<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 22, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TCI COMMUNICATIONS, INC.
AND
TELE-COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE--TCI COMMUNICATIONS, INC. 84-0588868--TCI COMMUNICATIONS, INC.
DELAWARE--TELE-COMMUNICATIONS, INC. 84-1260157--TELE-COMMUNICATIONS, INC.
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
TERRACE TOWER II
5619 DTC PARKWAY
ENGLEWOOD, COLORADO 80111-3000
(303) 267-5500
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
STEPHEN M. BRETT, ESQ. COPY TO:
TELE-COMMUNICATIONS, INC. ROBERT W. MURRAY JR., ESQ.
TERRACE TOWER II BAKER & BOTTS, L.L.P.
5619 DTC PARKWAY 599 LEXINGTON AVENUE
ENGLEWOOD, COLORADO 80111-3000 NEW YORK, NEW YORK 10022
(303) 267-5500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement as determined
by market conditions.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AGGREGATE MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT AGGREGATE AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING OFFERING REGISTRATION
REGISTERED REGISTERED PRICE PER UNIT PRICE(1)(3) FEE
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<S> <C> <C> <C> <C>
Debt Securities of TCI | | | |
Communications, Inc... | | | |
- ------------------------ | | | |
Series Preferred Stock, | | | |
par value $.01 per | | | |
share, of Tele- | | | |
Communications, | | | |
Inc. ................. | | | |
- ------------------------ | | | |
Tele-Communications, | | | |
Inc. Series A TCI Group | | | |
Common Stock, par value | (4) | (4) |$3,000,000,000|$885,000(4)
$1.00 per share(2).... | | | |
- ------------------------ | | | |
Depositary Shares(5)... | | | |
- ------------------------ | | | |
Guarantees by Tele- | | | |
Communications, Inc. | | | |
of Debt Securities.... | | | |
</TABLE>
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(1) In United States dollars or the equivalent thereof in one or more foreign
currencies, foreign currency units or composite currencies.
(2) Includes such presently indeterminate number of shares which may be (a)
issuable from time to time, (b) issuable from time to time upon conversion
of the Debt Securities and Series Preferred Stock registered hereunder and
(c) necessary to adjust the number of shares from time to time reserved
for issuance upon such conversion in accordance with the anti-dilution
provisions of the Debt Securities or Series Preferred Stock, respectively,
as a result of a stock split, stock dividend or other adjustment to or
change in the outstanding shares of such Series A TCI Group Common Stock.
(3) Such amount includes (i) the principal amount of any Debt Securities
issued at their principal amount and the issue price rather than the
principal amount of any Debt Securities issued at an original issue
discount, (ii) the initial offering price for shares of Series Preferred
Stock and (iii) the initial offering price for shares of Series A TCI
Group Common Stock. No separate consideration will be received (x) for
shares of Series A TCI Group Common Stock that are issuable upon
conversion of Debt Securities or upon conversion of Series Preferred Stock
or (y) guarantees by Tele-Communications, Inc. of Debt Securities. In no
event will the aggregate initial offering price of all securities
registered hereby exceed $3 billion. Such securities may be sold from time
to time separately or in any combination of units.
(4) The aggregate amount to be registered and the aggregate offering price per
unit have been omitted pursuant to the instructions to Form S-3. The
registration fee has been calculated in accordance with Rule 457(o) under
the Securities Act of 1933.
(5) There are being registered an indeterminate number of Depositary Shares as
may be issued, from time to time, if Tele-Communications, Inc. elects to
offer fractional interests in shares of any Series Preferred Stock.
-------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This Registration Statement contains a Prospectus relating to the offer from
time to time by TCI Communications, Inc. (the "Company") and Tele-
Communications, Inc. (the "Parent"), as the case may be, of the following: (i)
Debt Securities of the Company, (ii) shares of Series Preferred Stock of the
Parent, which may be issued in the form of depositary shares ("Depositary
Shares") evidenced by depositary receipts if the Parent elects to issue
fractional interests in shares of a series of Series Preferred Stock, (iii)
shares of Series A TCI Group Common Stock of the Parent, (iv) shares of Series
A TCI Group Common Stock of the Parent issuable upon conversion of Debt
Securities of the Company or upon conversion of Series Preferred Stock of the
Parent, and (v) any guarantees of the Parent with respect to Debt Securities
of the Company. The maximum aggregate initial offering price for all
securities registered by the Registration Statement shall be $3 billion.
The Registration Statement also contains a Prospectus Supplement relating to
the offering of up to $750,000,000 of Debt Securities of the Company as
Medium-Term Notes, Series D. Pricing information and certain other matters
concerning the Medium-Term Notes, Series D, will be included in one or more
Pricing Supplements to the Prospectus Supplement contained herein as Medium-
Term Notes, Series D are offered and sold hereunder. With respect to Debt
Securities offered as other than Medium-Term Notes, Series D, a Prospectus
Supplement describing the particular terms of such Debt Securities, the
designation and qualification (to the extent not already designated and
qualified and described in the Prospectus contained herein) of any trustee
with respect to the Debt Securities and the offer or sale thereof will be
filed in accordance with the rules of the Securities and Exchange Commission.
In the case of a series of Series Preferred Stock, the Prospectus Supplement
will include the particular terms of the series and the terms of the offering
and sale thereof. In the case of Depositary Shares, the Prospectus Supplement
will include the terms of the Depositary Shares and the related series of
Series Preferred Stock and the terms of the offering and sale thereof. In the
case of shares of Series A TCI Group Common Stock, the Prospectus Supplement
will include the terms of the offering and sale thereof.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JANUARY 22, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY , 1998)
$750,000,000
TCI COMMUNICATIONS, INC.
MEDIUM-TERM NOTES, SERIES D
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
----------
TCI Communications, Inc. (the "Company") may from time to time offer its
unsecured Medium-Term Notes, Series D (the "Notes"), for an aggregate principal
amount of up to $750,000,000 (or the equivalent thereof denominated in one or
more foreign currencies or currency units), subject to reduction as a result of
the sale of other Debt Securities (other than the Notes) pursuant to the
accompanying Prospectus. The Notes will be offered at varying maturities from
nine months or more from their dates of issue. Unless otherwise set forth in a
Pricing Supplement to this Prospectus Supplement (each, a "Pricing
Supplement"), the Notes may not be redeemed at the option of the Company or
repaid at the option of the holder thereof prior to maturity. See "Description
of Debt Securities--Senior Debt Securities" in the accompanying Prospectus. The
Notes will bear interest at fixed rates, which may be zero in the case of
certain Notes issued at a price representing a discount from the principal
amount payable at maturity, or variable rates ("Fixed Rate Notes" and "Floating
Rate Notes", respectively). The interest rate in the case of Fixed Rate Notes,
the method of determining the interest rate in the case of Floating Rate Notes,
and the issue price and stated maturity date of each Note will be established
at the time of issuance of such Note and will be set forth in the applicable
Pricing Supplement. Interest rates, the methods of determining interest rates
and issue prices are subject to change by the Company, but no such change will
affect any Note theretofore issued or as to which an offer to purchase has been
accepted by the Company. Unless otherwise described in the applicable Pricing
Supplement, Notes denominated in U.S. Dollars will be issued in denominations
of $1,000 or any integral multiple of $1,000. If the Notes are to be
denominated in one or more foreign currencies or currency units (each a
"Specified Currency"), then the provisions with respect thereto (including
authorized denominations) will be set forth in the applicable Pricing
Supplement and currency exchange rate information will be set forth in the
applicable Pricing Supplement.
Each Note will be in fully registered form and represented either by a global
certificate registered in the name of a nominee of The Depository Trust Company
("DTC") or another depositary (DTC or such other depositary, if any, described
in the applicable Pricing Supplement is herein referred to as the "Depository")
(each a "Book-Entry Note"), or a certificate issued in definitive form
("Certificated Note"), as set forth in the applicable Pricing Supplement.
Beneficial ownership interests in a Book-Entry Note will be shown on, and the
transfer thereof will be effected only through, records maintained by the
Depository's participants. Owners of beneficial interests in Book-Entry Notes
will be entitled to physical delivery of Notes in certificated form equal in
principal amount to their respective beneficial interests only under the
limited circumstances described herein. See "Book-Entry System". Owners of
beneficial interests in Book-Entry Notes will not be considered the holders
thereof.
Unless otherwise described in the applicable Pricing Supplement, interest on
each Fixed Rate Note will accrue from its Original Issue Date (as defined
herein) and will be payable semiannually on each February 15 and August 15 and
at maturity or, if applicable, upon redemption or repayment. The interest rate
on Floating Rate Notes will be calculated by reference to one or more of the
"CD Rate," the "Commercial Paper Rate," the "Federal Funds Rate," the "Prime
Rate," "LIBOR," the "Treasury Rate," the "CMT Rate," or such other interest
rate basis or formula as may be specified in the applicable Pricing Supplement,
and may be adjusted by a "Spread" or "Spread Multiplier," if any, each as
defined herein. Interest on each Floating Rate Note will accrue from its
Original Issue Date and will be payable as set forth therein and in the
applicable Pricing Supplement and at maturity or, if applicable, upon
redemption or repayment.
SEE "RISK FACTORS" ON PAGE S-2 OF THIS PROSPECTUS SUPPLEMENT FOR A DISCUSSION
OF CERTAIN RISKS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN
THE NOTES OFFERED HEREBY.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT OR THE
PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO AGENTS' PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)
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<S> <C> <C> <C>
Per Note............... 100% .125%-.925% 99.875%-99.075%
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Total.................. $750,000,000 $937,500-$6,937,500 $749,062,500-$743,062,500
</TABLE>
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(1) Each Note will be sold at 100% of its principal amount except as may be
provided in the applicable Pricing Supplement.
(2) The Company will pay a commission to Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Credit Suisse First Boston
Corporation, Lehman Brothers, Lehman Brothers Inc. or Salomon Brothers Inc
or such other agents as the Company may select (each an "Agent" and
together the "Agents") in the form of a discount, ranging from .125% to
.925% of the principal amount of the Notes sold through such Agent,
depending upon the Stated Maturity Date (as herein defined) and the rating
assigned to such Notes by nationally recognized securities rating agencies.
The Company has reserved the right to sell Notes directly to investors on
its own behalf, in which case no commission will be payable. The Company
may sell Notes to an Agent, as principal. Unless otherwise indicated in the
applicable Pricing Supplement, any Note sold to an Agent as principal will
be purchased by such Agent at a price equal to 100% of the principal amount
thereof less a percentage equal to the commission applicable to an agency
sale of a Note with an identical Stated Maturity Date, and may be resold by
such Agent to investors or other purchasers at prevailing market prices at
the time or times of resale, to be determined by the Agent or, if so
agreed, at a fixed public offering price.
(3) Before deduction of expenses payable by the Company estimated to be
$200,000. The Company has agreed to indemnify each Agent against certain
liabilities, including liabilities under the Securities Act of 1933.
----------
The Notes are being offered on a continuous basis by the Company through the
Agents, each of which has agreed to use its reasonable best efforts to solicit
offers to purchase the Notes. Notes may also be sold to an Agent, as principal,
for resale to investors or other purchasers. The Company reserves the right to
sell Notes directly to investors on its own behalf in those jurisdictions where
it is authorized to do so. Unless otherwise specified in an applicable Pricing
Supplement, the Notes will not be listed on any securities exchange, and there
can be no assurance that the Notes offered hereby will be sold or that there
will be a secondary market for the Notes. The Company reserves the right to
withdraw, cancel or modify the offer made hereby without notice. The Company or
any Agent, if it solicits such offer, may reject any offer to purchase Notes,
in whole or in part. See "Plan of Distribution."
----------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
LEHMAN BROTHERS
SALOMON SMITH BARNEY
----------
The date of this Prospectus Supplement is January , 1998.
<PAGE>
IN CONNECTION WITH AN OFFERING OF NOTES PURCHASED BY ONE OR MORE AGENTS (AS
DEFINED HEREIN) AS PRINCIPAL(S) ON A FIXED PRICE OFFERING BASIS, SUCH AGENT(S)
MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE
PRICE OF NOTES. SUCH TRANSACTIONS MAY INCLUDE STABILIZING AND THE PURCHASE OF
NOTES TO COVER SHORT POSITIONS OF SUCH AGENT(S). FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
RISK FACTORS
The Company incurred net losses of $452 million and $120 million for the
years ended December 31, 1996 and 1995, respectively, and net losses of $12
million and $268 million for the nine months ended September 30, 1997 and
1996, respectively. The Company had net earnings of $94 million for the year
ended December 31, 1994. Notwithstanding the losses it has incurred, the
Company has been able to, and expects to continue to be able to, satisfy its
debt service and other obligations as and when they become due. The Company's
operating cash flow (operating income before depreciation, amortization and
other non-cash credits or charges) ($2,203 million, $2,043 million and $1,801
million for the years ended December 31, 1996, 1995 and 1994, respectively,
and $2,031 million and $1,632 million for the nine months ended September 30,
1997 and 1996, respectively) has historically been sufficient to cover its
interest expense ($1,041 million, $962 million and $777 million for the years
ended December 31, 1996, 1995 and 1994, respectively, and $803 million and
$760 million for the nine months ended September 30, 1997 and 1996,
respectively). The Company's interest coverage ratios for the years ended
December 31, 1996, 1995 and 1994 were 212%, 212% and 232%, respectively, and
for each of the nine month periods ended September 30, 1997 and 1996 were 253%
and 215%, respectively. Operating cash flow is a measure of value and
borrowing capacity within the cable television industry and is not intended to
be a substitute for cash flows provided by operating activities, a measure of
performance prepared in accordance with generally accepted accounting
principles, and should not be relied upon as such. Operating cash flow, as
defined, does not take into consideration substantial costs of doing business,
such as interest expense, and should not be considered in isolation to other
measures of performance.
Another measure of liquidity is net cash provided by operating activities as
reflected in the Company's consolidated statements of cash flows. Net cash
provided by operating activities ($1,247 million, $1,263 million and $1,142
million for the years ended December 31, 1996, 1995 and 1994, respectively,
and $1,285 million and $769 million for the nine months ended September 30,
1997 and 1996, respectively) reflects net cash from the operations of the
Company available for the Company's liquidity needs after taking into
consideration the aforementioned substantial costs of doing business not
reflected in operating cash flow. Amounts expended by the Company for its
investing activities exceeded net cash provided by operating activities for
the years ended December 31, 1996, 1995 and 1994 and the nine months ended
September 30, 1996.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the accompanying Prospectus as the "Offered Securities"
and "Senior Debt Securities") supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Debt Securities set forth under the heading "Description of Debt Securities"
in the Prospectus, to which reference is hereby made. The following
description will apply to each Note unless otherwise specified in the
applicable Pricing Supplement. Capitalized terms not defined herein have the
meanings ascribed to them in the accompanying Prospectus.
GENERAL
The Notes are a series of Senior Debt Securities to be issued under the
Indenture, dated as of January , 1998 (the "Indenture"), between the Company
and The Bank of New York, as trustee (the "Trustee"), which Indenture is more
fully described in the accompanying Prospectus. Whenever any term defined in
the Indenture or the Notes is referred to, such term is incorporated by
reference as part of the statements made herein and such statements are
qualified in their entirety by such reference.
The Indenture does not limit the aggregate principal amount of Senior Debt
Securities that may be issued thereunder, and provides that Senior Debt
Securities may be issued in one or more series up to the aggregate principal
amount that may be authorized from time to time by the Company. The Notes
constitute a single series
S-2
<PAGE>
of Senior Debt Securities for purposes of the Indenture, which series is
unlimited in aggregate principal amount. As of the date of this Prospectus
Supplement, the Company has authorized the issuance and sale of up to
$750,000,000 (or the equivalent thereof denominated in one or more foreign
currencies or currency units) aggregate principal amount of Notes, and the
aggregate principal amount of Notes that may be offered for sale and sold
pursuant to this Prospectus Supplement and the accompanying Prospectus is
limited to such amount, subject to reduction as a result of the sale after the
date hereof of other Debt Securities (other than the Notes) pursuant to the
accompanying Prospectus. Unless otherwise indicated in the applicable Pricing
Supplement, currency amounts in this Prospectus Supplement, the accompanying
Prospectus and any Pricing Supplement are stated in United States dollars
("$", "U.S.$" or "U.S. Dollars").
The Notes are being offered on a continuous basis and each Note will mature
on a day nine months or more from its date of issue, as selected by the
initial purchaser and agreed to by the Company and as specified in the
applicable Pricing Supplement. Unless otherwise specified in a Note and
described in the applicable Pricing Supplement, a Note may not be redeemed at
the option of the Company or repaid at the option of the holder thereof prior
to its Stated Maturity Date (as defined below). See "Repayment and
Redemption." If so provided in a Note and described in the applicable Pricing
Supplement, the Stated Maturity Date of a Note may be extended at the option
of the Company. See "Extension of Maturity" below. The Notes will be unsecured
and unsubordinated obligations of the Company, will rank equally and ratably
with other unsecured and unsubordinated indebtedness of the Company and will
not be convertible into common stock of the Company or Tele-Communications,
Inc. (the "Parent").
Unless otherwise specified in such Note and the applicable Pricing
Supplement, the Notes will be denominated in U.S. Dollars and payments of
principal of, premium, if any, and any interest on the Notes will be made in
U.S. Dollars. If any Note is to be denominated other than exclusively in U.S.
Dollars, or if the principal of, premium, if any, or any interest on any Note
is to be payable in one or more currencies (or currency units or in amounts
determined by reference to an index or indices) other than that in which such
Note is denominated, additional information with respect thereto (including
authorized denominations and applicable exchange rate information) will be
provided in the applicable Pricing Supplement. Unless otherwise described in
the applicable Pricing Supplement, Notes denominated in U.S. Dollars will be
issued in denominations of $1,000 or any integral multiple of $1,000.
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note in fully registered form without coupons. Except as set
forth under "Book-Entry System," owners of beneficial interests in Book-Entry
Notes will not be entitled to physical delivery of Notes in certificated form.
All references herein to holders will be, with respect to Book-Entry Notes, to
the Depository or its nominee.
Certificated Notes will be exchangeable for Certificated Notes in other
authorized denominations, in an equal aggregate principal amount and otherwise
bearing identical terms and provisions, in accordance with the provisions of
the Indenture. Certificated Notes may be presented for registration of
transfer or for exchange at the office of the Registrar in The City of New
York designated for such purpose (currently the corporate trust department of
the Trustee, 101 Barclay Street, Floor 21 West, New York, New York 10286).
Beneficial interests in Book-Entry Notes may be transferred through a
participating member of the Depository. See "Book-Entry System." No service
charge will be made for any registration of transfer or exchange of any
Certificated Note, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
Each Note will bear interest at either (i) a fixed rate, which may be zero
in the case of Fixed Rate Notes issued at an Issue Price (as defined below)
representing a discount from the principal amount payable at maturity (a "Zero
Coupon Note"), or (ii) a floating rate determined by reference to an interest
rate basis or combination
of interest rate bases (the "Interest Rate Basis" or "Interest Rate Bases," as
applicable) specified in such Floating Rate Note and described in the
applicable Pricing Supplement, which may be adjusted by a Spread
S-3
<PAGE>
and/or Spread Multiplier (each as defined below), if any. See "Fixed Rate
Notes" and "Floating Rate Notes." Interest rates offered by the Company with
respect to the Notes may differ depending upon, among other things, the
aggregate principal amount of Notes purchased in any single transaction.
Unless otherwise specified in a Note and the applicable Pricing Supplement,
"Business Day" means any day, other than a Saturday or Sunday, that is not a
day on which banking institutions are authorized or required by law,
regulation or executive order to be closed in The City of New York, and with
respect to LIBOR Notes (as defined below), that is also a London Business Day.
"London Business Day" means any day on which dealings in deposits in U.S.
Dollars are transacted in the London interbank market.
"Original Issue Discount Note" means (i) a Note, including any Zero Coupon
Note, that has a stated redemption price at maturity that exceeds its Issue
Price by at least 0.25% of its principal amount multiplied by the number of
full years from the Original Issue Date to the Stated Maturity Date (each as
defined below) for such Note and (ii) any other Note issued with original
issue discount for United States federal income tax purposes as determined
pursuant to Section 1273 of the Internal Revenue Code of 1986, as amended (the
"Code").
The Pricing Supplement relating to each Note will describe the following
terms: (i) the price (which may be expressed as a percentage of the aggregate
principal amount thereof) at which such Note will be issued (the "Issue
Price"); (ii) the date on which such Note will be issued (the "Original Issue
Date"); (iii) the date on which such Note will mature (the "Stated Maturity
Date") and whether the Stated Maturity Date may be extended by the Company,
and if so, the Final Maturity Date (as defined under "Extension of Maturity");
(iv) whether such Note is a Fixed Rate Note or a Floating Rate Note; (v) if
such Note is a Fixed Rate Note, the rate per annum at which such Note will
bear interest, if any, the interest payment date or dates (if different from
those set forth below under "Fixed Rate Notes") and whether such rate may be
changed by the Company prior to the Stated Maturity Date; (vi) if such Note is
a Floating Rate Note, the Interest Rate Basis or Interest Rate Bases, as
applicable, the Initial Interest Rate, the Interest Reset Period, the Interest
Reset Dates, the Interest Payment Period, the Interest Payment Dates, the
Index Maturity, the Maximum Interest Rate, if any, the Minimum Interest Rate,
if any, the Spread, if any, the Spread Multiplier, if any (all as defined
under "Interest Rate" and "Floating Rate Notes" below), and any other terms
relating to the particular method of calculating the interest rate for such
Note, and whether any such Spread and/or Spread Multiplier may be changed by
the Company prior to the Stated Maturity Date; (vii) whether such Note is an
Original Issue Discount Note, and if so, the yield to maturity; (viii) whether
such Note will be issued initially as a Book-Entry Note or a Certificated
Note; (ix) whether such Note may be redeemed at the option of the Company, or
repaid at the option of the holder, prior to the Stated Maturity Date, and, if
so, the provisions relating to such redemption or repayment; and (x) any other
terms of such Note not inconsistent with the provisions of the Indenture.
REPAYMENT AND REDEMPTION
If agreed to by the initial purchaser of a Note and the Company, such Note
will be subject to repayment at the option of the holder thereof in accordance
with its terms on each optional repayment date therefor, if any (each an
"Optional Repayment Date"). Optional Repayment Dates, if any, will be fixed at
the time of sale and set forth in the applicable Pricing Supplement and
specified in the applicable Note. If no Optional Repayment Date is so
specified with respect to a Note, such Note will not be repayable at the
option of the holder thereof prior to its Stated Maturity Date. Unless
otherwise specified in the Note and described in the applicable Pricing
Supplement, on an Optional Repayment Date, if any, the related Note will be
repayable in whole or in part (provided that the principal amount of the Note
remaining outstanding after a partial repayment is an authorized denomination)
at the option of the holder thereof at a price equal to 100% of the principal
amount to be repaid, together with accrued and unpaid interest thereon up to,
but excluding, the date of repayment (except as
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otherwise provided below in the case of an Original Issue Discount Note). In
order for a Note to be repaid upon exercise of such repayment option, the
Paying Agent must receive, not more than 60 nor less than 30 days prior to an
Optional Repayment Date at the office in The City of New York designated for
such purpose (currently the corporate trust department of the Trustee, at 101
Barclay Street, Floor 21 West, New York, New York 10286), either (i) the Note,
with the form entitled "Option to Elect Repayment" included in the Note duly
completed, or (ii) a telegram, telex, facsimile transmission or letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the United
States setting forth the name of the holder of the Note, the principal amount
of the Note, the principal amount of the Note to be repaid, the certificate
number or a description of the tenor and terms of the Note, a statement that
the option to elect repayment is being exercised thereby and a guarantee that
the Note to be repaid with the form entitled "Option to Elect Repayment"
included in the Note duly completed will be received by the Paying Agent not
later than five Business Days after the date of such facsimile transmission or
letter and such Note and form duly completed are received by the Paying Agent
by such fifth Business Day. Exercise of such repayment option by the holder
thereof will be irrevocable with respect to each Note for which such repayment
election is made. No transfer or exchange of any Note (or, in the event that
any Note is to be repaid in part, the portion of the Note to be repaid) will
be permitted after exercise of a repayment option. All questions as to the
validity, eligibility (including time of receipt) and acceptance of any Note
for repayment will be determined by the Company, which determination will be
final, binding and non-appealable.
