstanding................ 949,154
Intangible assets........................ 490,524
Other assets............................. 1,305,839
-----------
Total assets............................. $44,043,010
===========
LIABILITIES
Deposits:
In domestic offices.................... $20,441,318
Noninterest-bearing ..........8,158,472
Interest-bearing ............12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 11,710,903
Noninterest-bearing .............46,182
Interest-bearing ............11,664,721
Federal funds purchased in
domestic offices of the bank:
Federal funds purchased................ 1,565,288
Demand notes issued to the U.S.
Treasury............................... 293,186
Trading liabilities...................... 826,856
Other borrowed money:
With original maturity of one year
or less.............................. 2,103,443
With original maturity of more than
one year............................. 20,766
Bank's liability on acceptances executed
and outstanding........................ 951,116
Subordinated notes and debentures........ 1,020,400
Other liabilities........................ 1,522,884
-----------
Total liabilities........................ 40,456,160
-----------
EQUITY CAPITAL
Common stock............................. 942,284
Surplus.................................. 525,666
Undivided profits and capital
reserves............................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities............................. ( 2,073)
Cumulative foreign currency translation
adjustments............................ ( 8,403)
-----------
Total equity capital..................... 3,586,850
-----------
Total liabilities and equity
capital ............................... $44,043,010
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi )- Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