In the case of a Book-Entry Note, the Depository's nominee will be the
holder of such Note and therefore will be the only entity that can exercise a
right to repayment. In order to ensure that the Depository's nominee will
timely exercise a right to repayment with respect to a beneficial owner's
interest in a Book-Entry Note, such beneficial owner must instruct the broker
or other direct or indirect participant through which it holds an interest in
such Note to notify the Depository of its desire to exercise a right to
repayment. Different firms have different cut-off times for accepting
instructions from their customers and, accordingly, each beneficial owner
should consult the broker or other direct or indirect participant through
which it holds an interest in a Book-Entry Note in order to ascertain the cut-
off time by which such an instruction must be given in order for timely notice
to be delivered to the Depository.
The Notes will not have a sinking fund unless otherwise described in the
applicable Pricing Supplement. If agreed to by the initial purchaser of a Note
and the Company, such Note will be subject to redemption at the option of the
Company in accordance with its terms on and after a date, if any, fixed at the
time of sale and set forth in the applicable Pricing Supplement and specified
in the applicable Note ("Initial Redemption Date"). If no Initial Redemption
Date is so specified with respect to a Note, such Note will not be redeemable
prior to its Stated Maturity Date. Unless otherwise specified in the Note and
described in the applicable Pricing Supplement, on and after the Initial
Redemption Date, if any, the related Note will be redeemable at any time in
whole or from time to time in part (provided that the principal amount of the
Note remaining outstanding after a partial redemption is an authorized
denomination) at the option of the Company at the applicable Redemption Price
(as defined below), together with accrued and unpaid interest on the principal
amount to be redeemed to but excluding the date of redemption, on notice given
by the Company or the Trustee to the holder thereof not more than 60 nor less
than 30 days prior to the date of redemption. Unless otherwise specified in
the Note and described in the applicable Pricing Supplement, and except as
otherwise provided below in the case of an Original Issue Discount Note, the
"Redemption Price" will initially be the Initial Redemption Percentage, if
any, specified in the Note and described in the applicable Pricing Supplement,
of the principal amount of such Note to be redeemed and, if the Initial
Redemption Percentage is greater than 100%, the Redemption Price will decline
at each anniversary of the Initial Redemption Date by the Annual Redemption
Percentage Reduction, if any, specified in the Note and described in the
applicable Pricing Supplement, of the principal amount thereof to be redeemed
until the Redemption Price is 100% of such principal amount. Whenever less
than all of the Notes of the Company at any time outstanding are to be
redeemed, the Company will select the particular Notes to be so redeemed,
provided that if less than all the Notes of the Company with identical terms
at any time outstanding are to be redeemed, the Notes to be so redeemed will
be selected by the Trustee by lot or such method as the Trustee considers fair
and appropriate.
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Notwithstanding anything in this Prospectus Supplement to the contrary,
unless otherwise specified in a Note and described in the applicable Pricing
Supplement, if a Note is an Original Issue Discount Note, the amount payable
on such Note in the event of redemption at the option of the Company or
repayment at the option of a holder on an Optional Repayment Date prior to its
Stated Maturity Date shall be the Amortized Face Amount (as defined under
"Payment of Principal and Interest" below) of such Note calculated as of the
date of such redemption or the date of such repayment, as the case may be.
REPURCHASE
The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes so purchased by the Company may be held or resold or, at
the discretion of the Company, may be surrendered to the Trustee for
cancellation.
PAYMENT OF PRINCIPAL AND INTEREST
The principal of, premium, if any, and interest, if any, on each Note are
payable by the Company in U.S. Dollars, unless otherwise specified in a Note
and described in the applicable Pricing Supplement.
Principal of, premium, if any, and interest, if any, on any Certificated
Note will be payable when due upon presentation and surrender of such Note at
the office of the Paying Agent in The City of New York designated for such
purpose (currently the corporate trust department of the Trustee, 101 Barclay
Street, Floor 21 West, New York, New York 10286); provided, however, that
payment of interest, other than interest payable on the Stated Maturity Date
or on the date of redemption or repayment if a Note is redeemed or repaid
prior to maturity (such Stated Maturity Date or date of redemption or
repayment with respect to any Note, as the case may be, being collectively
referred to herein as the "Maturity Date" with respect to the amount of
principal and any premium and interest payable on such date) may be made by
mailing a check to the holder at the address of such holder appearing on the
security register for the Notes at the close of business on the applicable
Regular Record Date (as defined below). Notwithstanding the foregoing, a
holder of $10,000,000 or more in aggregate principal amount of Certificated
Notes having the same Interest Payment Dates (as defined below) shall be
entitled to receive such interest payments in U.S. Dollars by wire transfer of
immediately available funds to an account at a bank in The City of New York
(or other bank consented to by the Paying Agent and the Company) designated by
such holder (provided that such bank has appropriate facilities therefor), but
only if appropriate payment instructions in writing have been received by the
Paying Agent not less than 16 calendar days prior to the applicable Interest
Payment Date. Unless otherwise specified in the applicable Pricing Supplement
(and subject to extension as provided under "Extension of Maturity"), payments
of principal of and any premium and interest on Certificated Notes will be
made on the Maturity Date in immediately available funds, provided that the
Certificated Notes to be paid are presented and surrendered to the Paying
Agent as provided above in time for the Paying Agent to make such payments in
such funds in accordance with its normal procedures. Such payments will be
made by wire transfer to an account at a bank in The City of New York (or
other bank consented to by the Paying Agent and the Company) designated by the
holder of the Notes (provided that such bank has appropriate facilities
therefor), provided that wire transfer instructions in writing have been
received by the Paying Agent not less than 16 calendar days prior to such
Maturity Date. Beneficial owners of Book-Entry Notes will be paid in
accordance with the Depository's and its participants' procedures in effect
from time to time. See "Book-Entry System." If required by applicable law or
instructed by the Company or any governmental agency that taxes or other
governmental charges should be withheld, the Paying Agent shall withhold any
such taxes or other governmental charges on any payments made in connection
with any Note.
Unless otherwise specified in a Note and described in the applicable Pricing
Supplement, if the principal of any Original Issue Discount Note is declared
to be, or automatically becomes, due and payable immediately as described in
the accompanying Prospectus under "Description of Debt Securities--Defaults
and Remedies," the amount of principal due and payable with respect to such
Note shall be the Amortized Face Amount of such Note calculated as of the date
of such acceleration of the maturity of such Note. The "Amortized Face Amount"
of an Original Issue Discount Note as of any date for which a calculation is
being made shall be an amount
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equal to (i) the Issue Price set forth in the applicable Pricing Supplement
plus (ii) the portion of the difference between the Issue Price and the
principal amount of such Note that has accrued at the yield to maturity set
forth in the Pricing Supplement (computed in accordance with generally
accepted United States bond yield computation principles) to the date with
respect to which such calculation is being made, but in no event shall the
Amortized Face Amount of an Original Issue Discount Note exceed its principal
amount.
Interest on any Note will be payable on each date specified on which an
installment of interest is due and payable ("Interest Payment Date") and at
the Maturity Date. Unless otherwise indicated in the applicable Pricing
Supplement and specified in the Note, the Interest Payment Dates for Fixed
Rate Notes will be as described below under "Fixed Rate Notes" and the
Interest Payment Dates for Floating Rate Notes will be determined in the
manner described below under "Floating Rate Notes." Unless otherwise indicated
in the applicable Pricing Supplement and specified in the Note, interest
payable and punctually paid or duly provided for on any Interest Payment Date
will be paid to the person in whose name such Note is registered at the close
of business on the Regular Record Date immediately preceding such Interest
Payment Date; provided, however, that unless otherwise specified in such Note
and the applicable Pricing Supplement the first payment of interest on any
Note with an Original Issue Date between a Regular Record Date and the next
succeeding Interest Payment Date or on an Interest Payment Date will be made
on the Interest Payment Date following the next succeeding Regular Record Date
to the registered holder on such next succeeding Regular Record Date;
provided, further, that interest payable at the Maturity Date will be payable
to the person to whom principal shall be payable. "Regular Record Date" means
the date as of which a Note must be registered in a person's name in order for
such person to receive an interest payment on the next succeeding Interest
Payment Date. Unless otherwise indicated in the applicable Pricing Supplement
and specified in the Note, the Regular Record Date for an Interest Payment
Date will be the fifteenth calendar day (whether or not a Business Day)
immediately preceding such Interest Payment Date.
Unless otherwise specified in a Note and described in the applicable Pricing
Supplement, all percentages resulting from any calculations will be rounded,
if necessary, to the nearest one hundred-thousandth of a percentage point
(with five one-millionths of a percentage point being rounded upward), and all
U.S. Dollar amounts used in or resulting from such calculation shall be
rounded to the nearest cent (with one-half cent being rounded upward).
The interest rate on the Notes will in no event be higher than the maximum
rate permitted by New York law as the same may be modified by United States
law of general application. Under present New York law, the maximum rate of
interest is 25% per annum on a simple interest basis, with certain exceptions.
This limit may not apply to Notes in which $2,500,000 or more has been
invested.
INTEREST RATE
The applicable Pricing Supplement relating to Fixed Rate Notes will
designate a fixed rate of interest per annum (which may be zero in the event
such Notes are Zero Coupon Notes) payable on such Notes. See "Fixed Rate
Notes" and "Zero Coupon Notes" below.
Each Floating Rate Note will bear interest at a rate determined by reference
to an Interest Rate Basis or two or more interest Rate Bases which may be
adjusted in either case by adding or subtracting a Spread ("Spread" is the
number of basis points (one basis point equals one-hundredth of a percentage
point) specified in a Note and described in the applicable Pricing Supplement
as being applicable to the interest rate for such Floating Rate Note), if any,
or by multiplying by the Spread Multiplier ("Spread Multiplier" is the
percentage specified in a Note and described in the applicable Pricing
Supplement as being applicable to the interest rate for such Floating Rate
Note), if any. The "Index Maturity" is the period to maturity of the
instrument or obligation with respect to which the Interest Rate Basis or
Bases will be calculated. A Floating Rate Note may also have either or both of
the following: (i) a maximum limitation, or ceiling, on the rate of interest
which may accrue during any interest period ("Maximum Interest Rate"); and
(ii) a minimum limitation, or floor, on the rate of interest which may accrue
during any interest period ("Minimum Interest Rate").
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The applicable Pricing Supplement relating to Floating Rate Notes will
designate, and each Floating Rate Note will specify, one or more of the
following Interest Rate Bases as applicable to the relevant Note: (a) the
Commercial Paper Rate, in which case such Note will be a Commercial Paper Rate
Note, (b) the Certificate of Deposit Rate (the "CD Rate"), in which case such
Note will be a CD Rate Note; (c) the Federal Funds Rate, in which case such
Note will be a Federal Funds Rate Note; (d) the Prime Rate, in which case such
Note will be a Prime Rate Note; (e) London Interbank Offered Rate ("LIBOR"),
in which case such Note will be a LIBOR Note; (f) the Treasury Rate, in which
case such Note will be a Treasury Rate Note; (g) the CMT Rate, in which case
such Note will be a CMT Note; or (h) such other interest rate basis or formula
as is set forth in such Pricing Supplement. A Floating Rate Note may bear
interest at a rate determined by reference to two or more Interest Rate Bases
(other than the Treasury Rate) and, if so, the applicable Pricing Supplement
will describe the Interest Rate Bases applicable to such Note.
Interest rates, interest rate formulas and other variable terms of a Note
are subject to change by the Company from time to time, but no such change
will affect any Note already issued or as to which an offer to purchase has
been accepted by the Company.
FIXED RATE NOTES
Unless otherwise described in the applicable Pricing Supplement, each Fixed
Rate Note will bear interest (which may be zero in the event such Note is a
Zero Coupon Note) from the Original Issue Date at the rate per annum stated on
the face thereof until the principal thereof is paid or made available for
payment. Unless otherwise specified in the Note and described in the
applicable Pricing Supplement and except as described below under "Extension
of Maturity," interest, to the extent payable, will be payable semiannually on
the "Interest Payment Dates" therefor (which will be on February 15 and August
15 of each year) and on the Maturity Date. Interest will be computed on the
basis of a 360-day year of twelve, 30-day months. Interest payments on a Fixed
Rate Note shall include interest accrued from and including the Original Issue
Date of such Note, or the most recent date to which interest has been paid or
duly provided for, as the case may be, to, but excluding, the related Interest
Payment Date or Maturity Date, as the case may be. If any Interest Payment
Date or Maturity Date for a Fixed Rate Note falls on a day that is not a
Business Day, the related payment of principal, premium, if any, and interest,
if any, will be made on the next succeeding Business Day as if it were made on
the date such payment were due, and no interest will accrue on the amount so
payable for the period from and after such Interest Payment Date or Maturity
Date, as the case may be.
FLOATING RATE NOTES
Each Floating Rate Note will specify and the applicable Pricing Supplement
will describe the Interest Rate Basis or Bases and the Spread and/or Spread
Multiplier, if any, and the Maximum Interest Rate and/or Minimum Interest
Rate, in each case if any, applicable to such Floating Rate Note. In addition,
each Floating Rate Note will specify and the applicable Pricing Supplement
will describe or particularize all applicable variable terms of such Floating
Rate Note. Unless otherwise described in the applicable Pricing Supplement,
each Floating Rate Note will bear interest at the rate or rates per annum
determined in accordance with the interest rate formula so specified therein
and described in the applicable Pricing Supplement from the Original Issue
Date until the principal thereof is paid or made available for payment.
Floating Rate Notes will have daily, weekly, monthly, quarterly, semiannual
or annual resets of the rate of interest (such period applicable to a Note
being the "Interest Reset Period" for such Note, and the first day of each
Interest Reset Period being an "Interest Reset Date"), which will be described
in the applicable Pricing Supplement and specified in the Note. Unless
otherwise so specified, the Interest Reset Date will be, in the case of
Floating Rate Notes which reset daily, each Business Day; in the case of
Floating Rate Notes which reset weekly, Wednesday of each week (with the
exception of weekly reset Treasury Rate Notes which will reset Tuesday of each
week, except as specified below); in the case of Floating Rate Notes which
reset monthly, the third Wednesday of each month; in the case of Floating Rate
Notes which reset quarterly, the third Wednesday of March, June, September and
December; in the case of Floating Rate Notes which reset semiannually, the
third
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Wednesday of the two months specified in such Note and described in the
applicable Pricing Supplement; and in the case of Floating Rate Notes which
reset annually, the third Wednesday of the month specified in such Note and
described in the applicable Pricing Supplement. If any Interest Reset Date for
any Floating Rate Note would otherwise be a day that is not a Business Day,
such Interest Reset Date will be postponed to the next succeeding day that is
a Business Day, except that in the case of a LIBOR Note, if such Business Day
is in the next succeeding calendar month, such Interest Reset Date shall be
the next preceding Business Day.
The interest rate applicable to each Interest Reset Period commencing on the
Interest Reset Date with respect to such Interest Reset Period will be the
rate determined by reference to the Interest Rate Basis or Bases on the
applicable "Interest Determination Date." The Interest Determination Date with
respect to the Commercial Paper Rate, the CD Rate, the Federal Funds Rate, the
Prime Rate and the CMT Rate will be the second Business Day preceding each
Interest Reset Date for the related Note. The Interest Determination Date with
respect to LIBOR will be the second London Business Day preceding each
Interest Reset Date for the related Note. The Interest Determination Date with
respect to the Treasury Rate, unless otherwise specified in the related
Treasury Rate Note, will be the day of the week in which the related Interest
Reset Date falls on which Treasury Bills (as defined under "Treasury Rate"
below) of the applicable Index Maturity are auctioned. Treasury Bills are
normally sold at auction on Monday of each week unless that day is a legal
holiday, in which case the auction is normally held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as a result
of a legal holiday, an auction is so held on the preceding Friday, such Friday
will be the Interest Determination Date for the Interest Reset Date occurring
in the next succeeding week. If an auction date falls on any Interest Reset
Date for a Treasury Rate Note, then such Interest Reset Date will instead be
the first Business Day following such auction date. The Interest Determination
Date for a Floating Rate Note the interest rate of which is determined by
reference to two or more Interest Rate Bases will be the first Business Day
which is at least two Business Days prior to the related Interest Reset Date
for such Note on which each Interest Rate Basis shall be determinable. Each
Interest Rate Basis will be determined on the Interest Determination Date, and
the applicable interest rate shall take effect on the related Interest Reset
Date.
Except as set forth above or in the applicable Pricing Supplement, the
interest rate in effect on each day shall be (i) if such day is an Interest
Reset Date, the interest rate determined as of the Interest Determination Date
immediately preceding such Interest Reset Date or (ii) if such day is not an
Interest Reset Date, the interest rate determined as of the Interest
Determination Date immediately preceding the most recent Interest Reset Date.
Interest on each Floating Rate Note will be payable monthly, quarterly,
semiannually or annually (the "Interest Payment Period"). Except as provided
below or in the applicable Pricing Supplement, interest will be payable in the
case of Floating Rate Notes which reset: (i) daily, weekly or monthly, on the
third Wednesday of each month or on the third Wednesday of March, June,
September and December of each year as specified in such Note and the
applicable Pricing Supplement; (ii) quarterly, on the third Wednesday of
March, June, September and December of each year; (iii) semiannually, on the
third Wednesday of the two months of each year specified in such Note and the
applicable Pricing Supplement; and (iv) annually, on the third Wednesday of
the month of each year specified in such Note and the applicable Pricing
Supplement (each, with respect to Floating Rate Notes, an "Interest Payment
Date") and, in each case, at maturity. If any Interest Payment Date for any
Floating Rate Note (other than the Maturity Date of such Note) would otherwise
be a day that is not a Business Day, such Interest Payment Date will be
postponed to the next day that is a Business Day except, in the case of a
LIBOR Note, if such Business Day is in the next succeeding calendar month,
such Interest Payment Date will be the immediately preceding Business Day. If
the Maturity Date of any Floating Rate Note falls on a day that is not a
Business Day, the related payment of principal, premium, if any, and interest
will be made on the next succeeding Business Day as if it were made on the
date such payment was due, and no interest will accrue on the amounts so
payable for the period from and after such date.
Interest payments on each Interest Payment Date for Floating Rate Notes will
include accrued interest from and including the Original Issue Date, or the
most recent date to which interest has been paid or duly provided for, as the
case may be, to, but excluding, such Interest Payment Date or the Maturity
Date, as the case may be.
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All percentages resulting from any calculation on Floating Rate Notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five-one millionths of a percentage point rounded upwards (e.g., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used
in or resulting from such calculation on Floating Rate Notes will be rounded,
in the case of United States dollars, to the nearest cent, or in the case of a
foreign currency or composite currency, to the nearest unit (with one-half
cent or unit being rounded upwards).
With respect to each Floating Rate Note, accrued interest will be calculated
by multiplying the principal amount thereof by an accrued interest factor.
Such accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which accrued interest is being
calculated. The interest factor (expressed as a decimal) for each such day
will be computed by dividing the interest rate in effect for such day by 360,
in the case of Notes having as their Interest Rate Basis the CD Rate,
Commercial Paper Rate, Federal Funds Rate, LIBOR or the Prime Rate, or by the
actual number of days in the year, in the case of Notes having as their
Interest Rate Basis the Treasury Rate or the CMT Rate. The interest rate in
effect on each day will be (a) if such day is an Interest Reset Date, the
interest rate with respect to the Interest Determination Date pertaining to
such Interest Reset Date, or (b) if such day is not an Interest Reset Date,
the interest rate with respect to the Interest Determination Date pertaining
to the next preceding Interest Reset Date, subject in either case to any
Maximum Interest Rate or Minimum Interest Rate limitation and to any
adjustment by a Spread and/or Spread Multiplier; provided, however, that the
interest rate in effect for the period from the Original Issue Date to the
initial Interest Reset Date ("Initial Interest Reset Rate") will be the rate
specified as such in the Floating Rate Note ("Initial Interest Rate").
Unless otherwise specified in a Floating Rate Note and described in the
applicable Pricing Supplement, the Trustee will be the Calculation Agent with
respect to each Floating Rate Note. The Calculation Agent is currently located
at 101 Barclay Street, New York, New York 10286 (telephone number: (212) 815-
5375; facsimile number: (212) 815-5915). Upon request of the holder of any
Floating Rate Note, the Calculation Agent will provide the interest rate then
in effect and, if determined, the interest rate that will become effective on
the next Interest Reset Date with respect to such Floating Rate Note. Any such
calculation by the Calculation Agent shall, absent manifest error, be
conclusive and binding for all purposes.
The "Calculation Date," if applicable, pertaining to any Interest
Determination Date will be the earlier of (i) the tenth calendar day after
such Interest Determination Date, or, if such day is not a Business Day, the
next succeeding Business Day or (ii) the Business Day immediately preceding
the applicable Interest Payment Date or Maturity Date, as the case may be.
CD RATE
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "CD Rate" means, with respect to any Interest
Determination Date relating to a CD Rate Note or any Interest Determination
Date for a Floating Rate Note for which one of the Interest Rate Bases is the
CD Rate (a "CD Rate Interest Determination Date"), the rate on such date for
negotiable certificates of deposit having the Index Maturity described in the
applicable Pricing Supplement as published by the Board of Governors of the
Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates" or any successor publication of the Board of Governors of the Federal
Reserve System ("H.15(519)") under the heading "CDs (Secondary Market)" or, if
not so published by 3:00 p.m., New York City time, on the Calculation Date
pertaining to such CD Rate Interest Determination Date, the CD Rate will be
the rate on such CD Rate Interest Determination Date for negotiable
certificates of deposit of the Index Maturity described in the applicable
Pricing Supplement as published by the Federal Reserve Bank of New York in its
daily statistical release "Composite 3:30 p.m. Quotations for U.S. Government
Securities" or any successor publication of the Federal Reserve Bank of New
York ("Composite Quotations") under the heading "Certificates of Deposit." If
such rate is not yet published in either H.15(519) or Composite Quotations by
3:00 p.m., New York City time, on the Calculation Date pertaining to such CD
Rate Interest Determination Date, then the CD Rate for such CD Rate Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates, as of
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approximately 10:00 a.m., New York City time, on such CD Rate Interest
Determination Date, of three leading nonbank dealers (which, unless otherwise
described in the applicable Pricing Supplement, may include an affiliate of
the Calculation Agent or an Agent) in negotiable U.S. Dollar certificates of
deposit in The City of New York selected by the Calculation Agent, for
negotiable certificates of deposit of major United States money center banks
(in the market for negotiable certificates of deposit) with a remaining
maturity closest to the Index Maturity designated in the Pricing Supplement in
a denomination of U.S. $5,000,000; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the CD Rate will be the CD Rate determined with respect to the
immediately preceding CD Rate Interest Determination Date or, in the case of
the first CD Rate Interest Determination Date, the Initial Interest Rate.
CD Rate Notes and other Notes are not deposit obligations of a bank and are
not insured by the Federal Deposit Insurance Corporation.
COMMERCIAL PAPER RATE
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "Commercial Paper Rate" means, with respect to any
Interest Determination Date relating to a Commercial Paper Rate Note or any
Interest Determination Date for a Floating Rate Note for which one of the
Interest Rate Bases is the Commercial Paper Rate (a "Commercial Paper Rate
Interest Determination Date"), the Money Market Yield (as defined below) of
the rate on such date for commercial paper having the Index Maturity described
in the applicable Pricing Supplement as published in H.15(519) under the
caption "Commercial Paper--Non-financial." In the event that such rate is not
so published prior to 3:00 p.m., New York City time, on the Calculation Date
pertaining to such Commercial Paper Rate Interest Determination Date, then the
Commercial Paper Rate will be the Money Market Yield of the rate on such
Commercial Paper Rate Interest Determination Date for commercial paper of the
Index Maturity described in the applicable Pricing Supplement as published in
Composite Quotations under the heading "Commercial Paper." If by 3:00 p.m.,
New York City time, on the Calculation Date pertaining to such Commercial
Paper Rate Interest Determination Date such rate is not yet published in
either H.15(519) or Composite Quotations, the Commercial Paper Rate for such
Commercial Paper Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates, as of approximately 11:00 a.m., New York City time, on such
Commercial Paper Rate Interest Determination Date, of three leading dealers of
commercial paper (which, unless otherwise described in the applicable Pricing
Supplement, may include an affiliate of the Calculation Agent or an Agent) in
The City of New York selected by the Calculation Agent, for commercial paper
having the Index Maturity described in the applicable Pricing Supplement
placed for a non-financial entity whose bond rating is "AA" or its equivalent,
from a nationally recognized securities rating organization; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting as mentioned in this sentence, the Commercial Paper Rate will
be the Commercial Paper Rate determined with respect to the immediately
preceding Commercial Paper Rate Interest Determination Date or, in the case of
the first Commercial Paper Rate Interest Determination Date, the Initial
Interest Rate.
"Money Market Yield" shall be a yield (expressed as a percentage rounded, if
necessary, to the nearest one hundred-thousandth of a percentage point)
calculated in accordance with the following formula:
D X 360
MONEY MARKET YIELD = -------------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
FEDERAL FUNDS RATE
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "Federal Funds Rate" means, with respect to any Interest
Determination Date relating to a Federal Funds Rate Note or
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any Interest Determination Date for a Floating Rate Note for which one of the
Interest Rate Bases is the Federal Funds Rate (a "Federal Funds Rate Interest
Determination Date"), the rate on such date for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)" or, if not so
published by 3:00 p.m., New York City time, on the Calculation Date pertaining
to such Federal Funds Rate Interest Determination Date, the Federal Funds Rate
will be the rate on such Federal Funds Rate Interest Determination Date for
Federal Funds as published in Composite Quotations under the heading "Federal
Funds/Effective Rate." If such rate is not yet published in either H.15(519)
or Composite Quotations by 3:00 p.m., New York City time, on the Calculation
Date pertaining to such Federal Funds Rate Interest Determination Date, the
Federal Funds Rate for such Federal Funds Rate Interest Determination Date
will be calculated by the Calculation Agent and will be the arithmetic mean of
the rates, as of approximately 9:00 a.m., New York City time, on such Federal
Funds Rate Interest Determination Date, for the last transaction in overnight
Federal Funds arranged by three leading brokers of Federal Funds transactions
in The City of New York selected by the Calculation Agent; provided, however,
that if the brokers selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, the Federal Funds Rate will be the
Federal Funds Rate determined with respect to the immediately preceding
Federal Funds Rate Interest Determination Date or, in the case of the first
Federal Funds Rate Interest Determination Date, the Initial Interest Rate.
PRIME RATE
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "Prime Rate" means, with respect to any Interest
Determination Date relating to a Prime Rate Note or any Interest Determination
Date for a Floating Rate Note for which one of the Interest Rate Bases is the
Prime Rate (a "Prime Rate Interest Determination Date"), the rate on such date
for the Prime Rate as published in H.15(519) under the heading "Bank Prime
Loan." In the event that such rate is not so published prior to 3:00 p.m., New
York City time, on the Calculation Date pertaining to such Prime Rate Interest
Determination Date, the Prime Rate will be the arithmetic mean of the rates of
interest publicly announced by each bank that appears on the Reuters Screen
USPRIME1 Page (as defined below) as such bank's prime rate or base lending
rate as in effect for such Prime Rate Interest Determination Date. If fewer
than four such rates appear on the Reuters Screen USPRIME1 Page for such Prime
Rate Interest Determination Date, then the Prime Rate shall be the arithmetic
mean, as calculated by the Calculation Agent, of the prime rates quoted on the
basis of the actual number of days in the year divided by 360 as of the close
of business on such Prime Rate Interest Determination Date by four major money
center banks in The City of New York selected by the Calculation Agent (after
consultation with the Company). If fewer than four quotations are so provided,
the Prime Rate will be calculated by the Calculation Agent (as described
above) on the basis of the prime rates quoted by the major money center banks
so selected and the prime rates quoted in The City of New York by the
appropriate number of substitute banks or trust companies organized and doing
business under the laws of the United States, or any state thereof, each
having total equity capital of at least $500 million and being subject to
supervision or examination by a Federal or state authority, selected by the
Calculation Agent (after consultation with the Company) to quote such rate or
rates; provided, however, that if the banks or trust companies selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Prime Rate will be the Prime Rate determined with respect to the
immediately preceding Prime Rate Interest Determination Date or, in the case
of the first Prime Rate Interest Determination Date, the Initial Interest
Rate.
"Reuters Screen USPRIME1 Page" means the display designated as page
"USPRIME1" on the Reuter Monitor Money Rates Service (or such other page as
may replace the USPRIME1 page on that service for the purpose of displaying
prime rates or base lending rates of major United States banks).
LIBOR
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "LIBOR" will be determined by the Calculation Agent in
accordance with the following provisions:
(i) With respect to any Interest Determination Date relating to a LIBOR
Note or any Interest Determination Date for a Floating Rate Note for which
one of the Interest Rate Bases is LIBOR ("LIBOR
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Interest Determination Date"), LIBOR will be, as specified in the Note and
described in the applicable Pricing Supplement, the arithmetic mean of the
offered rates, as calculated by the Calculation Agent, for deposits in the
Designated LIBOR Currency (as defined below) of not less than U.S.
$1,000,000 (or the equivalent thereof in one or more other currencies)
having the Index Maturity described in the applicable Pricing Supplement,
commencing on the second London Business Day immediately following such
LIBOR Interest Determination Date, which appear on the Designated LIBOR
Page (as defined below) as of approximately 11:00 a.m., London time, on
such LIBOR Interest Determination Date, if at least two such offered rates
appear on the Designated LIBOR Page. If fewer than two offered rates appear
on the Designated LIBOR Page, LIBOR in respect of that LIBOR Interest
Determination Date will be determined as if the parties had specified the
rate described in (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear on the Designated LIBOR Page as described in
(i) above, the Calculation Agent shall request the principal London offices
of each of four major reference banks (which may include affiliates of the
Agents) in the London interbank market selected by the Calculation Agent to
provide the Calculation Agent with a quotation of the rate at which
deposits in the Designated LIBOR Currency for the period of the Index
Maturity described in the applicable Pricing Supplement, commencing on the
second London Business Day immediately following such LIBOR Interest
Determination Date, are offered by it to prime banks in the London
interbank market as of approximately 11:00 a.m., London time, on such LIBOR
Interest Determination Date and in a principal amount equal to an amount of
not less than U.S. $1,000,000 (or the equivalent thereof in one or more
other currencies) that is representative for a single transaction in such
market at such time. If at least two such quotations are provided, LIBOR in
respect of such LIBOR Interest Determination Date will be the arithmetic
mean of such quotations as calculated by the Calculation Agent. If fewer
than two quotations are provided, LIBOR for such LIBOR Interest
Determination Date will be the arithmetic mean (rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point) of the rates
quoted as of approximately 11:00 a.m., New York City time, on such LIBOR
Interest Determination Date by three major banks (which may include
affiliates of the Agents) in The City of New York selected by the
Calculation Agent (after consultation with the Company) for loans in the
Designated LIBOR Currency to leading European banks, having the Index
Maturity described in the applicable Pricing Supplement commencing on the
second London Business Day immediately following such LIBOR Interest
Determination Date and in a principal amount equal to an amount of not less
than U.S. $1,000,000 (or the equivalent thereof in one or more other
currencies) that is representative for a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
will be the LIBOR determined with respect to the immediately preceding
LIBOR Interest Determination Date or, in the case of the first LIBOR
Interest Determination Date, the Initial Interest Rate.
As used herein the following terms have the following definitions:
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Pricing Supplement, the display on the Reuters Monitor Money
Rates Service (or any successor service) on the page specified in such
Pricing Supplement (or any other page as may replace such page on such
service) for the purpose of displaying the London interbank rates of major
banks for the Designated LIBOR Currency, or (b) if "LIBOR Telerate" is
specified in the applicable Pricing Supplement or neither "LIBOR Reuters"
nor "LIBOR Telerate" is specified in the applicable Pricing Supplement as
the method for calculating LIBOR, the display on the Dow Jones Markets
Limited (or any successor service) on the page specified in such Pricing
Supplement (or any other page as may replace such page on such service), or
if no such page is specified the applicable page, for the purpose of
displaying the London interbank rates of major banks for the Designated
LIBOR Currency.
"Designated LIBOR Currency" means the currency or composite currency
specified in the applicable Pricing Supplement as to which LIBOR shall be
calculated or, if no such currency or composite currency is specified in
the applicable Pricing Supplement, U.S. Dollars.
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TREASURY RATE
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "Treasury Rate" means, with respect to any Interest
Determination Date relating to a Treasury Rate Note (a "Treasury Rate Interest
Determination Date"), the rate for the most recent auction of direct
obligations of the United States ("Treasury Bills") having the Index Maturity
described in the applicable Pricing Supplement, as such rate is
published in H.15(519) under the heading "U.S. Government Securities--Treasury
Bills--auction average (investment)," or if not so published by 3:00 p.m., New
York City time, on the Calculation Date relating to such Treasury Rate
Interest Determination Date, the Treasury Rate will be the auction average
rate (expressed as a bond equivalent, on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) as otherwise announced by
the United States Department of the Treasury. In the event that the results of
the auction of Treasury Bills having the Index Maturity described in the
applicable Pricing Supplement are not published or announced as described
above by 3:00 p.m., New York City time, on such Calculation Date, or if no
such auction is held in a particular week, then the Treasury Rate for such
Treasury Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean (rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point) of the secondary
market bid rates, as of approximately 3:30 p.m., New York City time, on such
Treasury Rate Interest Determination Date, of three leading primary United
States government securities dealers (which, unless otherwise described in the
applicable Pricing Supplement, may include an affiliate of the Calculation
Agent or an Agent) selected by the Calculation Agent (after consultation with
the Company), for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity described in the applicable Pricing Supplement;
provided, however, that if the dealers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Treasury
Rate will be the Treasury Rate determined with respect to the immediately
preceding Treasury Rate Interest Determination Date or, in the case of the
first Treasury Rate Interest Determination Date, the Initial Interest Rate.
CMT RATE
Unless otherwise specified in such Note and described in the applicable
Pricing Supplement, "CMT Rate" means, with respect to any Interest
Determination Date relating to a CMT Note or any Interest Determination Date
for a Floating Rate Note for which one of the Interest Rate Bases is the CMT
Rate (a "CMT Rate Interest Determination Date"), the rate that appears on the
Designated CMT Telerate Page (as defined below) under the caption
"....Treasury Constant Maturities ... Federal Reserve Board Release
H.15(519)... Monday Approximately 3:45 p.m.," under the column for the
Designated CMT Maturity Index (as defined below) for (i) such CMT Rate
Interest Determination Date, if the Designated CMT Telerate Page is 7055, or
(ii) the week, or the month, as applicable, ended immediately preceding the
week in which such CMT Rate Interest Determination Date occurs, if the
Designated CMT Telerate Page is 7052. In the event such rate is not displayed
on the applicable page by 3:00 p.m., New York City time, on the Calculation
Date pertaining to such CMT Rate Interest Determination Date, the CMT Rate for
such CMT Rate Interest Determination Date will be the treasury constant
maturity rate on such CMT Rate Interest Determination Date for the Designated
CMT Maturity Index as published in H.15(519) under the heading "Treasury
Constant Maturities." If by 3:00 p.m., New York City time, on the Calculation
Date pertaining to such CMT Rate Interest Determination Date such rate is not
published in H.15(519), the CMT Rate for such CMT Rate Interest Determination
Date will be the treasury constant maturity rate for the Designated CMT
Maturity Index (or other United States treasury rate for the Designated CMT
Maturity Index if the treasury constant maturity rate is not published) with
respect to such date as published by either the Board of Governors of the
Federal Reserve System or the United States Department of the Treasury that
the Calculation Agent determines to be comparable to the rate previously
displayed on the Designated CMT Telerate Page or published in H.15(519). If
such rate is not so published by 3:00 p.m., New York City time, on the
Calculation Date pertaining to such CMT Rate Interest Determination Date, then
the CMT Rate for such CMT Rate Interest Determination Date will be calculated
by the Calculation Agent and will be a yield to maturity, based on the
arithmetic mean of the secondary market offered rates as of approximately 3:30
p.m., New York City time, on such CMT Rate Interest Determination Date of
three leading primary United States
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government securities dealers (which, unless otherwise described in the
Prospectus Supplement, may include an affiliate of the Calculation Agent or an
Agent) (each, a "Reference Dealer") in The City of New York selected by the
Calculation Agent (such three Reference Dealers to be selected from a pool of
five Reference Dealers selected by the Calculation Agent (after consultation
with the Company), with the Reference Dealers providing the highest quotation
(or, in the event of equality, one of the highest) and the lowest quotation
(or, in the event of equality, one of the lowest) being eliminated), for the
most recently issued direct noncallable fixed rate obligations of the United
States ("Treasury Notes") with an original maturity of approximately the
Designated CMT Maturity Index and a remaining term to maturity of not less
than such Designated CMT Maturity Index minus one year. If the Calculation
Agent is unable to obtain three such Treasury Note quotations, the CMT Rate
for such CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offered rates as of approximately 3:30 p.m., New York
City time, on such CMT Rate Interest Determination Date of three Reference
Dealers in The City of New York (such three Reference Dealers to be selected
from a pool of five References Dealers selected by the Calculation Agent
(after consultation with the Company), with the Reference Dealers providing
the highest quotation (or, in the event of equality, one of the highest) and
the lowest quotation (or, in the event of equality, one of the lowest) being
eliminated) for Treasury Notes with an original maturity of the number of
years that is the next highest to the Designated CMT Maturity Index and a
remaining term to maturity closest to the Designated CMT Maturity Index and in
an amount of at least $100 million. If at least three (but not five) of such
Reference Dealers are quoting as described above, then the CMT Rate will be
based on the arithmetic mean of the offer side prices obtained as provided in
the preceding sentence and neither the highest nor the lowest of such quotes
will be eliminated; provided however, that if at least three Reference Dealers
selected by the Calculation Agent (after consultation with the Company), are
not quoting as described in this sentence, the CMT Rate will be the CMT Rate
determined with respect to the immediately preceding CMT Rate Interest
Determination Date or, in the case of the first CMT Rate Interest
Determination Date, the Initial Interest Rate. If two Treasury Notes with an
original maturity as described in the second preceding sentence have remaining
terms to maturity equally close to the Designated CMT Maturity Index, the
Calculation Agent will obtain from the Reference Dealers selected in the
manner described quotations for the Treasury Note with the shorter remaining
term to maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones Markets
Limited (or any successor service) on the page specified in the applicable
Pricing Supplement for the purpose of displaying "Treasury Constant
Maturities" as reported in H.15(519) (or any other page as may replace such
page on such service for the purpose of displaying "Treasury Constant
Maturities" as reported in H.15(519)). If no such page is specified in the
applicable Pricing Supplement, the Designated CMT Telerate Page shall be 7052.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified
in the applicable Pricing Supplement with respect to which the CMT Rate will
be calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be 2 years.
ZERO COUPON NOTES
Each Zero Coupon Note will be offered at a substantial discount from its
principal amount at maturity. There will be no periodic payments of interest
with respect to a Zero Coupon Note. The calculation of the accrual of Original
Issue Discount (the difference between the Issue Price and the principal
amount at maturity of a Zero Coupon Note) in the period during which a Zero
Coupon Note remains outstanding will be on a semiannual bond equivalent basis
using a 360-day year composed of twelve 30-day months. Upon maturity, Original
Issue Discount will cease to accrue on a Zero Coupon Note. Each Zero Coupon
Note will set forth, among other things, the Original Issue Date, the Issue
Price, the yield to maturity, and the amount of Original Issue Discount
applicable to such Note. If a bankruptcy proceeding is commenced in respect of
the Company, the claim of the holder of a Zero Coupon Note is, under Title 11
of the United States Code, limited to the Amortized Face Amount of such Zero
Coupon Note calculated as of the date of commencement of the proceeding.
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OTHER/ADDITIONAL PROVISIONS; ADDENDUM
Any provisions with respect to the Notes, including the specification and
determination of one or more Interest Rate Bases, the calculation of the
interest rate applicable to a Floating Rate Note, the Interest Payment Dates,
the Maturity Date or any other term relating thereto, may be modified and/or
supplemented as specified under "Other/Additional Provisions" on the face
thereof or in an Addendum relating thereto, if so specified on the face
thereof. Such provisions will be described in the applicable Pricing
Supplement.
AMORTIZING NOTES
The Company may from time to time offer Notes with the amount of principal
thereof and interest thereon payable in installments over the term of such
Notes ("Amortizing Notes"). Unless otherwise specified in the applicable
Pricing Supplement, interest on each Amortizing Note will be computed on the
basis of a 360-day year of twelve 30-day months. Payments with respect to
Amortizing Notes will be applied first to interest due and payable thereon and
then to the reduction of the unpaid principal amount thereof. Further
information concerning additional terms and provisions of Amortizing Notes
will be specified in the applicable Pricing Supplement, including a table
setting forth repayment information for such Amortizing Notes.
EXTENSION OF MATURITY
Each Note will specify and the Pricing Supplement relating to each Note will
describe whether the Company has the option to extend the Stated Maturity Date
of such Note for one or more whole year periods (each an "Extension Period")
up to but not beyond the date (the "Final Maturity Date") specified in such
Note and described in such Pricing Supplement and the basis or formula, if
any, for setting the interest rate or the Spread and/or Spread Multiplier, if
any, as the case may be, applicable to any such Extension Period.
The Company may exercise such option with respect to a Note by notifying the
Trustee of such exercise at least 45 but not more than 60 days prior to the
Stated Maturity Date of such Note in effect prior to the exercise of such
option (the "Original Stated Maturity Date"). No later than 40 days prior to
the Original Stated Maturity Date, the Trustee will mail to the holder of such
Note a notice (the "Extension Notice") relating to such Extension Period, by
first class mail, postage prepaid, setting forth (i) the election of the
Company to extend the Stated Maturity Date of such Note, (ii) the new Stated
Maturity Date, (iii) in the case of a Fixed Rate Note, the interest rate
applicable to the Extension Period or, in the case of a Floating Rate Note,
the Spread and/or Spread Multiplier, if any, applicable to the Extension
Period, (iv) the provisions, if any, for redemption at the option of the
Company during the Extension Period, including the date or dates on which or
the period or periods during which and the price or prices at which such
redemption may occur during the Extension Period and (v) in the case of a Note
that is subject to repayment at the option of the Holder hereof, the
provisions, if any, for repayment of this Note at the option of the Holder on
the Original Stated Maturity Date for such Note, the price at which such
repurchase shall occur, and the period within which such Note, with the
"Option to Elect Repayment" form completed, must be surrendered to the Paying
Agent. Upon the mailing by the Trustee of an Extension Notice to the holder of
a Note, the Stated Maturity Date of such Note shall be extended automatically
as set forth in the Extension Notice, and except as modified by the Extension
Notice and as described in the next paragraph, such Note will have the same
terms as prior to the mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to the Original
Stated Maturity Date for a Note, the Company may, at its option, revoke the
interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, provided for in the Extension
Notice and establish a higher interest rate, in the case of a Fixed Rate Note,
or a higher Spread and/or Spread Multiplier in the case of a Floating Rate
Note, for the Extension Period by mailing or causing the Trustee to mail
notice of such higher interest rate or higher Spread and/or Spread Multiplier,
as the case may be, first class mail, postage prepaid, to the holder of such
Note. Such notice shall be irrevocable. All Notes with identical terms with
respect to which the Stated Maturity Date is extended will bear such higher
interest rate, in the case of a Fixed Rate Note, or higher Spread and/or
Spread Multiplier, as the case may be, in the case of a Floating Rate Note,
for the Extension Period.
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INDEXED NOTES
If any Note is not to be denominated in U.S. Dollars, certain provisions
with respect thereto will be set forth in an applicable Pricing Supplement
which will specify the currency or currencies, including composite currencies
such as the European Currency Unit ("ECU"), in which the principal, premium,
if any, and interest, if any, with respect to such Note are to be paid, along
with any other terms relating to the non-U.S. Dollar denomination.
Notes may be issued with the amount of principal, premium and/or interest
payable in respect thereof to be determined with reference to the price or
prices of specified commodities or stocks, to the exchange rate of one or more
designated currencies (including a composite currency such as the ECU)
relative to an indexed currency or to other price(s) or exchange rate(s)
("Indexed Notes"), in each case as specified in the applicable Pricing
Supplement. In certain cases, Holders of Indexed Notes may receive a principal
payment on the Maturity Date that is greater than or less than the principal
amount of such Indexed Notes depending upon the relative value on the Maturity
Date of the specified indexed item. Information as to the method for
determining the amount of principal, premium, if any, and/or interest, if any,
payable in respect of Indexed Notes, certain historical information with
respect to the specified indexed item and certain additional risks and
material tax considerations associated with an investment in Indexed Notes
will be specified in the applicable Pricing Supplement.
BOOK-ENTRY SYSTEM
The Notes may be issued in whole or in part as Book-Entry Notes represented
by a Global Security (as defined in the accompanying Prospectus) deposited
with, or on behalf of, the Depository and registered in the name of the
Depository or a nominee of the Depository. Unless otherwise specified in the
applicable Pricing Supplement, DTC will be the Depository.
So long as the Depository for a Global Security, or a nominee of the
Depository, is the registered owner of the Global Security, the Depository or
its nominee, as the case may be, will be considered the sole owner or holder
of the Book-Entry Notes represented by such Global Security for all purposes
under the Indenture. Except as provided below, owners of beneficial interests
in Book-Entry Notes represented by a Global Security will not be considered
the owners or holders thereof under the Indenture, will not be entitled to
have Book-Entry Notes represented by such Global Security registered in their
names and will not be entitled to physical delivery of Notes in certificated
form evidencing their respective beneficial interests therein. A Global
Security may not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository or by the Depository or any nominee to a
successor of the Depository of a nominee of such successor.
Payments of principal of and any premium and interest on Book-Entry Notes
represented by a Global Security registered in the name of the Depository or
its nominee will be made to the Depository or its nominee, as the case may be,
as the registered owner of the Global Security. Neither the Company, the
Trustee, any Paying Agent nor the Registrar will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in Book-Entry Notes represented by a
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
The Company expects that the Depository or its nominee, upon receipt of any
payment of principal, premium, if any, or interest, if any, in respect of a
Global Security, will credit immediately participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security as shown on the records of such
Depository or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in Book-Entry Notes represented
by such Global Security held through such participants will be governed by
standing customer instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
participants.
If the Depository with respect to any Global Security is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days of such time, the
Company will issue Certificated Notes in exchange for each Book-Entry Note
represented by such Global
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Security. In addition, the Company may at any time and in its sole discretion
determine not to have the Notes represented by a Global Security and, in such
event, will issue Certificated Notes in exchange for the Book-Entry Notes
represented by such Global Security. In either instance, an owner of a
beneficial interest in a Book-Entry Note will be entitled to have a
Certificated Note or Notes equal in principal amount to such beneficial
interest registered in its name and will be entitled to physical delivery of
such Note or Notes.
DTC has advised the Company and the Agents as follows: DTC is a limited-
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC was created to hold securities for persons that have
accounts with DTC ("participants") and to facilitate the clearance and
settlement of securities transactions among its participants in such
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movements of
securities certificates. DTC's participants include securities brokers and
dealers (including the Agents), banks, trust companies, clearing corporations,
and certain other organizations, some of whom (and/or their representatives)
own DTC. Access to DTC's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly.
Persons who are not participants may beneficially own securities held by DTC
only through participants.
DTC has also advised the Company and the Agents that, upon the issuance by
the Company of Book-Entry Notes represented by a Global Security, DTC will
credit on its book-entry registration and transfer system the respective
principal amounts of the Book-Entry Notes represented by such Global Security
to the accounts of participants. The accounts to be credited shall be
designated by the applicable Agent or by the Company if such Notes are offered
and sold directly by the Company. Ownership of beneficial interests in Book-
Entry Notes represented by a Global Security registered in the name of DTC or
its nominee will be limited to participants or persons that may hold interests
through participants. Ownership of beneficial interests in Book-Entry Notes
represented by a Global Security registered in the name of DTC or its nominee
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by DTC or its nominee (with respect to beneficial
interests of participants), or by participants or persons that may hold
interests through participants (with respect to beneficial interests of
persons other than participants). The laws of some states may require that
certain purchasers of securities take physical delivery of such securities in
certificated form. Such limits and such laws may impair the ability to
transfer beneficial interests in Book-Entry Notes.
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CERTAIN UNITED STATES TAX CONSIDERATIONS
UNITED STATES HOLDERS
The following is a summary of certain United States federal income tax
considerations that may be relevant to a holder of a Note that is a United
States person (as defined in the Code), or that otherwise is subject to United
States federal income taxation on a net income basis in respect of a Note.
This summary is based on laws, regulations, rulings and decisions now in
effect, all of which are subject to change. This summary deals only with
holders that will hold Notes as capital assets and does not address tax
considerations applicable to investors that may be subject to special tax
rules, such as financial institutions, tax-exempt organizations, insurance
companies or dealers in securities or currencies, or persons that will hold
Notes as a position in a "straddle" or as part of a hedging transaction for
tax purposes. This summary does not include a discussion of tax consequences
to holders of any Note in which principal, premium, if any, and interest, if
any, with respect to such Note are to be paid in a Specified Currency or which
is an Indexed Note. Additional United States federal income tax considerations
applicable to particular Notes may be set forth in the applicable Pricing
Supplement.
Investors should consult their own tax advisors in determining the tax
consequences to them of holding and disposing of Notes, including the
application to their particular situation of the tax considerations discussed
below, as well as the application of state, local, foreign or other tax laws.
Payments of Interest. Payments of Qualified Stated Interest (as defined
below) on a Note will be taxable to a holder as ordinary interest income at
the time that such payments are accrued or are received (in accordance with
the holder's method of tax accounting). In general, Qualified Stated Interest
is stated interest which is unconditionally payable in cash or property (other
than debt instruments of the issuer) at least annually at a single fixed rate.
(For a special rule in the case of Floating Rate Notes, see below.)
Purchase, Sale and Retirement of Notes. A holder's tax-basis in a Note
generally will equal the cost of such Note to such holder, increased by any
amounts includible in income by the holder as original issue discount (and
accrued market discount, if any, if the holder has included such market
discount in income) and reduced by any amortized premium (each as described
below) and any payments other than payments of Qualified Stated Interest made
on such Note.
Upon the sale, exchange or retirement of a Note, a holder generally will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale, exchange or retirement (less any accrued and unpaid
interest, which will be taxable as such) and the holder's tax basis in the
Note.
Except as otherwise discussed below, gain or loss recognized by certain
noncorporate holders on the sale, exchange or retirement of a Note could be
taxed at a rate lower than ordinary income. Different tax rates may be
applicable to such taxpayers based upon the period that such Note was held
(for one year or less, for more than one year but not more than eighteen
months, for more than eighteen months, and for certain taxpayers in taxable
years beginning after December 31, 2000, for more than five years). The
distinction between capital gain or loss and ordinary income is also relevant
for purposes of, among other things, the limitation on the deductibility of
capital losses.
Original Issue Discount. Holders of Original Issue Discount Notes generally
will be subject to the special tax accounting rules for original issue
discount obligations provided by the Code and certain Treasury Regulations
issued on January 27, 1994 (the "OID Regulations"). Holders of such Notes
should be aware that, as described in greater detail below, they generally
must include original issue discount in ordinary gross income for United
States federal income tax purposes as it accrues, in advance of the receipt of
cash attributable to that income.
For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Note over its issue
price, if such excess equals or exceeds a de minimus amount (generally 1/4 of
1% of the Note's stated redemption price at maturity multiplied by the number
of complete years to its maturity from its issue date). The issue price of an
issue of Notes equals the first price at which a substantial
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amount of such Notes has been sold. The stated redemption price at maturity of
a Note is the sum of all payments provided by the Note other than payments of
Qualified Stated Interest. In addition, under the OID Regulations, if a Note
bears interest for one or more accrual periods at a rate below the rate
applicable for the remaining term of such Note (e.g., Notes with teaser rates
or interest holidays), and if the greater of either the resulting foregone
interest on such Note or any "true" discount on such Note (i.e., the excess of
the Note's stated principal amount over its issue price) equals or exceeds a
specified de minimis amount, then part or all of the stated interest on the
Note would be treated entirely as original issue discount rather than
Qualified Stated Interest.
In general, each holder of an Original Issue Discount Note, whether such
holder uses the cash or the accrual method of tax accounting, will be required
to include in ordinary gross income the sum of the "daily portions" of
original issue discount on that Note for all days during the taxable year on
which the holder owns the Note. The daily portions of original issue discount
on an Original Issue Discount Note are determined by allocating to each day in
any accrual period a ratable portion of the original issue discount allocable
to that accrual period. An accrual period may be any length of time, and the
lengths may vary during the time the Note is outstanding, so long as no
accrual period is greater than one year and provided that each scheduled
payment of principal or interest occurs either on the final day of an accrual
period or on the first day of an accrual period. In the case of an initial
holder, the amount of original issue discount on an Original Issue Discount
Note allocable to each accrual period is determined by (i) multiplying the
"adjusted issue price" (as defined below) of the Note by the yield to maturity
of the Note (as adjusted for the length of the accrual period) and (ii)
subtracting from that product the amount, if any, of Qualified Stated Interest
allocable to that accrual period.
The "adjusted issue price" of an Original Issue Discount Note at the
beginning of any accrual period will generally be the sum of its issue price
and the amount of original issue discount allocable to all prior accrual
periods, reduced by the amount of all payments other than payments of
Qualified Stated Interest, if any, made with respect to such Note in all prior
accrual periods. As discussed above, in order to determine the amount of
original issue discount allocable to an accrual period, the adjusted issue
price of an Original Issue Discount Note will be multiplied by the Note's
yield to maturity (as adjusted for the length of the accrual period). As a
result of this "constant yield" method of including original issue discount
into income, the amounts so includible in income by a holder, in respect of an
Original Issue Discount Note, are generally lesser in the early years and
greater in the later years than the amounts that would be includible on a
straight-line basis.
In the case of Floating Rate Notes, special rules apply. Such a Note will
qualify as a "variable rate debt instrument" if it (i) has an issue price
which does not exceed the total noncontingent principal payments by more than
an amount equal to the lesser of (a) .015 multiplied by the product of the
total noncontingent principal payments and the number of complete years to the
Floating Rate Note's maturity from its issue date or (b) 15 percent of the
total noncontingent principal payments; (ii) provides for stated interest,
paid or compounded at least annually, at current values of (a) one or more
qualified floating rates, (b) a single fixed rate and one or more qualified
floating rates, (c) a single fixed rate and a single objective rate that is a
qualified inverse floating rate or (d) a single objective rate. A floating
rate is a qualified floating rate if variations in the rate can reasonably be
expected to measure contemporaneous variations in the cost of newly borrowed
funds in the currency in which the Floating Rate Note is denominated. A
multiple of a qualified floating rate is generally not a qualified floating
rate, except that a multiple greater than .65 and not more than 1.35 is
permissible (and the product can be decreased or increased by a fixed rate).
An objective rate is a rate (other than a qualified floating rate) that is
determined using a single fixed formula and that is based on objective
financial or economic information (i.e., an objective rate generally includes
a rate that is based on one or more qualified floating rates or on the yield
of actively traded personal property (within the meaning of Section 1092(d)(1)
of the Code), unless the rate is based on information that is within the
control of the issuer (or certain related parties) or that is unique to the
circumstances of the issuer (or certain related parties), such as dividends,
profits, or the value of the issuer's stock). A qualified inverse floating
rate is an objective rate in which (i) the rate is equal to a fixed rate minus
a qualified floating rate and (ii) variations in the rate can reasonably be
expected to inversely reflect contemporaneous variations in the cost of newly
borrowed funds. The fact that a Floating Rate Note has a Maximum Interest Rate
or a Minimum Interest Rate will not affect the qualification of such Floating
Rate Note
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as a "variable rate debt instrument" if such Maximum or Minimum Interest Rates
are fixed throughout the term of the debt instruments, or such Maximum or
Minimum Interest Rates are not reasonably expected as of the issue date to
cause the yield on the Note to be significantly more or less than the yield
would be without the restriction of the Maximum or Minimum Interest Rate. The
OID Regulations also provide that if a Floating Rate Note provides for stated
interest at a fixed rate for an initial period of less than one year followed
by a variable rate that is either a qualified floating rate or an objective
rate and if the variable rate on the Floating Rate Note's issue date is
intended to approximate the fixed rate (e.g., the value of the variable rate
on the issue date does not differ from the value of the fixed rate by more
than 25 basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
If a Floating Rate Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, then
any stated interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually will
constitute Qualified Stated Interest and will be taxed accordingly. Thus, a
Floating Rate Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
and that qualifies as a "variable rate debt instrument" under the OID
Regulations will generally not be treated as having been issued with original
issue discount unless the Floating Rate Note is issued at a "true" discount
(i.e., at a price below the Note's stated principal amount) in excess of a
specified de minimis amount. Original issue discount on such a Floating Rate
Note arising from "true" discount is allocated to an accrual period using the
constant yield method described above.
In general, any other Floating Rate Note that qualifies as a "variable rate
debt instrument" will be deemed to be converted into an "equivalent" fixed
rate debt instrument for purposes of determining the amount and accrual of
original issue discount and Qualified Stated Interest on the Floating Rate
Note. The OID Regulations generally require that such a Floating Rate Note be
treated as converted into an "equivalent" fixed rate debt instrument by
substituting any qualified floating rate or qualified inverse floating rate
provided for under the terms of the Floating Rate Note with a fixed rate equal
to the value of the qualified floating rate or qualified inverse floating
rate, as the case may be, as of the Floating Rate Note's issue date. Any
objective rate (other than a qualified inverse floating rate) provided for
under the terms of the Floating Rate Note is converted into a fixed rate that
reflects the yield that is reasonably expected for the Floating Rate Note. In
the case of a Floating Rate Note that qualifies as a "variable rate debt
instrument" and provides for stated interest at a fixed rate in addition to
either one or more qualified floating rates or a qualified inverse floating
rate, the fixed rate is initially converted into a qualified floating rate (or
a qualified inverse floating rate, if the Floating Rate Note provides for a
qualified inverse floating rate). Under such circumstances, the qualified
floating rate or qualified inverse floating rate that replaces the fixed rate
must be such that the fair market value of the Floating Rate Note as of the
Floating Rate Note's issue date is approximately the same as the fair market
value of an otherwise identical debt instrument that provides for either the
qualified floating rate or qualified inverse floating rate rather than the
fixed rate. Subsequent to converting the fixed rate into either a qualified
floating rate or a qualified inverse floating rate, the Floating Rate Note is
then treated as converted into an "equivalent" fixed rate debt instrument in
the manner described above.
Once the Floating Rate Note is deemed converted into an "equivalent" fixed
rate debt instrument pursuant to the foregoing rules, the amount of original
issue discount and Qualified Stated Interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a United
States holder of the Floating Rate Note will account for such original issue
discount and qualified stated interest as if the United States holder held the
"equivalent" fixed rate debt instrument. Each accrual period appropriate
adjustments will be made to the amount of qualified stated interest or
original issue discount assumed to have been accrued or paid with respect to
the "equivalent" fixed rate debt instrument in the event that such amounts
differ from the actual amount of interest accrued or paid on the Floating Rate
Note during the accrual period.
If a Floating Rate Note does not qualify for the above treatment, then the
Note will be an Original Issue Discount Note and the interest on such Note
will be treated as contingent interest. Contingent interest is generally
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includible in income over time based on a projected payment schedule and the
issuer's cost of capital for fixed rate debt instruments, and gain or loss
from the sale, exchange or retirement of a Note providing for contingent
interest will generally be treated as ordinary gain or loss. The regulations
governing contingent interest are quite complex, and the application of these
regulations to particular Notes may be set forth in the applicable Pricing
Supplement.
A subsequent holder of an Original Issue Discount Note that does not
purchase the Note at a cost which exceeds its stated redemption price at
maturity, reduced by the amount of any payment made on the Note prior to the
date of purchase other than payments of Qualified Stated Interest, also
generally will be required to include in gross income the daily portions of
original issue discount, calculated as described above. However, if the
subsequent holder acquires the Original Issue Discount Note at a lower yield
to maturity than the yield of the Note for original issue discount purposes
with respect to the initial holder of the Note, the subsequent holder may
reduce its periodic inclusions of original issue discount income to reflect
the lower yield to maturity of the Note.
In general, an individual or other cash method holder of an Original Issue
Discount Note that matures one year or less from the date of its issuance (a
"short-term Original Issue Discount Note") is not required to accrue original
issue discount for United States federal income tax purposes unless an
election is made to do so. United States holders who report income for federal
income tax purposes on the accrual method and certain other holders, including
banks and dealers in securities, are required to include original issue
discount on such short-term Original Issue Discount Notes on a straight-line
basis, unless an election is made to accrue the original issue discount
according to a constant interest method based on daily compounding. In the
case of a holder who is not required, and does not elect, to include original
issue discount in income currently, any gain realized on the sale, exchange or
retirement of the short-term Original Issue Discount Note will be ordinary
income to the extent of the original issue discount accrued on a straight-line
basis (or, if elected, according to a constant interest method based on daily
compounding) through the date of sale, exchange or retirement. In addition,
such non-electing holders which are not subject to the current inclusion
requirement described in this paragraph will be required to defer deductions
for any interest paid on indebtedness incurred or continued to purchase or
carry such short-term Original Issue Discount Notes in an amount not exceeding
the deferred interest income, until such deferred interest income is realized.
If any Note is issued with Optional Repayment Dates, the yield and maturity
on the Note will be calculated by assuming that the Note will be repaid on the
first Optional Repayment Date if such repayment would increase the yield on
the Note. If the Note is deemed to be repaid on the first Optional Repayment
Date, but is not in fact repaid on such date, then for purposes of calculating
original issue discount, a new Note will be deemed issued on such date for the
Note's adjusted issue price on such date, and the rules outlined in this and
the previous sentence will apply with respect to al subsequent Optional
Repayment Dates.
If any Note is issued with multiple redemption dates, the yield and maturity
on such Note will be calculated by assuming that the Note will be redeemed on
the Initial Redemption Date if such redemption would decrease the yield on the
Note. If the Note is deemed to be redeemed on the Initial Redemption Date, but
is not in fact redeemed on such date, then for purposes of calculating
original issue discount, a new Note will be deemed issued on such date for the
Note's adjusted issue price on such date, and the rules outlined in this and
the previous sentence will apply with respect to all subsequent redemption
dates.
If any Note is subject to an Extension Period, then the yield and maturity
on such Note shall be calculated by deeming the Final Maturity Date to be the
Stated Maturity Date of the Note and treating the Original Stated Maturity
Date as being the date on which the Company has a call option on the Note.
Such call option will be deemed to be exercised on the Original Stated
Maturity Date if, and only if, by utilizing the Original Stated Maturity Date
as the Maturity Date and the redemption price on such date as the stated
redemption price at maturity, the yield to maturity of the Note is lower than
it would be if the Note were not redeemed on such date. If the Note is deemed
to be repaid on the Original Stated Maturity Date and is not in fact repaid on
such date, then for purposes of calculating original issue discount a new Note
will be deemed issued on the Original Stated
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Maturity Date for the Note's adjusted issue price on such date and the rules
outlined in this and the previous sentence will apply with respect to all
subsequent maturity dates. If the deemed call option is not considered to be
exercised, the option to extend shall be presumed to be exercised.
Premium and Market Discount. A holder of a Note that purchases the Note at a
cost greater than the sum of all amounts payable on the Note after the
purchase (other than payments of Qualified Stated Interest) will be considered
to have purchased the Note at a premium and may amortize such premium, using a
constant yield method, over the remaining term of the Note.
If a holder of a Note purchases the Note at a price that produces a yield to
maturity higher than the yield to maturity at which such Note first was
issued, the Note generally will be considered to bear "market discount" in the
hands of such holder. In such case, the gain realized by the holder on the
sale or retirement of the Note generally will be treated as ordinary income to
the extent of the market discount that accrued on the Note while held by such
holder, unless such holder elected to accrue market discount into income
currently. In general terms, market discount on a Note will be treated as
accruing ratably over the term of such Note, or, at the election of the
holder, under a constant yield method. In addition, a portion of the interest
expense incurred or continued to purchase or carry a Note with market discount
may be deferred unless the holder elects to accrue market discount into income
currently.
The OID Regulations provide for an election whereby a holder may choose to
treat all stated interest, original issue discount, and market discount as
original issue discount.
Treatment of Certain Interest. The treatment to a holder of income from an
Original Issue Discount Note may be affected by a provision of the Omnibus
Budget Reconciliation Act of 1989. To the extent this provision applies to an
Original Issue Discount Note and the holder of such Note is a corporation,
then solely for purposes of the deduction allowed by the Code to corporations
for dividends received from a domestic corporation, all or a portion of the
original issue discount from such Note may be treated as a dividend to such
holder. For this provision to apply (i) the maturity date of a debt instrument
must be more than 5 years from the date of issue, (ii) the yield to maturity
on such instrument must equal or exceed the sum of (A) the applicable federal
rate in effect under Section 1274(d) of the Code for the calendar month in
which the obligation is issued, plus (B) 5 percentage points, and (iii) such
instrument must have "significant original issue discount." A debt instrument
will be treated as having "significant original issue discount" if (i) the
aggregate amount which would be includible in gross income with respect to
such instrument for periods before the close of any accrual period ending
after the date five years after the date of issue exceeds (ii) the sum of (A)
the aggregate amount of interest to be paid under the instrument before the
close of such accrual period, and (B) the product of the issue price of such
instrument and its yield to maturity. For purposes of applying this provision
to a debt instrument, any payment under the instrument will be assumed to be
made on the last day permitted under such instrument. The specific application
of this provision to an Original Issue Discount Note will depend upon the
terms of such Note.
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below:
(i) payments of principal and interest, including premium or original
issue discount ("Discount") on an Original Issue Discount Note, made by the
Company or any of its paying agents on a Note to any holder that is a
corporation, individual, fiduciary or partnership that is, as to the United
States, a foreign corporation, a nonresident alien individual, a
nonresident fiduciary of a foreign estate or trust, or a foreign
partnership (a "United States Alien") will not be subject to United States
withholding tax, provided that in the case of Discount or interest, (a) the
holder does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of the Company entitled to
vote, (b) the holder is not a controlled foreign corporation that is
related to the Company through stock ownership, (c) the holder is not a
bank receiving interest described in Section 881(c)(3) of the Code, and (d)
either (1) the beneficial owner of the Note certifies to the Company or its
agent, under penalties of perjury, that it is not a United States
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person (as defined in the Code) and provides its name and address or (2) a
securities clearing organization, bank or other financial institution that
holds customers' securities in the ordinary course of its trade or business
(a "financial institution"), and holds the Note on behalf of the beneficial
owner, certifies to the Company or its agent, under penalties of perjury,
that such a certification from the beneficial owner has been received by it
or by a financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof;
(ii) a holder of a Note who is a United States Alien will not be subject
to United States federal income tax on gain realized on the sale, exchange
or retirement of the Note, unless (a) such gain is derived within the
United States and such holder is an individual who is present in the United
States for 183 days or more during the taxable year in which the gain
occurred or (b) such gain is effectively connected with a United States
trade or business of such holder; and
(iii) a Note held by an individual who at the time of death is not a
citizen or resident of the United States (as defined in the Code) will not
be subject to United States federal estate tax as a result of such
individual's death if the individual does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock
of the Company entitled to vote and, at the time of the individual's death,
payments with respect to the Note would not have been effectively connected
to the conduct of a trade or business by the individual in the United
States.
If a United States Alien is engaged in a trade or business in the United
States and interest, including Discount, on the Note is effectively connected
with the conduct of such trade or business, the United States Alien, although
exempt from the withholding tax discussed in the preceding paragraph, may be
subject to United States income tax on such interest and Discount in the same
manner as if it were a United States holder. In addition, if such a holder is
a foreign corporation, it may be subject to a branch profits tax equal to 30%
of its effectively connected earnings and profits for the taxable year,
subject to adjustments. For this purpose, interest, including Discount, on a
Note will be included in earnings and profits if such interest and Discount is
effectively connected with the conduct by the United States Alien of a trade
or business in the United States.
Notwithstanding the above, certain contingent interest will be taxable to
non-resident alien individuals and foreign corporations unless such interest
is subject to a treaty exemption. For this purpose, subject to certain
exceptions, interest is deemed to be contingent if the amount of interest is
determined by reference to:
1. any receipts, sales or other cash flow of the issuer or a related
person;
2. any income or profits of the issuer or a related person;
3. any change in value of any property of the issuer or a related person;
or
4. any dividend, partnership distribution or similar payments made by the
issuer or a related person.
A "related person" for this purpose includes not only persons who would be
related under the rules of Section 267(b) and Section 707(b)(1) of the Code,
but also anyone who is a party to any arrangement undertaken for a tax
avoidance purpose. In addition, the Internal Revenue Service (the "IRS") may
designate in regulations other types of contingent interest which will fall
under the scope of this law.
Also, a Note providing only for contingent interest will be considered
situated within the United States for estate tax purposes, and will thus be
included in a decedent's gross estate. If a Note provides for both contingent
and non-contingent interest, an appropriate portion of the value of such an
instrument, as determined in a manner prescribed by the IRS, will be treated
as property within the United States and will thus be included in a decedent's
gross estate. Until regulations are issued to provide guidance as to the
proper method for determining the appropriate portion of such an instrument
that is to be treated as situated in the United States, taxpayers will be
permitted to use any reasonable method for making such determination.
The exact scope of the law relating to contingent interest Notes remains to
be determined by regulations. Prospective holders of Notes are urged to
consult their personal tax advisors with respect to the scope of the law.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
Payments of principal (including Discount, if any) of and any premium and
interest on a Note made within the United States by the Company or a Paying
Agent are generally subject to information reporting and possibly to "backup
withholding" at a rate of 31%. Information reporting and "backup withholding"
generally do not apply to payments to certain "exempt recipients" such as
corporations. Also, information reporting and backup withholding do not apply
to payments of principal (including Discount, if any) of and any premium and
interest on a Note made outside the United States by the Company or a Paying
Agent if the certification described in clause (i) (d) under "Non-United
States Holders" is received, provided in each case that the payor does not
have actual knowledge that the holder is a United States person.
Payment of the proceeds from the sale of a Note to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding, except that, if the broker is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50% or more of whose gross income is from a United States trade or
business, information reporting and possibly backup withholding will apply to
such payments unless such broker has documentary evidence in its files of the
owner's foreign status and has no actual knowledge to the contrary (or the
owner otherwise establishes an exemption from information reporting and backup
withholding). Payment of the proceeds from the sale of a Note to or through
the United States office of a broker is subject to information reporting and
backup withholding unless the holder or beneficial owner certifies as to its
United States Alien status or otherwise establishes an exemption from
information reporting and backup withholding.
NEW WITHHOLDING REGULATIONS
On October 6, 1997, the U.S. Treasury Department issued new regulations (the
"New Regulations") which make certain modifications to the withholding, backup
withholding and information reporting rules described above. The New
Regulations attempt to unify certification requirements and modify reliance
standards. The New Regulations are generally effective for payments made after
December 31, 1998, subject to certain transition rules. Prospective investors
are urged to consult their own tax advisors regarding the New Regulations.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis by the Company through
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Credit Suisse First Boston Corporation, Lehman Brothers, Lehman Brothers Inc.
or Salomon Brothers Inc (each an "Agent" and together the "Agents"). The
Company reserves the right to sell Notes through agents other than the Agents
subject to the terms of the Distribution Agreement between the Company and the
Agents. The Company will pay the applicable Agent a commission which,
depending on the maturity of the Notes and the rating assigned to the Notes by
nationally recognized statistical rating agencies, will range from .125% to
.925% of the principal amount or, in the case of an Original Issue Discount
Note, the Issue Price of any Note of the Company sold through such Agent. The
Company may sell the Notes to each of the Agents, as principal, at a discount
for their own account or for resale to investors or other purchases at varying
prices related to prevailing market prices at the time of resale, to be
determined by such Agent or, if so agreed, at a fixed public offering price.
In addition, the Agents may offer the Notes they have purchased as principal
to other dealers. The Agents may sell Notes to any dealer at a discount and,
unless otherwise specified in an applicable Pricing Supplement, such discount
allowed to any dealer will not be in excess of the discount to be received by
such Agent from the Company. Unless otherwise indicated in an applicable
Pricing Supplement, any Note sold to an Agent as principal will be purchased
by such Agent at a price equal to 100% of the principal amount thereof less a
percentage of the principal amount equal to the commission applicable to an
agency sale of a Note of identical maturity. An Agent may sell Notes it has
purchased from the Company as principal to certain dealers less a concession
equal to all or any portion of the discount received in connection with such
purchase. Such Agent may allow, and such dealers may reallow, a discount to
certain other dealers. After the initial offering of Notes, the offering price
(in the case of Notes to be resold on a fixed offering price basis), the
concession and the reallowance may be changed.
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The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and, in its sole discretion, may accept or reject orders
in whole or in part whether placed directly with Company or through an Agent.
Each Agent will have the right, in its discretion reasonably exercised, to
reject any offer to purchase Notes received by it, in whole or in part.
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in The City of New York, on the date of
settlement.
In connection with an offering of Notes purchased by one or more Agents as
principal(s) on a fixed price offering basis, such Agent(s) will be permitted
to engage in certain transactions that stabilize the price of Notes. Such
transactions may consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of Notes. If the Agent creates or the Agents
create, as the case may be, a short position in Notes, i.e., if it sells or
they sell Notes in an aggregate principal amount exceeding that set forth in
the applicable Pricing Supplement, such Agent(s) may reduce that short
position by purchasing Notes in the open market. In general, purchases of
Notes for the purpose of stabilization or to reduce a short position could
cause the price of Notes to be higher than it might be in the absence of such
purchases.
Neither the Company nor any of the Agents makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described in the immediately preceding paragraph may have on the
price of Notes. In addition, neither the Company nor any of the Agents makes
any representation that the Agents will engage in any such transactions or
that such transactions, once commenced, will not be discontinued without
notice.
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Credit Suisse First Boston Corporation, Lehman Brothers Inc. and Salomon
Brothers Inc and certain affiliates thereof engage in transactions with and
perform services for the Company and the Parent and certain of their
subsidiaries in the ordinary course of business.
The Company has agreed to indemnify the Agents against, or to contribute to
payments the Agents may be required to make in respect of, certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended. The Agents may be deemed to be underwriters within the meaning of
such Act. The Company has agreed to reimburse the Agents for certain expenses.
The Agents may engage in transactions with or perform services for the Company
in the ordinary course of business.
The Agents may from time to time purchase and sell Notes in the secondary
market, but they are not obligated to do so, and there can be no assurance
that there will be a secondary market for the Notes of the Company or
liquidity in the secondary market if one develops. From time to time, the
Agents may make a market in the Notes.
The Company has reserved the right to sell Notes directly to investors in
those jurisdictions where it is authorized to do so.
S-26
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JANUARY 22, 1998
PROSPECTUS
TCI COMMUNICATIONS, INC.
DEBT SECURITIES
TELE-COMMUNICATIONS, INC.
SERIES PREFERRED STOCK
DEPOSITARY SHARES
TELE-COMMUNICATIONS, INC. SERIES A TCI GROUP COMMON STOCK
TCI Communications, Inc., a Delaware corporation (the "Company"), and Tele-
Communications, Inc., a Delaware corporation (the "Parent" or "TCI"), as the
case may be, from time to time may offer the following: (i) debentures, notes,
bonds or other evidences of indebtedness of the Company (the "Debt
Securities"), (ii) shares of the Series Preferred Stock, par value $.01 per
share, of the Parent (the "Series Preferred Stock"), which may be issued in the
form of depositary shares ("Depositary Shares") evidenced by depositary
receipts, (iii) shares of the Parent's Tele-Communications, Inc. Series A TCI
Group Common Stock, par value $1.00 per share (the "Series A TCI Group Common
Stock") (Debt Securities, Series Preferred Stock, Depositary Shares and Series
A TCI Group Common Stock in respect of which this Prospectus is being delivered
are collectively referred to as the "Offered Securities"), or any combination
of the foregoing, at an aggregate initial offering price not to exceed $3
billion (or the equivalent thereof denominated in one or more foreign
currencies, foreign currency units or composite currencies) at prices and on
terms to be determined at the time of sale and to be set forth in supplements
to this Prospectus.
The Debt Securities may be offered as convertible Debt Securities
("Convertible Debt Securities") which, unless previously redeemed or otherwise
purchased, will be convertible at any time during the conversion period
specified in a supplement to this Prospectus into shares of Series A TCI Group
Common Stock. Debt Securities may be issued as Original Issue Discount
Securities to be sold at a substantial discount below their principal amount
and, if issued, certain terms thereof will be set forth in a supplement to this
Prospectus. The Debt Securities may be issued in registered form without
coupons attached ("Registered Debt Securities"), in bearer form with or without
coupons attached ("Bearer Debt Securities") and in the form of one or more
global securities ("Global Securities"). See "Description of Debt Securities."
Bearer Debt Securities will be offered only to non-United States persons
(subject to certain exceptions) and to branches, located outside the United
States, of certain United States financial institutions. See "Description of
Debt Securities--Limitations on Issuance of Bearer Debt Securities." The Debt
Securities may be offered as separate series in amounts, at prices and on terms
to be determined at the time of sale and set forth in a supplement to this
Prospectus. Series Preferred Stock may be issued as a series of convertible
Series Preferred Stock which, unless previously redeemed or otherwise
purchased, will be convertible at any time during the conversion period
specified in a supplement to this Prospectus into shares of Series A TCI Group
Common Stock. Series Preferred Stock may be offered as separate series in
amounts, at prices and on terms to be determined at the time of sale and set
forth in a supplement to this Prospectus. See "Description of Series Preferred
Stock." If the Parent elects to issue fractional interests in shares of a
series of Series Preferred Stock, such fractional interests will be represented
by Depositary Shares evidenced by depositary receipts, each Depositary Share
equivalent to a fractional interest in a share of such series of Series
Preferred Stock. See "Description of Depositary Shares." Shares of Series A TCI
Group Common Stock may be offered in amounts, at market prices prevailing at
the time of sale or at prices and on terms to be determined at or prior to the
time of sale and set forth in a supplement to this Prospectus. See "Description
of Parent Capital Stock--Common Stock."
Certain terms of the Offered Securities in respect of which this Prospectus
is being delivered will be set forth in an accompanying supplement to this
Prospectus (a "Prospectus Supplement"). In the case of Debt Securities, the
Prospectus Supplement will include, where applicable, the specific designation
(including whether senior, senior subordinated or subordinated and whether
convertible), aggregate principal amount, maturity (which may be fixed or
extendible), interest rate or rates (which may be fixed or variable), if any,
and time of payment of interest, if any, authorized denominations, currency or
currencies in which principal, premium, if any, and interest are payable,
initial conversion price or conversion rate and any specific terms relating to
the adjustment thereof that are in addition to or different from those
described herein, the period during which any convertible Debt Securities may
be converted, any terms for a sinking fund or for redemption, purchase or
exchange at the option of the Company or the holder (including the form or
method of payment, which may include cash, Debt Securities of another series or
other forms of consideration), the terms of any guarantee of any Debt
Securities by the Parent, any covenants or events of default that are in
addition to or different from those described herein, the designation and
qualification (to the extent not already designated and qualified and described
herein) of any trustee with respect to the Debt Securities, and any other
specific terms of the Debt Securities, and the terms of the offer and sale
thereof. In the case of Series Preferred Stock, the Prospectus Supplement will
include the designation, the number of shares being offered, the initial public
offering price, any redemption provisions, any conversion rights, the
liquidation preference per share, the dividend rate (or method of calculation
thereof), dates on which dividends shall be payable and dates from which
dividends shall accrue, and the terms of the offering and sale thereof. In the
case of Depositary Shares, the Prospectus Supplement will include the
designation of the Series Preferred Stock represented thereby, the fraction of
a share of such Series Preferred Stock represented by each Depositary Share,
the number of Depositary Shares offered, the name of the depositary and the
terms of the offering and sale thereof. In the case of Series A TCI Group
Common Stock, the Prospectus Supplement will include the number of shares being
offered, the initial public offering price and terms of the offering and sale
thereof.
The Company or the Parent may sell Offered Securities to or through
underwriters or dealers designated from time to time, which may be a group of
underwriters represented by one or more managing underwriters. In addition, the
Offered Securities may be sold directly by the Company to other purchasers or
through agents. See "Plan of Distribution." The names of any such underwriters,
dealers, managing underwriters, purchasers or agents involved in the sale of
the Offered Securities in respect of which this Prospectus is being delivered,
the amounts of Offered Securities, if any, to be purchased by such persons, the
purchase price of the Offered Securities sold, the proceeds to the Company or
the Parent from such sale, and the compensation, if any, of such underwriters,
dealers, managing underwriters, purchasers or agents will be set forth in the
Prospectus Supplement. The Company and the Parent reserve the sole right to
accept and, together with their agents, from time to time, to reject in whole
or in part any proposed purchase of the Offered Securities to be made directly
or through agents. See "Plan of Distribution" for possible indemnification
arrangements for agents, dealers and underwriters.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by the Prospectus Supplement applicable to the Offered
Securities being sold.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The date of this Prospectus is January , 1998.
<PAGE>
AVAILABLE INFORMATION
The Company and the Parent have filed with the Securities and Exchange
Commission (the "Commission"), Washington, D.C., a registration statement on
Form S-3 (Registration No. 333- ) (together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to the Offered Securities, the
shares of Series A TCI Group Common Stock that may be issuable upon conversion
of any convertible Debt Securities or Series Preferred Stock and the
guarantees that may be issued by the Parent in respect of Debt Securities.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information
pertaining to the Company, the Parent, the Offered Securities, and the
guarantees of the Parent offered hereby, reference is made to the Registration
Statement. Statements contained herein concerning the provisions of any
document are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in
its entirety by such reference.
Each of the Company and the Parent is subject to the information
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy statements,
information statements and other information with the Commission. Such
reports, proxy statements, information statements and other information filed
with the Commission under the Exchange Act by the Company and/or the Parent
can be inspected and copied at the public reference facilities maintained by
the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the
Commission: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and
at 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains a site on the World Wide Web that contains reports, proxy
and information statements and other information regarding registrants
(including the Company and the Parent) that file electronically with the
Commission. The address of the Commission's Web site is http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission by the Company
(File No. 0-5550) and by the Parent (File No. 0-20421) and are incorporated
into this Prospectus by reference and made a part hereof:
1. The Annual Report on Form 10-K of the Parent for the fiscal year ended
December 31, 1996, as amended by Form 10-K/A (Amendment No.1).
2. The Annual Report on Form 10-K of the Company for the fiscal year
ended December 31, 1996, as amended by Form 10-K/A (Amendment No.1).
3. The Quarterly Reports on Form 10-Q of the Parent for the quarterly
periods ended March 31, 1997, June 30, 1997 and September 30, 1997, as
amended by Form 10-Q/A (Amendment No. 1).
4. The Quarterly Reports on Form 10-Q of the Company for the quarterly
periods ended March 31, 1997, June 30, 1997 and September 30, 1997.
5. The Current Reports on Form 8-K of the Parent dated January 22, 1997,
March 5, 1997, August 28, 1997 and September 9, 1997.
6. The Current Reports on Form 8-K of the Company dated January 22, 1997,
March 11, 1997 and September 22, 1997.
7. The financial statements and notes thereto of "VII Cable" which appear
in the Current Report on Form 8-K of the Parent, dated June 19, 1996.
2
<PAGE>
All documents filed by the Company and/or the Parent with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date hereof and prior to the termination of the offering of the securities
offered hereby shall be deemed to be incorporated herein by reference and to
be a part hereof from the respective dates of the filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such previous
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company and the Parent will provide without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents incorporated by reference herein, other than certain exhibits to
such documents (unless such exhibits are specifically incorporated by
reference into the documents that this Prospectus incorporates). Such requests
should be addressed to Stephen M. Brett, Esq., Executive Vice President of TCI
Communications, Inc. and Executive Vice President and General Counsel of Tele-
Communications, Inc., Terrace Tower II, 5619 DTC Parkway, Englewood, Colorado
80111-3000; telephone (303) 267-5500.
3
<PAGE>
THE COMPANY AND THE PARENT
The Company is one of the largest providers of cable television services in
the United States. The Company, through its subsidiaries and affiliates,
operates cable television systems throughout the continental United States and
Hawaii. The Parent owns all of the common stock of the Company.
The Parent, through its subsidiaries (including the Company) and affiliates,
is principally engaged in the construction, acquisition, ownership and
operation of cable television systems and in the provision of satellite-
delivered video entertainment, information and home shopping programming
services to various distribution media, principally cable television systems.
The Parent also has investments in cable and telecommunications operations and
television programming in certain international markets, as well as
investments in companies and joint ventures involved in developing and
providing programming for new television and telecommunications technologies.
The Parent is organized into four principal business groups: Domestic Cable
and Communications; Programming; International Cable and Programming; and
Technology/Venture Capital.
Both the Company and the Parent are Delaware corporations. The executive
offices of the Company and the Parent are located at Terrace Tower II, 5619
DTC Parkway, Englewood, Colorado 80111-3000; telephone (303) 267-5500. Unless
the context indicates otherwise and except as used in the discussion under the
caption "Description of Debt Securities," the "Company" means TCI
Communications, Inc. and its consolidated subsidiaries and the "Parent" means
Tele-Communications, Inc. and its consolidated subsidiaries.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Securities, together with
internally generated funds, may be used (i) to repay, redeem or repurchase
outstanding indebtedness of the Company or the Parent, as the case may be;
(ii) for general operations of the Company or the Parent, as the case may be,
including acquisitions, capital expenditures and working capital requirements;
or (iii) for such other purposes as may be specified in the Prospectus
Supplement. All or a portion of such proceeds received by the Company or the
Parent, as the case may be, may be advanced to affiliates of the Company or
the Parent, as the case may be, in the form of dividends, loans or as a
contribution to capital, as applicable.
A brief description of any indebtedness to be repaid with the proceeds of
the Offered Securities will be set forth in the Prospectus Supplement.
The amount of the Company's future capital expenditures for cable television
operations will be determined by acquisitions of additional cable television
systems, contractual obligations under existing franchises, expansions of
existing systems through rebuilds and upgrades, technological developments and
various other economic factors and market conditions. Specific plans,
arrangements or agreements, written or oral, with respect to any material
acquisitions by the Company by merger or otherwise, or with respect to any
material disposition of assets by the Company, if any, will, to the extent not
disclosed in a document incorporated by reference herein, be disclosed in the
Prospectus Supplement.
Pending application of the net proceeds to the foregoing uses, the net
proceeds will be added to the Company's working capital and invested in short-
term interest-bearing obligations. Such investments will be subject to
fluctuating interest rates which may be lower than the rates applicable to the
Offered Securities.
The Company may borrow additional funds from time to time from public and
private sources on both a long-term and short-term basis and may sell
commercial paper to fund its future capital and working capital requirements
in excess of internally generated funds. Certain of such borrowings may rank
senior in right of payment to the indebtedness represented by the Offered
Securities but only if such Offered Securities are not "Senior Debt
Securities." See "Description of Debt Securities."
4
<PAGE>
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Company. The ratio of earnings to combined fixed charges and preferred stock
dividends of the Company was 1.21, 1.22 and 1.00 for the years ended December
31, 1994, 1993 and 1992, respectively, and 1.01 for the nine months ended
September 30, 1997. The ratio of earnings to combined fixed charges and
preferred stock dividends of the Company was less than 1.00 for the years
ended December 31, 1996 and 1995, and for the nine months ended September 30,
1996; thus, earnings available for combined fixed charges and preferred stock
dividends were inadequate to cover combined fixed charges and preferred stock
dividends for such periods. The amounts of the coverage deficiencies were $394
million and $170 million for the years ended December 31, 1996 and 1995,
respectively, and $366 million for the nine months ended September 30, 1996.
For the ratio calculations, earnings available for combined fixed charges and
preferred stock dividends consists of earnings (losses) before income taxes
plus fixed charges (minus capitalized interest and preferred stock dividend
requirements of the Company), distributions from and losses of less than 50%-
owned affiliates with debt not guaranteed by the Company (net of earnings not
distributed of less than 50%-owned affiliates), minority interests in earnings
(losses) of consolidated subsidiaries, the elimination of preferred stock
dividend requirements of consolidated subsidiaries to 50%-owned affiliates,
and preferred stock dividend requirements of 50%-owned affiliates, other than
dividends payable to the Company. Combined fixed charges and preferred stock
dividends consist of (i) interest (including capitalized interest) on debt,
including interest related to debt guaranteed by the Company of less than 50%-
owned affiliates where the investment in such affiliates results in the
recognition of a loss, (ii) the elimination of interest of consolidated
subsidiaries to 50%-owned affiliates, (iii) the Company's proportionate share
of interest of 50%-owned affiliates, (iv) that portion of rental expense the
Company believes to be representative of interest (one-third of rental
expense), (v) amortization of debt expense, (vi) that portion of minority
interests in earnings (losses) of consolidated subsidiaries that represent the
amount of pretax earnings that would be required to cover preferred stock
dividend requirements of consolidated subsidiaries, (vii) that portion of
minority interests in earnings (losses) of consolidated subsidiaries that
represents dividend requirements on Company-obligated mandatorily redeemable
preferred securities of subsidiary trusts holding solely subordinated debt
securities of a subsidiary, (viii) the amount of pretax earnings that would be
required to cover preferred stock dividend requirements of the Company, (ix)
the elimination of preferred stock dividend requirements of consolidated
subsidiaries to 50%-owned affiliates, and (x) the preferred stock dividend
requirements of 50%-owned affiliates, other than dividends payable to the
Company. The Company has guaranteed the debt of certain less than 50%-owned
affiliates and certain unaffiliated entities in which it has an interest.
Fixed charges of $13 million, $5 million, $5 million, $14 million and $3
million relating to such guarantees for the years ended December 31, 1996,
1995, 1994, 1993 and 1992, respectively, and fixed charges of $10 million and
$3 million relating to such guarantees for the nine months ended September 30,
1997 and 1996, respectively, have not been included in fixed charges because
the investment in such entity does not result in the recognition of a loss and
it is not probable that the Company will be required to honor the guarantee.
Parent. The ratio of earnings to combined fixed charges and preferred stock
dividends of the Parent was 1.44, 1.17, 1.22 and 1.00 for the years ended
December 31, 1996, 1994, 1993 and 1992, respectively, and 1.21 for the nine
months ended September 30, 1997. The ratio of earnings to combined fixed
charges and preferred stock dividends of the Parent was less than 1.00 for the
year ended December 31, 1995 and for the nine months ended September 30, 1996;
thus, earnings available for combined fixed charges and preferred stock
dividends were inadequate to cover combined fixed charges and preferred stock
dividends for such periods. The amounts of the coverage deficiencies were $246
million for the year ended December 31, 1995 and $503 million for the nine
months ended September 30, 1996. For the ratio calculations, earnings
available for combined fixed charges and preferred stock dividends consists of
earnings (losses) before income taxes plus fixed charges (minus capitalized
interest and preferred stock dividend requirements of the Parent),
distributions from and losses of less than 50%-owned affiliates with debt not
guaranteed by the Parent (net of earnings not distributed of less than 50%-
owned affiliates), minority interests in earnings (losses) of consolidated
subsidiaries, the elimination of preferred stock dividend requirements of
consolidated subsidiaries to 50%-owned affiliates, and preferred stock
dividend requirements of 50%-owned affiliates, other than dividends payable to
the Parent. Combined fixed charges and preferred stock dividends consist of
(i) interest (including capitalized interest) on debt, including
5
<PAGE>
interest related to debt guaranteed by the Parent of less than 50%-owned
affiliates where the investment in such affiliates results in the recognition
of a loss, (ii) the elimination of interest of consolidated subsidiaries to
50%-owned affiliates, (iii) the Parent's proportionate share of interest of
50%-owned affiliates, (iv) that portion of rental expense the Parent believes
to be representative of interest (one-third of rental expense), (v)
amortization of debt expense, (vi) that portion of minority interests in
earnings (losses) of consolidated subsidiaries that represent the amount of
pretax earnings that would be required to cover preferred stock dividend
requirements of consolidated subsidiaries, (vii) that portion of minority
interests in earnings (losses) of consolidated subsidiaries that represents
dividend requirements on Parent-obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely subordinated debt securities of
a subsidiary, (viii) the amount of pretax earnings that would be required to
cover preferred stock dividend requirements of the Parent, (ix) the
elimination of preferred stock dividend requirements of consolidated
subsidiaries to 50%-owned affiliates, and (x) the preferred stock dividend
requirements of 50%-owned affiliates, other than dividends payable to the
Parent. The Parent has guaranteed the debt of certain less than 50%-owned
affiliates and certain unaffiliated entities in which it has an interest.
Fixed charges of $8 million, $8 million, $6 million, $14 million and $3
million relating to such guarantees for the years ended December 31, 1996,
1995, 1994, 1993 and 1992, respectively, and fixed charges of $14 million and
$9 million relating to such guarantees for the nine months ended September 30,
1997 and 1996, respectively, have not been included in fixed charges because
the investment in such entity does not result in the recognition of a loss and
it is not probable that the Parent will be required to honor the guarantee.
DESCRIPTION OF DEBT SECURITIES
The Company may offer Debt Securities consisting of Senior Debt Securities,
Senior Subordinated Debt Securities or Subordinated Debt Securities, any of
which Debt Securities may be issued as Convertible Debt Securities, or any
combination of the foregoing.
The Debt Securities will represent unsecured general obligations of the
Company. The Senior Debt Securities will be senior to all subordinated
indebtedness of the Company, and pari passu (equally and ratably) with other
unsecured, unsubordinated indebtedness of the Company. The Senior Subordinated
Debt Securities will be subordinate in right of payment to certain other debt
obligations of the Company, pari passu with certain other senior subordinated
indebtedness of the Company and senior to certain other subordinated
indebtedness of the Company. The Subordinated Debt Securities will be
subordinate in right of payment to certain other debt obligations of the
Company and pari passu with certain other subordinated indebtedness of the
Company. At September 30, 1997, the Company had an aggregate of approximately
$13.955 billion of total Debt (as defined under "Senior Debt Securities--
Definitions") (including guarantees of indebtedness of others and the
unaccreted portion of indebtedness issued at a discount, but excluding
indebtedness owed to subsidiaries), substantially all of which would rank on a
parity in right of payment with the Senior Debt Securities. At that date, the
Company and its subsidiaries also had an aggregate of approximately $1.6
billion in undrawn lines of credit (excluding amounts related to lines of
credit which provide availability to support commercial paper).
The Company is a holding company and its assets consist primarily of
investments in its subsidiaries. A substantial portion of the consolidated
liabilities of the Company have been incurred by its subsidiaries. Therefore,
the Company's rights and the rights of its creditors, including holders of
Debt Securities, to participate in the distribution of assets of any
subsidiary upon the latter's liquidation or reorganization will be subject to
prior claims of the subsidiary's creditors, including trade creditors, except
to the extent that the Company may itself be a creditor with recognized claims
against the subsidiary (in which case the claims of the Company would still be
subject to the prior claims of any secured creditor of such subsidiary and of
any holder of indebtedness of such subsidiary that is senior to that held by
the Company). At September 30, 1997, the Company's subsidiaries had total Debt
of approximately $4.912 billion (including guarantees of indebtedness of
others and the unaccreted portion of indebtedness issued at a discount, but
excluding indebtedness owed to the Company).
The Debt Securities will be obligations exclusively of the Company. The
Company's ability to service its indebtedness, including the Debt Securities,
is dependent primarily upon the earnings of its subsidiaries and the
6
<PAGE>
distribution or other payment of such earnings to the Company in the form of
dividends, loans or advances, payment or reimbursement for management fees and
expenses, and repayment of loans and advances from the Company. The
subsidiaries are separate and distinct legal entities and have no obligation,
contingent or otherwise, to pay any amounts due pursuant to the Debt
Securities or to make any funds available therefor, whether by dividends,
loans or other payments. The payment of dividends or the making of loans and
advances to the Company by its subsidiaries may be subject to statutory or
regulatory restrictions, are contingent upon the earnings of those
subsidiaries and are subject to various business considerations. Further,
certain of the Company's subsidiaries are subject to loan agreements that
prohibit or limit the transfer of funds by such subsidiaries to the Company in
the form of loans, advances or dividends and require that such subsidiaries'
indebtedness to the Company be subordinate to the indebtedness under such loan
agreements. The amount of net assets of subsidiaries subject to such
restrictions exceeds the Company's consolidated net assets. The Parent is also
a separate and distinct legal entity and it has no obligation, contingent or
otherwise, to pay any amounts due pursuant to the Debt Securities or to make
any funds available therefor, whether by loans or other payments, except for
any Offered Securities which the Parent has specifically elected to guarantee
as set forth in an applicable Prospectus Supplement. See "--Guarantees of Debt
Securities" below.
The Senior Debt Securities will be issued under an Indenture, dated as of
January , 1998, executed by the Company and The Bank of New York, as Trustee
(the "Senior Indenture"); the Senior Subordinated Debt Securities will be
issued under an Indenture to be executed by the Company and a trustee
designated in accordance with the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act") (the "Senior Subordinated Indenture"); and the
Subordinated Debt Securities will be issued under an Indenture to be executed
by the Company and a trustee designated in accordance with the Trust Indenture
Act (the "Subordinated Indenture"). In this Prospectus, the Senior Indenture,
the Senior Subordinated Indenture and the Subordinated Indenture are sometimes
collectively referred to as the Indentures and individually as an Indenture
and the Trustee under the Senior Indenture, the Trustee under the Senior
Subordinated Indenture and the Trustee under the Subordinated Indenture are
sometimes collectively referred to as the Trustees and individually as a
Trustee. In the event that any particular series of Debt Securities are
guaranteed by the Parent, the applicable Indenture will be supplemented by a
supplemental indenture among the Company, as issuer, the Parent, as guarantor,
and the Trustee. Any such supplemental indenture will be filed as an exhibit
to a Current Report on Form 8-K to be filed by the Company and Parent
following the issuance of such series of guaranteed Debt Securities. See "--
Guarantees of Debt Securities" below. The terms of the Senior Debt Securities,
the Senior Subordinated Debt Securities and the Subordinated Debt Securities
include those stated in the respective Indentures and in any supplemental
indenture, and those made part of the Indentures by reference to the Trust
Indenture Act, as in effect on the date of the applicable Indenture. The
Indentures (or form thereof, as the case may be) are filed as exhibits to the
Registration Statement. The Debt Securities are subject to all such terms and
holders of Debt Securities are referred to the respective Indentures and the
Trust Indenture Act for a statement of such terms. See "Additional
Information."
The following summaries of certain provisions of the Indentures do not
purport to be complete and are subject to, and qualified in their entirety by
reference to, all provisions of the Indentures. As used in this section
"Description of Debt Securities," unless the context indicates otherwise, the
term "Company" means TCI Communications, Inc. and does not include any of its
subsidiaries. All other capitalized terms used in this section and not
otherwise defined have the meanings assigned to them in the Indentures.
GENERAL
The Indentures do not limit the amount of Debt Securities which can be
issued thereunder and provide that Debt Securities may be issued in one or
more series, in such form, with such terms and up to the aggregate principal
amount authorized from time to time by the Company. (Sections 2.01 and 2.02 of
the Indentures)
Reference is made to the Prospectus Supplement for the following terms of
the Offered Securities: (i) the designation (including whether they are Senior
Debt Securities, Senior Subordinated Debt Securities or
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Subordinated Debt Securities), aggregate principal amount, authorized
denominations and currency or currencies in which principal, premium, if any,
and interest on the Offered Securities are payable; (ii) whether the Offered
Securities are to be issuable initially in temporary global form and whether
any of the Offered Securities are issuable in permanent global form as Global
Securities; (iii) whether the Offered Securities are to be issuable as
Registered Debt Securities or Bearer Debt Securities or both; (iv) the index
or indices used to determine the amount of payments of principal, premium, if
any, and interest on the Offered Securities; (v) the percentage of their
principal amount at which such Offered Securities will be issued; (vi) the
date on which the Offered Securities will mature (which may be fixed or
extendible); (vii) the rate or rates (which may be fixed or variable) per
annum, if any, at which the Offered Securities will bear interest and the date
from which such interest will accrue; (viii) the times at which any such
interest will be payable and with respect to Registered Debt Securities the
record date for the interest payable on any interest payment date; (ix) any
mandatory or optional sinking fund or analogous provisions; (x) the date or
dates, if any, on or after which, or the circumstances under which, and the
price or prices (and form or method of payment thereof) at which the Offered
Securities may be redeemed, purchased or exchanged at the option of the
Company or any holder; (xi) the initial conversion price per share or
conversion rate at which Offered Securities that are convertible will be
converted into Series A TCI Group Common Stock, any specific terms relating to
the adjustment thereof that are in addition to or different from those
described herein and the period during which such Offered Securities may be so
converted; (xii) the terms of any guarantee by the Parent of the payment of
principal, premium, if any, or interest on the Offered Debt Securities; (xiii)
any covenants or Events of Default that are in addition to or different from
those described herein; (xiv) whether such Offered Securities will be
initially issued in book-entry or certificated form; and (xv) any other
specific terms. Reference is made to the Prospectus Supplement with respect to
the designation and qualification of the Trustee under the Senior Subordinated
Indenture and the Subordinated Indenture.
If the purchase price of any Offered Securities is denominated in one or
more foreign currencies, foreign currency units or composite currencies, or if
the principal, premium, if any, and interest on any Offered Securities are
payable in one or more foreign currencies, foreign currency units or composite
currencies, the restrictions, elections, general tax considerations, specific
terms and other information with respect to such Offered Securities and such
foreign currency or currencies or foreign currency unit or units or composite
currencies will be set forth in the applicable Prospectus Supplement.
Debt Securities may be issued under the Indentures as Original Issue
Discount Securities to be sold at a substantial discount below their principal
amount ("original issue discount"). The issue price of Offered Securities that
are Original Issue Discount Securities, the amount of the original issue
discount with respect thereto, the manner and rate or rates per annum (which
may be fixed or variable) at which such original issue discount shall accrue,
the yield to maturity represented thereby, the date or dates from or to which
or period or periods during which such original issue discount shall accrue,
the portion of the principal amount of such Offered Securities that will be
payable upon acceleration of the maturity thereof or upon the optional or
mandatory redemption, purchase or exchange thereof, and any other specific
terms thereof will be described in the Prospectus Supplement relating thereto,
together with special federal income tax and other considerations applicable
to such Offered Securities.
SENIOR DEBT SECURITIES
The Senior Indenture contains, among others, the following covenants which
will apply to Offered Securities that are Senior Debt Securities unless
otherwise provided in the Prospectus Supplement for such Offered Securities
(certain defined terms used in the Senior Indenture are described under the
caption "--Definitions" below):
Limitation on Restricted Subsidiary Funded Debt. As long as any Senior Debt
Securities of a series entitled to the benefit of this covenant are
outstanding, the Company will not permit any Restricted Subsidiary to incur or
assume any Funded Debt if immediately after the incurrence or assumption of
such Funded Debt, the aggregate outstanding principal amount of all Funded
Debt of the Restricted Subsidiaries would exceed fifteen percent (15%) of the
Maximum Funded Debt Amount. Notwithstanding the foregoing, any Restricted
Subsidiary
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may incur Funded Debt to extend, refinance, renew or replace Funded Debt of
such Restricted Subsidiary, provided that the principal amount of the Funded
Debt so incurred does not exceed the principal amount of the Funded Debt
extended, refinanced, renewed or replaced thereby immediately prior to such
extension, refinancing, renewal or replacement plus any premium, accrued and
unpaid interest or capitalized interest payable thereon, reasonable fees
incurred in connection therewith, and the amount of any prepayment premium
necessary to accomplish any refinancing. (Section 4.02 of the Senior
Indenture) The Senior Indenture does not limit the incurrence of Funded Debt,
or any other debt, secured or unsecured, by the Company, except as described
under "Limitation on Liens," or by any Unrestricted Subsidiary.
Designation of Restricted Subsidiaries. As long as any Senior Debt
Securities entitled to the benefit of this covenant are outstanding, with
respect to the Senior Debt Securities of any series, the Company may designate
an Unrestricted Subsidiary as a Restricted Subsidiary or designate a
Restricted Subsidiary as an Unrestricted Subsidiary at any time, provided that
(1) immediately after giving effect to such designation, the Leverage Ratio of
the Restricted Group is not greater than 8.0:1 and the Company and the
Restricted Subsidiaries are in compliance with the "Limitation on Liens" and
"Limitation on Restricted Subsidiary Funded Debt" covenants, and (2) an
Officers' Certificate with respect to such designation is delivered to the
Trustee within 75 days after the end of the fiscal quarter of the Company in
which such designation is made (or, in the case of a designation made during
the last fiscal quarter of the Company's fiscal year, within 120 days after
the end of such fiscal year), which Officers' Certificate shall state the
effective date of such designation; the Company shall make the initial
designation of Restricted Subsidiaries with respect to the Senior Debt
Securities of any series, and deliver the required Officers' Certificate with
respect thereto to the Trustee, on or prior to the date of initial issuance of
Senior Debt Securities of such series. (Section 4.03 of the Senior Indenture)
Limitation on Liens. As long as any Senior Debt Securities of a series
entitled to the benefit of this covenant are outstanding, the Company will
not, and will not permit any Subsidiary to, create, incur or assume any Lien,
except for Permitted Liens (defined below), on any Property to secure the
payment of Funded Debt of the Company or any Subsidiary if, immediately after
the creation, incurrence or assumption of such Lien, the aggregate outstanding
principal amount of all Funded Debt of the Company and the Subsidiaries that
is secured by Liens (other than Permitted Liens) on Property would exceed ten
percent (10%) of Total Consolidated Assets, unless effective provision is made
whereby the Senior Debt Securities (together with, if the Company shall so
determine, any other Funded Debt ranking equally with the Senior Debt
Securities, whether then existing or thereafter created) are secured equally
and ratably with (or prior to) such Funded Debt (but only for so long as such
Funded Debt is so secured). (Section 4.04 of the Senior Indenture)
The foregoing limitation on Liens shall not apply to the creation,
incurrence or assumption of the following Liens ("Permitted Liens"):
(1) Any Lien which arises out of a judgment or award against the Company
or any Subsidiary with respect to which the Company or such Subsidiary at
the time shall be prosecuting an appeal or proceeding for review (or with
respect to which the period within which such appeal or proceeding for
review may be initiated shall not have expired) and with respect to which
it shall have secured a stay of execution pending such appeal or
proceedings for review or with respect to which the Company or such
Subsidiary shall have posted a bond and established adequate reserves (in
accordance with generally accepted accounting principles) for the payment
of such judgment or award;
(2) Liens on assets or property of a person existing at the time such
person is merged into or consolidated with the Company or any Subsidiary or
becomes a Subsidiary; provided, that such Liens were in existence prior to
the contemplation of such merger, consolidation or acquisition and do not
secure any Property of the Company or any Subsidiary other than the
property and assets subject to the Liens prior to such merger,
consolidation or acquisition;
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(3) With respect to Senior Debt Securities of any series, Liens existing
on the date of original issuance of such Senior Debt Securities;
(4) Liens securing Funded Debt (including in the form of Capitalized
Lease Obligations and purchase money indebtedness) incurred for the purpose
of financing the cost (including without limitation the cost of design,
development, site acquisition, construction, integration, manufacture or
acquisition) of real or personal Property (tangible or intangible) which is
incurred contemporaneously therewith or within 60 days thereafter; provided
(i) such Liens secure Funded Debt in an amount not in excess of the cost of
such Property (plus an amount equal to the reasonable fees and expenses
incurred in connection with the incurrence of such Funded Debt) and (ii)
such Liens do not extend to any Property of the Company or any Subsidiary
other than the Property for which such Funded Debt was incurred;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure the Senior Debt Securities;
(7) Liens granted in favor of the Company or any Subsidiary; and
(8) Any Lien representing the extension, refinancing, renewal or
replacement (or successive extensions, refinancings, renewals or
replacements) of Liens referred to in clauses (2), (3), (4), (5), (6) and
(7) above, provided that the principal of the Funded Debt secured thereby
does not exceed the principal of the Funded Debt secured thereby
immediately prior to such extension, renewal or replacement, plus any
accrued and unpaid interest or capitalized interest payable thereon,
reasonable fees and expenses incurred in connection therewith, and the
amount of any prepayment premium necessary to accomplish any refinancing;
provided, that such extension, renewal or replacement shall be limited to
all or a part of the Property (or interest therein) subject to the Lien so
extended, renewed or replaced (plus improvements and construction on such
Property). (Section 4.04 of the Senior Indenture)
Definitions. The following are certain of the terms defined in the Senior
Indenture (Section 1.01):
"Capitalized Lease Obligation" of any person means any obligation of such
person to pay rent or other amounts under a lease with respect to any property
(whether real, personal or mixed) acquired or leased by such person and used
in its business that is required to be accounted for as a liability on the
balance sheet of such person in accordance with generally accepted accounting
principles and the amount of such Capitalized Lease Obligation shall be the
amount so required to be accounted for as a liability.
"Company" means TCI Communications, Inc., a Delaware corporation, until a
successor replaces it pursuant to the applicable provisions of the Senior
Indenture and thereafter means the successor.
"Debt" of any person means:
(1) any indebtedness of such person (i) for borrowed money or (ii)
evidenced by a note, debenture or similar instrument (including a purchase
money obligation) given in connection with the acquisition of any property
or assets, including securities;
(2) any guarantee by such person of any indebtedness of others described
in the preceding clause (1); and
(3) any amendment, renewal, extension or refunding of any such
indebtedness or guarantee.
"Funded Debt" of any person means, as of the date as of which the amount
thereof is to be determined, without duplication, all indebtedness of such
person for borrowed money or for the deferred purchase price of property or
assets in respect of which such person is liable and all guaranties by such
person of any indebtedness of others for borrowed money, and all Capitalized
Lease Obligations of such person, which by the terms thereof have a final
maturity, duration or payment date more than one year from the date of
determination thereof (including, without limitation, any balance of such
indebtedness or obligation which was Funded Debt at the time of its creation
maturing within one year from such date of determination) or which has a final
maturity,
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duration or payment date within one year from such date of determination but
which by its terms may be renewed or extended at the option of such person for
more than one year from such date of determination, whether or not theretofore
renewed or extended. The term "Funded Debt" excludes (A) for purposes of the
"Limitation on Liens" covenant, (1) any indebtedness of the Company or any
Subsidiary to the Company or another Subsidiary, (2) any guarantee by the
Company or any Subsidiary of indebtedness of the Company or another
Subsidiary, provided that such guarantee is not secured by a Lien on any
Property, and (3) any guarantee by the Company or any Subsidiary of the
indebtedness of any person (including, without limitation, a business trust),
if the obligation of the Company or such Subsidiary under such guaranty is
limited in amount to the amount of funds held by or on behalf of such person
that are available for the payment of such indebtedness, and (B) for purposes
of each of the "Limitation on Restricted Subsidiary Funded Debt" and the
"Designation of Restricted Subsidiaries" covenants, (1) any indebtedness of
the Company or any Restricted Subsidiary to the Company or another Restricted
Subsidiary, (2) any guarantee by the Company or any Restricted Subsidiary of
indebtedness of the Company or another Restricted Subsidiary, provided that
such guarantee is not secured by a Lien on Restricted Property, (3) any
guarantee by the Company or any Restricted Subsidiary of the indebtedness of
any person (including, without limitation, a business trust), if the
obligation of the Company or such Restricted Subsidiary under such guarantee
is limited in amount to the amount of funds held by or on behalf of such
person that are available for the payment of such indebtedness and (4) any
indebtedness of the Company or any Restricted Subsidiary to any Unrestricted
Subsidiary which indebtedness is subordinated in right of payment to the prior
payment in full of the outstanding Senior Debt Securities of such series on
terms no less favorable to the holders of such Senior Debt Securities than
those contained in Article Ten of that certain Indenture, dated as of April 1,
1991, between the Company and Chemical Bank, as Trustee, pursuant to which the
Company's subordinated debt securities are subordinated to all Senior Debt of
the Company (as defined therein), without giving effect to any amendment,
modification or supplement to, or discharge of such Indenture after the date
of the Senior Indenture, and which indebtedness is not secured by a Lien on
Restricted Property. For purposes of determining the outstanding principal
amount of Funded Debt at any date, the amount of indebtedness issued at a
price less than the principal amount thereof shall be equal to the amount of
the liability in respect thereof at such date determined in accordance with
generally accepted accounting principles.
"Leverage Ratio" with respect to the Restricted Group means, as of the date
of and after giving effect to any designation of an Unrestricted Subsidiary as
a Restricted Subsidiary and/or any designation of a Restricted Subsidiary as
an Unrestricted Subsidiary, in each case in accordance with the "Designation
of Restricted Subsidiaries" covenant, the ratio of (1) the aggregate
outstanding principal amount of all Funded Debt of the Restricted Group as of
such date to (2) the product of four times the Restricted Group Cash Flow for
the most recent full fiscal quarter for which financial information is
available on such date.
"Lien" means any mortgage, pledge, lien, security interest, or other similar
encumbrance.
"Maximum Funded Debt Amount" means, as of any date of determination thereof,
that amount which is equal to the product of (i) eight and (ii) the product of
(x) the Restricted Group Cash Flow for the most recent full fiscal quarter for
which financial information is available on such date and (y) four.
"Parent" means Tele-Communications, Inc., a Delaware corporation, and any
successor thereof.
"Principal Property" means, as of any date of determination, any property or
assets owned by any Restricted Subsidiary other than (1) any such property
which, in the good faith opinion of the Board of Directors, is not of material
importance to the business conducted by the Company and its Restricted
Subsidiaries taken as a whole and (2) any shares of any class of stock or any
other security of any Unrestricted Subsidiary.
"Property" means all assets and properties of the Company and its
Subsidiaries (real, personal, tangible, intagible or mixed), including any
shares of capital stock or indebtedness of, or other interests (including
partnership interests) in, a Subsidiary owned by the Company or a Subsidiary.
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"Restricted Group" means, as of any date of determination, the Company and
the Restricted Subsidiaries as of such date after giving effect to any
designation being made on such date in accordance with the "Designation of
Restricted Subsidiaries" covenant.
"Restricted Group Cash Flow" for any period means the Restricted Group Net
Income (as defined below) for such period, plus (A) the sum (without
duplication) of the aggregate of each of the following items of the Company
and the Restricted Subsidiaries for such period to the extent taken into
account as charges to Restricted Group Net Income for such period: (i)
interest expense, (ii) income tax expense, (iii) depreciation and amortization
expense and other noncash charges, (iv) extraordinary or non-recurring items
and (v) after-tax losses on sales of assets outside of the ordinary course of
business not otherwise included in extraordinary items in accordance with
generally accepted accounting principles, minus (B) the sum (without
duplication) of the aggregate of each of the following items of the Company
and the Restricted Subsidiaries for such period to the extent taken into
account as credits to Restricted Group Net Income for such period: (i) noncash
credits, (ii) extraordinary or non-recurring items, and (iii) after-tax gains
on sales of assets outside of the ordinary course of business not otherwise
included in extraordinary items in accordance with generally accepted
accounting principles.
For purposes of this definition, (1) "Restricted Group Net Income" for any
period means the aggregate of the net income (loss) for such period of the
Company and the Restricted Subsidiaries, determined on a consolidated basis in
accordance with generally accepted accounting principles; provided, however,
that (i) the net income (loss) of any person accounted for by the equity
method of accounting and the net income (loss) of any Unrestricted Subsidiary
shall be excluded, except that the net income of any such person or
Unrestricted Subsidiary shall be included to the extent of the amount of
dividends or distributions paid by such person or Unrestricted Subsidiary to
the Company or a Restricted Subsidiary during such period, and (ii) except as
otherwise provided in clause (2) below, the net income (loss) of any other
person acquired by the Company or any Restricted Subsidiary in a transaction
accounted for as a pooling of interests for any period prior to the date of
such acquisition shall be excluded; and (2) if the Company or any Restricted
Subsidiary consummated any acquisition or disposition of assets during the
period for which Restricted Group Cash Flow is being calculated, or
consummated any acquisition or disposition of assets subsequent to such period
and on or prior to the date as of which the Leverage Ratio or Maximum Funded
Debt Amount, as applicable, is to be determined, then, in each such case, the
Restricted Group Cash Flow for such period shall be calculated on a pro forma
basis as if such acquisition or disposition had occurred at the beginning of
such period.
"Restricted Property" means, as of any date of determination, any Principal
Property and any shares of stock of a Restricted Subsidiary owned by the
Company or a Restricted Subsidiary.
"Restricted Subsidiary" means, as of any date of determination, a
corporation a majority of whose voting stock is owned by the Company and/or
one or more Restricted Subsidiaries, which corporation has been, or is then
being, designated a Restricted Subsidiary in accordance with the "Designation
of Restricted Subsidiaries" covenant, unless and until designated an
Unrestricted Subsidiary in accordance with such covenant.
"Subsidiary" means any corporation, association, partnership or other
business entity of which a majority of the total voting power of the capital
stock or other interests (including partnership interests) entitled (without
regard to the occurrence of a contingency) to vote in the election of
directors, managers, or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) the Company, (ii) the Company and one or more
of its Subsidiaries or (iii) one or more Subsidiaries of the Company.
"Total Consolidated Assets" means the total assets (real, personal,
tangible, intangible and mixed) that would be shown on a balance sheet of the
Company and its Subsidiaries prepared in accordance with generally accepted
accounting principles consistently applied, as of any date selected by the
Company not more than 45 days prior to the taking of the action for the
purpose of which Total Consolidated Assets is to be determined.
"Unrestricted Subsidiary" means, as of any date of determination, any
Subsidiary of the Company that is not a Restricted Subsidiary.
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Nothing in the Senior Indenture affords holders of Senior Debt Securities
protection in the event of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction involving the Company or in the
event of a change of control of the Company or the Parent.
SENIOR SUBORDINATED DEBT SECURITIES
The following provisions will apply to Offered Securities that are Senior
Subordinated Debt Securities unless otherwise provided in the Prospectus
Supplement for such Offered Securities.
Subordination. The indebtedness evidenced by the Senior Subordinated Debt
Securities will be subordinate to the prior payment in full of all Senior Debt
as described below. The Senior Subordinated Indenture does not limit Senior
Debt or any other debt, secured or unsecured, of the Company or any
subsidiary, except as described under "Limitation on Subordinated Debt
Superior to the Senior Subordinated Debt Securities" below. Upon maturity (by
acceleration or otherwise) of any Senior Debt, payment in full must be made on
such Senior Debt (or duly provided for) before any payment is made on or in
respect of the Senior Subordinated Debt Securities (except payments made in
capital stock of the Company or in warrants, rights or options to purchase or
acquire capital stock of the Company, sinking fund payments made in Senior
Subordinated Debt Securities acquired by the Company before the maturity of
such Senior Debt, and payments made through the exchange of other debt
obligations of the Company for such Senior Subordinated Debt Securities in
accordance with the terms of such Senior Subordinated Debt Securities provided
that such Debt obligations are subordinated to Senior Debt at least to the
extent that the Senior Subordinated Debt Securities for which they are
exchanged are so subordinated in accordance with the Senior Subordinated
Indenture). During the continuance of any default in payment of the principal
of, premium, if any, interest on, or other amounts due in respect of, any
Senior Debt, no payment may be made by the Company on, or in respect of, the
Senior Subordinated Debt Securities (except payments made in capital stock of
the Company or in warrants, rights or options to purchase or acquire capital
stock of the Company, sinking fund payments made in Senior Subordinated Debt
Securities acquired by the Company before such default and notice thereof, and
payments made through the exchange of other debt obligations of the Company
for such Senior Subordinated Debt Securities in accordance with the terms of
such Senior Subordinated Debt Securities provided that such debt obligations
are subordinated to Senior Debt at least to the extent that the Senior
Subordinated Debt Securities for which they are exchanged are so subordinated
in accordance with the Senior Subordinated Indenture). Upon any distribution
of assets of the Company in any dissolution, winding up, liquidation or
reorganization of the Company, payment of all amounts due in respect of the
Senior Subordinated Debt Securities will be subordinated, to the extent and in
the manner set forth in the Senior Subordinated Indenture, to the prior
payment in full of all Senior Debt. Such subordination will not prevent the
occurrence of any Event of Default. (Sections 10.01, 10.02, 10.03 and 10.11 of
the Senior Subordinated Indenture) The Indenture for the Senior Debt
Securities contains a cross-acceleration provision that would, among other
things, permit the acceleration of the maturity of any outstanding Senior Debt
Securities in the event that the maturity of any outstanding Senior
Subordinated Debt Securities or Subordinated Debt Securities were accelerated.
See "Defaults and Remedies" below. The instruments and agreements pursuant to
which all or substantially all of the Company's Senior Debt has been incurred
also contain cross-default or cross-acceleration provisions.
Securities Senior to Junior Subordinated Debt. The indebtedness evidenced by
the Senior Subordinated Debt Securities will be superior in right of payment
to all Junior Subordinated Debt as described below. Upon maturity (by
acceleration or otherwise) of the Senior Subordinated Debt Securities of any
series, payment in full must be made thereon, or duly provided for, before any
payment is made on or in respect of any Junior Subordinated Debt (except
payments made in capital stock of the Company or in warrants, rights or
options to purchase or acquire capital stock of the Company, sinking fund
payments made in instruments evidencing Junior Subordinated Debt of the same
issue acquired before the maturity of the Senior Subordinated Debt Securities
of such series, and payments made through the exchange of other debt
obligations of the Company for such Junior Subordinated Debt in accordance
with the terms of such Junior Subordinated Debt provided that such debt
obligations are subordinated to the Senior Subordinated Debt Securities at
least to the extent that the Junior Subordinated Debt for which they are
exchanged is so subordinated in accordance with the Senior Subordinated
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Indenture). During the continuance of any default in payment of the principal
of, premium, if any, interest on, or other amounts due in respect of, the
Senior Subordinated Debt Securities of any series, no payment may be made by
the Company on, or in respect of, any Junior Subordinated Debt (except
payments made in capital stock of the Company or in warrants, rights or
options to purchase or acquire capital stock of the Company, sinking fund
payments made in instruments evidencing Junior Subordinated Debt of the same
issue acquired before such default and notice thereof, and payments made
through the exchange of other debt obligations of the Company for such Junior
Subordinated Debt in accordance with the terms of such Junior Subordinated
Debt provided that such debt obligations are subordinated to the Senior
Subordinated Debt Securities at least to the extent that the Junior
Subordinated Debt for which they are exchanged is so subordinated in
accordance with the Senior Subordinated Indenture). Upon any distribution of
assets of the Company in any dissolution, winding up, liquidation or
reorganization of the Company, holders of the Senior Subordinated Debt
Securities will be entitled to receive payment in full of all amounts due in
respect thereof before the holders of any Junior Subordinated Debt are
entitled to receive any payment on account of such Junior Subordinated Debt.
(Section 4.05 of the Senior Subordinated Indenture)
Limitation on Subordinated Debt Superior to the Senior Subordinated Debt
Securities. As long as any Senior Subordinated Debt Securities remain
outstanding, the Company may not create or incur any Debt which is subordinate
or junior in right of payment to any Senior Debt if such Debt is superior in
right of payment to the Senior Subordinated Debt Securities. (Section 4.06 of
the Senior Subordinated Indenture)
Definitions. The following are certain of the terms defined in the Senior
Subordinated Indenture (Sections 4.06 and 10.01):
"Junior Subordinated Debt" means the principal of (premium, if any) and
interest on Debt of the Company created or incurred after the date of the
Senior Subordinated Indenture which by its terms is subordinate in right of
payment to the Senior Subordinated Debt Securities, including any Subordinated
Debt Securities issued under the Subordinated Indenture.
"Senior Debt" means the principal of (premium, if any) and interest on Debt
of the Company outstanding at any time other than (i) the Senior Subordinated
Debt Securities, (ii) the Company's outstanding 11 1/8% senior subordinated
debentures due October 1, 2003, which shall rank pari passu with the Senior
Subordinated Debt Securities, (iii) any Subordinated Debt Securities issued
under the Subordinated Indenture, and (iv) Debt which by its terms is not
superior in right of payment to the Senior Subordinated Debt Securities.
The definition of "Debt" in the Senior Subordinated Indenture is the same as
that in the Senior Indenture.
Nothing in the Senior Subordinated Indenture affords holders of Senior
Subordinated Debt Securities protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction
involving the Company or in the event of a change of control of the Company or
the Parent.
SUBORDINATED DEBT SECURITIES
The following provisions will apply to Offered Securities that are
Subordinated Debt Securities unless otherwise provided in the Prospectus
Supplement for such Offered Securities:
Subordination. The indebtedness evidenced by the Subordinated Debt
Securities will be subordinate to the prior payment in full of all Senior Debt
as described below. The Subordinated Indenture does not limit Senior Debt or
any other debt, secured or unsecured, of the Company or any subsidiary. Upon
maturity (by acceleration or otherwise) of any Senior Debt, payment in full
must be made on such Senior Debt (or duly provided for) before any payment is
made on or in respect of the Subordinated Debt Securities (except payments
made in capital stock of the Company or in warrants, rights or options to
purchase or acquire capital stock of the Company, sinking fund payments made
in Subordinated Debt Securities acquired by the Company before the maturity of
such Senior Debt, and payments made through the exchange of other debt
obligations of the
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Company for such Subordinated Debt Securities in accordance with the terms of
such Subordinated Debt Securities provided that such debt obligations are
subordinated to Senior Debt at least to the extent that the Subordinated Debt
Securities for which they are exchanged are so subordinated in accordance with
the Subordinated Indenture). During the continuance of any default in payment
of the principal of, premium, if any, interest on, or other amounts due in
respect of, any Senior Debt, no payment may be made by the Company on, or in
respect of, the Subordinated Debt Securities (except payments made in capital
stock of the Company or in warrants, rights or options to purchase or acquire
capital stock of the Company, sinking fund payments made in Subordinated Debt
Securities acquired by the Company before such default and notice thereof, and
payments made through the exchange of other debt obligations of the Company
for such Subordinated Debt Securities in accordance with the terms of such
Subordinated Debt Securities provided that such debt obligations are
subordinated to Senior Debt at least to the extent that the Subordinated Debt
Securities for which they are exchanged are so subordinated in accordance with
the Subordinated Indenture). Upon any distribution of assets of the Company in
any dissolution, winding up, liquidation or reorganization of the Company,
payment of all amounts due in respect of the Subordinated Debt Securities will
be subordinated, to the extent and in the manner set forth in the Subordinated
Indenture, to the prior payment in full of all Senior Debt. Such subordination
will not prevent the occurrence of any Event of Default. (Sections 10.01,
10.02, 10.03 and 10.11 of the Subordinated Indenture) The Indenture for the
Senior Debt Securities contains a cross-acceleration provision that would,
among other things, permit the acceleration of the maturity of any outstanding
Senior Debt Securities in the event that the maturity of any outstanding
Senior Subordinated Debt Securities or Subordinated Debt Securities were
accelerated. See "Defaults and Remedies" below. The instruments and agreements
pursuant to which all or substantially all of the Company's Senior Debt has
been incurred also contain cross-default or cross-acceleration provisions.
"Senior Debt" means the principal of (premium, if any) and interest on Debt
of the Company outstanding at any time other than (i) the Subordinated Debt
Securities and (ii) Debt which by its terms is not superior in right of
payment to the Subordinated Debt Securities. The definition of "Debt" in the
Subordinated Indenture is the same as that in the Senior Indenture.
Nothing in the Subordinated Indenture affords holders of Subordinated Debt
Securities protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction involving the
Company or in the event of a change of control of the Company or the Parent.
CONVERTIBLE DEBT SECURITIES
In addition to the provisions described under the applicable of "Senior Debt
Securities", "Senior Subordinated Debt Securities" or "Subordinated Debt
Securities" above, the following provisions will apply to Offered Securities
that are convertible Debt Securities unless otherwise provided in the
Prospectus Supplement for such Offered Securities:
For purposes of the conversion provisions of each Indenture, "Parent Stock"
means the Series A TCI Group Common Stock and any other capital stock into
which the Parent Stock may be changed after the date of such Indenture.
(Section 1.01 of the Indentures)
Conversion. The holder of any convertible Debt Security will have the right,
exercisable at any time up to and including the maturity date thereof (or such
shorter period as may be specified for any series of convertible Debt
Securities in the Prospectus Supplement relating thereto), unless previously
redeemed or otherwise purchased, to convert such Debt Security at the
principal amount thereof (or, if such Debt Security is an Original Issue
Discount Security, such portion of the principal amount thereof as is
specified in the terms of such Debt Security) into shares of Parent Stock at
the conversion price or conversion rate set forth in the Prospectus
Supplement, subject to adjustment as described below. The holder of a
convertible Debt Security may convert a portion thereof if the portion to be
converted and the remaining portion of such Debt Security are in denominations
issuable for that series of Debt Securities. (Section 10.01 of the Senior
Indenture and Section
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11.01 of the Senior Subordinated and Subordinated Indentures) In the case of
Debt Securities called for redemption, conversion rights will expire at the
close of business on such day on or prior to the redemption date as may be
specified in the Prospectus Supplement.
The conversion price or conversion rate of the convertible Debt Securities,
or the securities or other property to be received on conversion, is subject
to adjustment upon the occurrence of certain events, including (i) the payment
of a dividend or the making of a distribution in shares of Parent Stock to
holders of Parent Stock or the payment of a dividend or the making of a
distribution to holders of Parent Stock payable in shares of the Parent's
capital stock other than Parent Stock; (ii) the subdivision, combination or
reclassification of outstanding shares of Parent Stock; (iii) the issuance to
all holders of Parent Stock of rights or warrants entitling them (for a period
not exceeding 45 days or such other period as may be specified in the
Prospectus Supplement) to purchase shares of Parent Stock (or, unless
otherwise provided in the Prospectus Supplement, securities (other than the
convertible Debt Securities and shares of Tele-Communications, Inc. Series B
TCI Group Common Stock) convertible into Parent Stock) at a price per share
(or, in the case of such convertible securities, having a conversion price per
share after adding thereto an allocable portion of the exercise price of the
right or warrant to purchase such convertible securities) less than the
Average Market Price on the Determination Date (each as defined in the
Indentures) per share of such Parent Stock; (iv) the distribution to all
holders of Parent Stock of evidences of indebtedness or assets (excluding cash
dividends or distributions unless otherwise provided in the Prospectus
Supplement) or certain rights or warrants (other than those referred to
above); and (v) certain mergers, consolidations or sales of assets. In the
case of any such dividend or distribution on the Parent Stock of shares of
capital stock, subdivision, combination or reclassification, the holder of
each outstanding convertible Debt Security will have the right to convert such
Debt Security into the kind and amount of securities which he would have owned
immediately after such event if he had converted such Debt Security
immediately before the record date for or effective date of, as the case may
be, such event. In the case of any such merger, consolidation or sale of
assets, the holder of each outstanding convertible Debt Security will have the
right to convert such Debt Security into the kind and amount of securities,
cash or other assets receivable upon such merger, consolidation or sale by a
holder of the number of shares of Parent Stock into which such Debt Security
could have been converted immediately before the effective date of such
transaction (assuming such holder of Parent Stock failed to exercise any
rights of election and received per share of Parent Stock the kind and amount
of securities, cash or other assets received per share by a plurality of the
non-electing shares). In the case of any such issuance of rights or warrants
which expire within 45 days (or such other period as may be specified in the
Prospectus Supplement) after the record date for the determination of
stockholders entitled to receive the rights or warrants, or any such
distribution of evidences of indebtedness or assets or other rights or
warrants, the conversion price or conversion rate will be adjusted pursuant to
formulas contained in the Indentures. However, no adjustment to the conversion
price or conversion rate need be made if the holders may participate in the
transaction or in certain other cases.
In addition to the foregoing adjustments, the Company will be permitted to
make such reductions in the conversion price or increases in the conversion
rate as it considers to be advisable. Unless otherwise provided in the
Prospectus Supplement, the Company is not required to make adjustments in the
conversion price or conversion rate of less than 1% of the initial conversion
price or conversion rate, as the case may be, but any adjustment that would
otherwise be required to be made will be taken into account in the computation
of any subsequent adjustment. No adjustment is required in respect of the
issuance of Parent Stock under any dividend or interest reinvestment plan of
the Parent. Fractional shares of Parent Stock will not be issued upon
conversion, but, in lieu thereof, the Company will pay a cash adjustment. No
payment or adjustment will be made upon any conversion on account of any
interest (or, in the case of Original Issue Discount Securities, original
issue discount) accrued on the convertible Debt Securities surrendered for
conversion or on account of any dividends on the Parent Stock issued upon
conversion. Convertible Debt Securities surrendered for conversion between the
record date for an interest payment, if any, and the interest payment date
(except convertible Debt Securities called for redemption on a redemption date
during such period) may be required to be accompanied by payment of an amount
equal to the interest thereon which the registered holder is to receive.
(Article Ten of the Senior Indenture and Article Eleven of the Senior
Subordinated and Subordinated Indentures)
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GUARANTEES OF DEBT SECURITIES
The Parent may, at its option, unconditionally guarantee to the holders of
Offered Securities the full and prompt payment of principal, premium, if any,
and interest on such Offered Securities when and as the same shall become due
and payable, whether at maturity, upon redemption or otherwise. The terms of
any such guarantee (a "Guarantee") will be set forth in a supplement to the
applicable Indenture. Any such Guarantee will be an unsecured obligation of
the Parent. Any right of payment of the holders of Senior Debt Securities
under a Guarantee will be prior to any right of payment of the holders of
Senior Subordinated Debt Securities and Subordinated Debt Securities under a
Guarantee, and any right of payment of the holders of Senior Subordinated Debt
Securities under a Guarantee will be prior to any right of payment of the
holders of Subordinated Debt Securities under a Guarantee.
If a Guarantee is issued by the Parent with respect to any Offered
Securities, reference is made to the Prospectus Supplement for such Offered
Securities for a description of the specific terms of such Guarantee,
including events of default relating thereto and, where applicable,
subordination provisions of such Guarantee and covenants of the Parent. Unless
otherwise specified in the applicable Prospectus Supplement, Offered
Securities will not be guaranteed by the Parent.
DENOMINATION AND FORM
Unless otherwise indicated in the Prospectus Supplement, the Offered
Securities will be Registered Debt Securities denominated in U.S. Dollars and
will be issued only in denominations of $1,000 and integral multiples of
$1,000. (Section 2.03 of the Senior Subordinated and Subordinated Indentures
and Sections 2.01 and 2.03 of the Senior Indenture) Under the Senior
Indenture, Debt Securities of any series may be issuable as Registered Debt
Securities, Bearer Debt Securities (with or without coupons attached) or both,
and may be issuable in whole or in part in the form of one or more Global
Securities. In addition, the Senior Indenture provides that Debt Securities
may be denominated or payable in one or more foreign currencies, foreign
currency units or composite currencies. (Sections 2.01 and 2.02 of the Senior
Indenture) Unless otherwise indicated in the applicable Prospectus Supplement,
Bearer Debt Securities denominated in U.S. Dollars will be issued only in the
denomination of $5,000 with coupons attached. (Sections 2.01 and 2.03 of the
Senior Indenture) A Global Security will be issued in a denomination equal to
the aggregate principal amount of outstanding Debt Securities represented by
such Global Security. (Section 2.10 of the Senior Indenture and Section 2.15
of the Senior Subordinated and the Subordinated Indentures) The Prospectus
Supplement relating to a series of Debt Securities denominated other than in
U.S. Dollars will specify the authorized denominations thereof.
During the "restricted period," as defined in Treasury Regulation Section
1.163-5(c)(2)(i)(D)(7), no Bearer Debt Security may be offered or sold (or
resold in connection with its original issuance) in the United States or its
possessions or to a United States person (subject to certain exceptions).
Further, no Bearer Debt Security may be mailed or otherwise delivered to any
location in the United States or its possessions in connection with a sale
that occurred during the restricted period. Offered Securities that are Bearer
Debt Securities will be subject to certification requirements as to the
ownership of such Bearer Debt Security (including beneficial interests in a
Global Security representing such Bearer Debt Security) which will be
described in the applicable Prospectus Supplement. See "Limitations on
Issuance of Bearer Debt Securities."
REGISTRAR, PAYING AGENT, CONVERSION AGENT
The Company will maintain an office or agency where Registered Debt
Securities of each series may be presented for registration of transfer or for
exchange ("Registrar"), an office or agency where Debt Securities of each
series may be presented for payment ("Paying Agent") and an office or agency
where Debt Securities of each series that is convertible may be presented for
conversion ("Conversion Agent"). The Company may have one or more co-
Registrars, one or more additional Paying Agents and one or more additional
Conversion Agents with respect to any series of Debt Securities and the
Company or any of its subsidiaries may act as Paying Agent, Registrar or co-
Registrar or Conversion Agent. Unless otherwise indicated in an applicable
Prospectus Supplement, each Trustee will initially act as Paying Agent and
Registrar for each series of Debt Securities
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issued under its respective Indenture and as Conversion Agent for any series
that is convertible. The Company may change any Paying Agent, Registrar or co-
Registrar or Conversion Agent at any time without notice to the holders of
Debt Securities, except as described below with respect to Debt Securities
issued under the Senior Indenture. The Company will promptly notify the
Trustee of the name and address of any such Agent. (Section 2.05 of the
Indentures)
The Senior Indenture also provides that if Debt Securities of a series are
issuable as Bearer Debt Securities, the Company will maintain (i) in the
Borough of Manhattan, The City of New York, an office or agency where any
Registered Debt Securities of that series may be presented or surrendered for
payment and for registration of transfer, where Debt Securities of that series
may be surrendered for exchange and where Bearer Debt Securities of that
series and related coupons may be presented or surrendered for payment in the
circumstances described under "Payment" below, and (ii) subject to any laws or
regulations applicable thereto, in a place of payment for Debt Securities of
that series located outside the United States, an office or agency where any
Registered Debt Securities of that series may be surrendered for registration
of transfer, where Debt Securities of that series may be surrendered for
exchange and where Debt Securities of that series and any related coupons may
be presented and surrendered for payment, provided that if the Debt Securities
of that series are listed on The International Stock Exchange of the United
Kingdom and the Republic of Ireland, the Luxembourg Stock Exchange or any
other stock exchange located outside the United States and such stock exchange
shall so require, the Company will maintain a Paying Agent for the Debt
Securities of that series in London, Luxembourg or any other required city
located outside the United States, as the case may be, so long as the Debt
Securities of that series are listed on such exchange. Any Paying Agents
outside the United States initially designated by the Company for the Offered
Securities will be named in the applicable Prospectus Supplement. The Company
will promptly notify the Trustee and the holders of Senior Debt Securities of
a series of the location and any change in the location of any office or
agency which it is required to maintain for the Senior Debt Securities of such
series. (Section 4.01 of the Senior Indenture)
TRANSFER AND EXCHANGE
Registered Debt Securities of any series (other than a Global Security,
except as provided under "Global Securities") will be exchangeable at the
option of the holder for other Registered Debt Securities of the same series
of any authorized denominations and of a like aggregate principal amount and
tenor. (Section 2.08 of the Indenture) In addition, if Debt Securities of any
series issued under the Senior Indenture are issuable as both Registered Debt
Securities and Bearer Debt Securities, then, if so provided with respect to
the Debt Securities of such series, at the option of the holder and subject to
the terms of such Indenture, Bearer Debt Securities (with, except as provided
below, all related unmatured coupons and all related matured coupons in
default) of such series will be exchangeable for Registered Debt Securities of
the same series of any authorized denominations and of a like aggregate
principal amount and tenor. Bearer Debt Securities surrendered in exchange for
Registered Debt Securities between a regular record date or, in certain
circumstances, a special record date, for an interest payment and the relevant
interest payment date shall be surrendered without the coupon relating to such
interest payment date attached and interest will not be payable on such
interest payment date in respect of the Registered Debt Security issued in
exchange for such Bearer Debt Security, but will be payable only to the holder
of such coupon in accordance with the terms of the Senior Indenture. Unless
otherwise specified in the applicable Prospectus Supplement, Bearer Debt
Securities will not be issued in exchange for Registered Debt Securities.
(Section 2.08 of the Senior Indenture)
Debt Securities of any series may be surrendered for exchange as provided
above, and Registered Debt Securities of any series (other than a Global
Security, except as provided under "Global Securities") may be surrendered for
registration of transfer, at the office or agency designated by the Company
for such purpose with respect to such series of Debt Securities. Bearer Debt
Securities will be transferable by delivery. (Section 2.14 of the Senior
Indenture) Every Registered Debt Security presented or surrendered for
registration of transfer or for exchange shall be duly endorsed or accompanied
by appropriate transfer documents duly executed. No service charge will be
made for any registration of transfer or exchange of Debt Securities, but the
Company may require
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payment of a sum sufficient to cover any taxes and other governmental charges
that may be imposed in relation thereto. (Section 2.08 of the Indentures)
The Company and the Registrar need not transfer or exchange any Debt
Securities selected for redemption or purchase (except, in the case of Debt
Securities to be redeemed or purchased in part, the portion thereof not to be
redeemed or purchased) or any Debt Securities in respect of which a notice
requiring the purchase or redemption thereof by the Company at the option of
the holder thereof has been given and not withdrawn by such holder in
accordance with the terms of such Debt Securities (as described, if
applicable, in the Prospectus Supplement) (except, in the case of Debt
Securities to be so purchased or redeemed in part, the portion thereof not to
be so purchased or redeemed). (Section 2.08 of the Indentures) A Bearer Debt
Security so selected for redemption or purchase or in respect of which a
notice requiring the redemption or purchase thereof by the Company at the
option of the holder thereof has been given and not so withdrawn may however,
if so provided with respect to the Debt Securities of such series, be
exchanged for a Registered Debt Security of that series and like tenor,
provided that such Registered Debt Security is simultaneously surrendered for
redemption or purchase, as the case may be. (Section 2.08 of the Senior
Indenture)
The Senior Subordinated Indenture and the Subordinated Indenture also
provide that the Registrar need not transfer or exchange any Debt Securities
of a particular series during a period of 15 days before a selection of Debt
Securities of such series to be redeemed. (Section 2.08 of the Senior
Subordinated and the Subordinated Indentures) The Senior Indenture provides
that the Company shall not be required to issue, register the transfer of or
exchange Debt Securities of any series during a period beginning at the
opening of business 15 days before any selection of Debt Securities of that
series to be redeemed and ending at the close of business on (i) if Debt
Securities of that series are issuable only as Registered Debt Securities, the
date of the mailing of the relevant notice of redemption, and (ii) if Debt
Securities of that series are issuable as Bearer Debt Securities, the date of
the first publication of the relevant notice of redemption or, if Debt
Securities of that series are also issuable as Registered Debt Securities and
there is no publication, the mailing of the relevant notice of redemption.
(Section 2.08 of the Senior Indenture)
Prior to due presentment of a Registered Debt Security for registration of
transfer, the person in whose name such Registered Debt Security is registered
may be treated as the owner of it for all purposes. (Section 2.14 of the
Indentures) The bearer of any Bearer Debt Security and the bearer of any
coupon appertaining thereto may be treated as the owner of such Bearer Debt
Security or coupon for all purposes. (Section 2.14 of the Senior Indenture)
GLOBAL SECURITIES
The Indentures provide that the Debt Securities of any series thereunder may
be issued in whole or in part in the form of one or more Global Securities,
which Global Securities may be issued in registered form (or, in the case of
Senior Debt Securities, bearer form) and in either temporary or permanent
form. (Sections 2.10 and 2.11 of the Senior Indenture and Sections 2.11 and
2.15 of the Senior Subordinated and Subordinated Indentures) Each Global
Security will be deposited with and, if it is issued in registered form, will
be registered in the name of the depositary (or a nominee of the depositary)
identified in the applicable Prospectus Supplement. (Section 2.10 of the
Senior Indenture and Section 2.15 of the Senior Subordinated and Subordinated
Indentures) So long as the depositary for a Global Security in registered
form, or its nominee, is the registered owner of the Global Security, the
depositary or its nominee, as the case may be, will be considered the sole
owner of the Debt Securities represented by such Global Security for all
purposes under the Indenture. (Section 2.14 of the Indentures) Unless and
until it is exchanged in whole or in part for Debt Securities in definitive
form, a Global Security may not be transferred except as a whole by the
depositary for such Global Security to a nominee of such depositary or by a
nominee of such depositary to such depositary or another nominee of such
depositary or by the depositary or any nominee to a successor depositary or
any nominee of such successor. (Section 2.08 of the Indentures) Unless
otherwise specified in the applicable Prospectus Supplement, if the depositary
with respect to any Global Security is at any time unwilling, unable or
ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days of such time, or if the Company, in
its sole discretion, at any time determines that any series of Debt Securities
issued or issuable in the form of a Global Security shall
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no longer be represented by such Global Security, then in either such event
the Global Security shall be exchanged for Debt Securities in definitive form
pursuant to the applicable Indenture. Further, if so specified by the Company
with respect to the Debt Securities of a series and described in the
applicable Prospectus Supplement, an owner of a beneficial interest in a
Global Security representing Debt Securities of such series may, on terms
acceptable to the Company and the depositary for such Global Security, receive
Debt Securities of such series in definitive form. In any such instance, an
owner of a beneficial interest in a Global Security will be entitled to
physical delivery in definitive form of Debt Securities in authorized
denominations and of like tenor of the series represented by such Global
Security, equal in principal amount to such beneficial interest, and to have
such Debt Securities registered in its name (if the Debt Securities of such
series are issuable as Registered Debt Securities). (Section 2.08 of the
Indentures) See, however, "Limitations on Issuance of Bearer Debt Securities"
below for a discussion of certain restrictions on the delivery of a Bearer
Debt Security in definitive form in exchange for an interest in a Global
Security. Except as described above, unless otherwise specified in the
applicable Prospectus Supplement, owners of beneficial interests in a Global
Security will not be entitled to have Debt Securities of the series
represented by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of Debt Securities of such
series in definitive form and will not be considered the owners or holders
thereof under the applicable Indenture.
Any specific terms of the depositary arrangement with respect to a series of
Debt Securities or any part thereof will be described in the applicable
Prospectus Supplement. The Company anticipates that the following provisions
will apply to all depositary arrangements.
Upon the issuance of a Global Security, the depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts
of the Debt Securities represented by such Global Security to the accounts of
participants. Ownership of beneficial interests in a Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the depositary (with respect to beneficial interests of
participants in the depositary), or by participants in the depositary or
persons that may hold interest through such participants (with respect to
beneficial interests of persons other than participants in the depositary).
Ownership of beneficial interests in a Global Security will be limited to
participants or persons that hold interests through participants.
Subject to the restrictions discussed under "Limitations on Issuance of
Bearer Debt Securities" below, payments of the principal of and any premium
and interest on Debt Securities registered in the name of or held by a
depositary or its nominee will be made to the depositary or its nominee, as
the case may be, as the registered owner or the holder of the Global Security
representing such Debt Securities. None of the Company, the Trustee, any
Paying Agent or the Registrar for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Security for such Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests. (Section 2.14 of
the Indentures)
The Company expects that the depositary for Debt Securities of a series,
upon receipt of any payment of principal, premium or interest in respect of a
Global Security, will credit immediately participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security as shown on the records of such
depositary. The Company also expects that payments by participants to owners
of beneficial interests in such Global Security held through such participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
participants. With respect to a Global Security that represents in whole or in
part Debt Securities of a series that are issuable as Bearer Debt Securities,
receipt by owners of beneficial interests in such Global Security of payments
in respect of such Global Security will be subject to the restrictions
discussed under "Limitations on Issuance of Bearer Debt Securities" below.
LIMITATIONS ON ISSUANCE OF BEARER DEBT SECURITIES
In compliance with United States federal tax laws and regulations, Bearer
Debt Securities (including beneficial interests in a Global Security that
represents Bearer Debt Securities) may not be offered or sold (or
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resold in connection with their original issuance) during the "restricted
period," as defined in Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7), in
the United States or its possessions or to United States persons (each as
defined below) other than to (i) a Qualifying Foreign Branch of a United
States Financial Institution (as defined below), (ii) a United States person
who acquires and holds the obligation through the Qualifying Foreign Branch of
a United States Financial Institution, (iii) a United States office of an
"exempt distributor," as defined in Treasury Regulation Section 1.163-
5(c)(2)(i)(D)(5), (iv) the United States office of an international
organization, as defined in Section 7701(a)(18) of the Internal Revenue Code
of 1986, as amended (the "Code") and the regulations thereunder, or (v) the
United States office of a foreign central bank, as defined in Section 895 of
the Code and the regulations thereunder. In addition, Bearer Debt Securities
may not be delivered within the United States or its possessions in connection
with a sale that occurred during the restricted period. Any underwriters,
agents and dealers participating in the offering of Offered Securities must
agree that they will not offer any Bearer Debt Securities for sale or resale
in the United States or its possessions or to United States persons (other
than a person specified in clause (i), (ii), (iii), (iv) or (v) above) or
deliver Bearer Debt Securities within the United States or its possessions.
The term "Qualifying Foreign Branch of a United States Financial Institution"
means a branch located outside the United States of a United States financial
institution (as defined in Treasury Regulation Section 1.165-12(c)(1)(v)) that
provides a certificate within a reasonable time (or a blanket certificate in
the year the Debt Security is issued or either of the preceding two calendar
years) stating that it agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Code and the regulations thereunder. The term
"United States person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, an estate the
income of which is subject to United States federal income taxation regardless
of its source, and a trust if (i) a court within the United States is able to
exercise primary supervision over the administration of the trust, and (ii)
one or more United States fiduciaries have the authority to control all
substantial decisions of the trust; the term "United States" means the United
States of America (including the States and the District of Columbia), and the
term "possessions" includes, but is not limited to, Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands.
United States federal tax laws and regulations also require that the owner
of an obligation issuable in bearer form or the financial institution (as
defined in the preceding paragraph) or clearing organization through which the
owner directly or indirectly holds such obligation must provide the issuer of
the obligation with a certificate on the earlier of the date of the first
actual payment of interest on the obligation or the date of delivery by the
issuer of the obligation in definitive form stating that on such date the
obligation is owned by (a) a person that is not a United States person, (b) a
person described in clause (i) or (ii) of the preceding paragraph, or (c) a
financial institution for purposes of resale during the restricted period, but
not for resale directly or indirectly to a United States person or to a person
within the United States or its possessions. A certificate described in clause
(a) or (b) above may not be given with respect to an obligation that is owned
by a financial institution for purposes of resale during the restricted
period. When the required certificate is provided by a clearing organization,
the certificate must be based upon statements provided to it by its member
organizations. For purposes of the foregoing, a "temporary global security,"
as defined in Treasury Regulation Section 1.163-5(c)(1)(ii)(B), is not
considered to be an obligation in definitive form. In compliance with the
foregoing, if the Offered Securities are of a series of Debt Securities
issuable as Bearer Debt Securities, the delivery thereof (including delivery
in exchange for an interest in a Global Security) and the payment of interest
thereon, as applicable, will be subject to the satisfaction of certification
requirements that will be specified by the Company in accordance with the
Senior Indenture in connection with the establishment of such series and will
be described in the applicable Prospectus Supplement. (Sections 2.02 and 2.04
of the Senior Indenture) The Senior Indenture also provides that no Bearer
Debt Security (including a Global Security that represents Bearer Debt
Securities) will be mailed or otherwise delivered to any location in the
United States or its possessions. (Section 2.04 of the Senior Indenture)
Bearer Debt Securities and any coupons appertaining thereto will bear a
legend substantially to the following effect: "Any United States person who
holds this obligation will be subject to limitations under the United States
income tax laws, including the limitations provided in Sections 165(j) and
1287(a) of the Internal Revenue Code." Under Sections 165(j) and 1287(a) of
the Code, holders that are United States persons, with certain exceptions,
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will not be entitled to deduct any loss on Bearer Debt Securities and must
treat as ordinary income any gain realized on the sale or other disposition
(including the receipt of principal) of Bearer Debt Securities.
PAYMENT
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any premium and interest on Bearer Debt Securities (other
than a Global Security) will be made, subject to any applicable laws and
regulations, at the offices of such Paying Agent or Paying Agents outside the
United States as the Company may designate from time to time, except that, at
the option of the Company (or, if so specified in the applicable Prospectus
Supplement, at the option of the holder), payment of interest may be made by
check (provided the same is not mailed to an address inside the United States)
or by wire transfer to an account located outside the United States maintained
by the payee. (Sections 2.13 and 4.01 of the Senior Indenture) Unless
otherwise indicated in an applicable Prospectus Supplement, payment of
interest on Bearer Debt Securities on any interest payment date will be made
only against surrender of the coupon relating to such interest payment date.
(Section 2.13 of the Senior Indenture) No payment with respect to any Bearer
Debt Security will be made at any office or agency of the Company in the
United States or by check mailed to any address in the United States or by
transfer to an account maintained in the United States. Notwithstanding the
foregoing, payments of principal of and any premium and interest on Bearer
Debt Securities denominated and payable in U.S. Dollars will be made at the
office of the Company's Paying Agent in the Borough of Manhattan, The City of
New York, if (but only if) payment of the full amount thereof in U.S. Dollars
at all offices or agencies outside the United States is illegal or effectively
precluded by exchange controls or other similar restrictions. (Section 4.01 of
the Senior Indenture)
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and any premium and interest on Registered Debt Securities
(other than a Global Security) will be made at the office of such Paying Agent
or Paying Agents as the Company may designate from time to time, except that
at the option of the Company payment of any interest may be made by check
mailed to the address of the person entitled thereto as such address shall
appear in the security register or, if so specified with respect to the
Registered Debt Securities of any series issued under the Senior indenture, by
wire transfer to an account designated by such person. Payment of any
installment of interest on Registered Debt Securities will be made to the
person in whose name such Registered Debt Security is registered at the close
of business on the regular record date (or, in the case of defaulted interest,
special record date) for such interest payment. (Section 2.13 of the
Indentures)
All moneys paid by the Company to a Paying Agent for the payment of
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Company and the holder
of such Debt Security or any coupon appertaining thereto will thereafter look
only to the Company for payment thereof unless an applicable abandoned
property law designates another person. (Section 8.03 of the Indentures)
AMENDMENT, SUPPLEMENT, WAIVER
Subject to certain exceptions, the Indentures or the Debt Securities may be
amended or supplemented, and any past default or compliance with any provision
may be waived, insofar as the Debt Securities of any series are concerned,
with the consent of the holders of a majority in aggregate principal amount of
the outstanding Debt Securities of such series. (Sections 6.04 and 9.02 of the
Indentures) Without the consent of any holder of Debt Securities, the Company
and the Trustee may amend or supplement the Indentures or the Debt Securities
to cure any ambiguity, defect or inconsistency, to permit or facilitate the
issuance of Debt Securities in bearer form or to provide for uncertificated
Debt Securities in global form in addition to certificated Debt Securities (so
long as any "registration-required obligation," within the meaning of Section
163(f)(2) of the Code, is in registered form for purposes of the Code) or to
make certain other specified changes or any change that does not materially
adversely affect the rights of any holder of Debt Securities. (Section 9.01 of
the Indentures)
SUCCESSOR CORPORATION
The Company may not consolidate with or merge into, or transfer its
properties and assets substantially as an entirety to, another corporation
unless (i) the successor corporation, which shall be a corporation organized
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under the laws of the United States or a State thereof, assumes by
supplemental indenture all the obligations of the Company under the Debt
Securities and the Indentures, and (ii) after giving effect to such
transaction, no Event of Default shall have occurred and be continuing.
Thereafter, unless otherwise specified in the Prospectus Supplement, all such
obligations of the Company terminate. (Section 5.01 of the Indentures)
DEFAULTS AND REMEDIES
An Event of Default with respect to Debt Securities of any series is: (i)
default for 30 days in payment of any interest on the Debt Securities of that
series; (ii) default in payment of principal, premium or any other amount
(other than interest) due in respect of the Debt Securities of that series at
maturity, upon redemption (including default in the making of any mandatory
sinking fund payment), upon purchase by the Company at the option of the
holder or otherwise; (iii) failure by the Company for 30 days after receipt of
written notice as provided in the Indentures to comply with any of its other
agreements in the Indentures (other than agreements expressly included in the
Indentures solely for the benefit of a series of Debt Securities other than
that series or expressly made inapplicable to the Debt Securities of such
series) or the Debt Securities of that series; (iv) (for purposes of the
Senior Indenture only) acceleration of the maturity of any Debt of the Company
(including Senior Debt Securities of any other series) if the aggregate
principal amount (or, if applicable, issue price plus accrued original issue
discount) of the Debt the maturity of which has been accelerated exceeds five
percent (5%) of the aggregate principal amount of the Company's Funded Debt
then outstanding and such Debt is not paid, or such acceleration is not
rescinded or annulled or such acceleration is not contested by appropriate
proceedings and all consequences thereof that would have a material adverse
effect on the Company stayed, within 30 days after receipt of written notice
as provided in the Senior Indenture; provided, however, that if, after the
expiration of such 30-day period, the event of default that resulted in the
acceleration of the maturity of such Debt of the Company is remedied or cured
by the Company or waived by the holders of such Debt in any authorized manner
or otherwise ceases to exist, then the Event of Default described in this
clause (iv) resulting from such acceleration will be deemed cured and not
continuing; and (v) certain events of bankruptcy or insolvency. (Section 6.01
of the Indentures) If an Event of Default occurs with respect to the Debt
Securities of any series and is continuing, the Trustee or the holders of at
least 25% in aggregate principal amount of the Debt Securities of that series
may declare to be due and payable immediately (i) the principal amount of that
series (or, if the Debt Securities of that series are Original Issue Discount
Securities, that portion of the principal amount specified in the terms of
that series) and (ii) accrued interest, if any, thereon. The Indentures
provide for automatic acceleration of the maturity of such amounts upon the
occurrence of certain events of bankruptcy or insolvency. (Section 6.02 of the
Indentures) The Senior Indenture provides that a declaration of acceleration
of the maturity of the Senior Debt Securities of any series as a result of an
Event of Default described in clause (iv) above will be automatically annulled
if (x) the acceleration of the Debt that is the subject of such Event of
Default is declared void ab initio as a result of the Company's contest
thereof or (y) the declaration of acceleration of such Debt is rescinded or
annulled in any manner authorized by the instrument evidencing or creating
such Debt within 90 days of the declaration of acceleration of the Senior Debt
Securities of such series and, in the case of clause (y), the annulment of the
declaration of acceleration under the Senior Indenture would not conflict with
any judgment or decree, and, in the case of either clause (x) or (y), all
other existing Events of Default (other than the non-payment of amounts that
have become due with respect to such Senior Debt Securities solely by such
acceleration) with respect to Senior Debt Securities of that series have been
cured or waived. (Section 6.02 of the Senior Indenture) Holders of Debt
Securities may not enforce the Indentures or the Debt Securities except as
provided in the Indentures. (Section 6.06 of the Indentures) The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Debt Securities. (Section 7.01 of the Indentures) Subject to certain
limitations, holders of a majority in aggregate principal amount of the Debt
Securities of any series may direct the Trustee in its exercise of any trust
or power with respect to the Debt Securities of that series. (Section 6.05 of
the Indentures) The Trustee may withhold from holders of Debt Securities
notice of any continuing default (except a default in payment of principal,
premium, if any, interest or other amounts due) if it determines that
withholding notice is in their interest. (Section 7.05 of the Indentures) The
Company is required to file periodic reports with the Trustee as to the
absence of default. (Section 4.07 of the Senior Indenture and Section 4.03 of
the Senior Subordinated and Subordinated Indentures)
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NO PERSONAL LIABILITY
No past, present or future director, officer, employee or stockholder, as
such, of the Company or any successor thereof shall have any liability for any
obligations of the Company under the Debt Securities or the Indentures or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each holder of Debt Securities by accepting a Debt Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issue of the Debt Securities. (Section 11.11 of the
Senior Indenture and Section 12.11 of the Senior Subordinated and Subordinated
Indentures)
SATISFACTION AND DISCHARGE
The Company's obligations under the Debt Securities of any series and the
applicable Indenture with respect to such series (except for the obligation to
pay the principal of and premium and interest, if any, on the Debt Securities
of such series and certain other specified obligations) will be satisfied and
discharged in accordance with the provisions of the Indenture if either (i)
all Debt Securities of such series and coupons, if any, appertaining thereto
previously authenticated and delivered (other than destroyed, lost or
wrongfully-taken Debt Securities or coupons which have been replaced or paid,
Debt Securities or coupons for whose payment money has theretofore been held
in trust and, after remaining unclaimed for two years, has been repaid to the
Company, and certain coupons appertaining to Bearer Securities surrendered for
exchange, redemption or purchase) have been delivered to the Trustee for
cancellation or (ii) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations (or, in the case of the Senior
Indenture, Government Obligations) sufficient to pay the principal of and
premium and interest, if any, on all Debt Securities of such series and
coupons, if any, appertaining thereto not theretofore cancelled or delivered
to the Trustee for cancellation (other than Debt Securities and coupons
referred to in the parenthetical in clause (i) above) to maturity or
redemption, as the case may be. (Section 2.01 of the Indentures)
THE TRUSTEES
The Trustee under the Senior Indenture is The Bank of New York. The Bank of
New York acts as depositary for funds of, makes loans to, and performs other
services for the Company and the Parent and certain of their affiliates in the
normal course of business and acts as trustee with respect to certain
outstanding senior indebtedness of the Company. The Bank of New York serves as
transfer agent and registrar for each series of the Parent's common stock and
for the Parent's Class B 6% Cumulative Redeemable Exchangeable Junior
Preferred Stock. John C. Malone, a director of the Company and the Parent, is
a director of The Bank of New York.
Information with respect to the Trustees under the Senior Subordinated
Indenture and the Subordinated Indenture will be provided in the applicable
Prospectus Supplement.
Any Trustee in its individual or any other capacity may become the owner or
pledgee of Debt Securities and may otherwise deal with the Company or its
affiliates with the same rights it would have if it were not the Trustee
provided it complies with the terms of the Indenture. (Section 7.03 of the
Indentures)
ADDITIONAL INFORMATION
The Indentures (or form thereof, as the case may be) are exhibits to the
Registration Statement. Anyone who receives this Prospectus may obtain copies
of the Indentures (or form thereof, as the case may be) without charge by
writing to Stephen M. Brett, Esq., Executive Vice President of the Company, at
the address set forth under "The Company and the Parent." The foregoing
summaries of certain provisions of the Indentures do not purport to be
complete and are subject to, and qualified in their entirety by reference to,
all provisions of the Indentures, including the definitions of certain terms.
Wherever particular provisions or defined terms of the Indentures are referred
to, such provisions or defined terms are incorporated herein by reference.
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DESCRIPTION OF SERIES PREFERRED STOCK
The Parent is authorized to issue up to 50,000,000 shares of Series
Preferred Stock. The Series Preferred Stock is issuable, from time to time, in
one or more series, with such powers, designations, preferences and relative
participating, optional or other rights, and qualifications, limitations or
restrictions thereof, as is stated and expressed in a resolution or
resolutions providing for the issue of each such series adopted by the Board
of Directors. All shares of any one series of the Series Preferred Stock are
required to be alike in every particular. Except to the extent otherwise
provided in the resolution or resolutions providing for the issue of any
series of Series Preferred Stock, the holders of shares of such series will
have no voting rights except as may be required by Delaware law. As of the
date of this Prospectus, there are six series of Series Preferred Stock
outstanding. See "Description of Parent Capital Stock--Preferred Stock."
As described under "Description of Depositary Shares" below, the Parent may,
at its option, elect to offer Depositary Shares evidenced by depositary
receipts, each representing an interest in a fraction (to be specified in the
Prospectus Supplement relating to the particular series of Series Preferred
Stock) of a share of the particular series of Series Preferred Stock, issued
and deposited with a depositary, in lieu of offering any shares of such Series
Preferred Stock. See "Description of Depositary Shares."
Series Preferred Stock constituting Offered Securities shall have the
dividend, liquidation, redemption, and voting rights set forth below unless
otherwise provided in a Prospectus Supplement relating to such Series
Preferred Stock. Reference is made to the Prospectus Supplement relating to a
particular series of the Series Preferred Stock offered thereby for specific
terms, including: (a) the designation of such series of Series Preferred Stock
and the number of shares offered; (b) the amount of liquidation preference per
share; (c) the initial public offering price at which such series of Series
Preferred Stock will be issued; (d) the dividend rate (or method of
calculation), the dates on which dividends shall be payable and the dates from
which dividends shall commence to cumulate, if any; (e) any redemption or
sinking fund provisions; (f) any conversion or exchange rights; (g) any voting
rights; (h) whether the Parent has elected to offer Depositary Shares as
described under "Description of Depositary Shares"; and (i) any other rights,
preferences, privileges, limitations, and restrictions of such series of
Series Preferred Stock.
Each series of Series Preferred Stock, when issued, will be fully paid and
nonassessable and will have no preemptive rights. The rights of the holders of
each series of the Series Preferred Stock to receive dividends and
distributions of assets will be subordinate to those of the Parent's general
creditors, but superior to the rights of holders of any capital stock of the
Parent ranking junior to such series of Series Preferred Stock as to the
payment of dividends, rights of redemption and rights on liquidation,
including any series of common stock of the Parent.
DIVIDEND RIGHTS
Holders of a series of Series Preferred Stock constituting Offered
Securities will be entitled to receive, when, as, and if declared by the Board
of Directors, out of funds of the Parent legally available therefor, cash
dividends on such dates and at such rates as are set forth in, or as are
determined by the method described in, the Prospectus Supplement relating to
such series of Series Preferred Stock. Such rate may be fixed or variable or
both. Each such dividend will be payable to the holders of record as they
appear on the stock books of the Parent (or, if applicable, the records of the
Depositary (as hereinafter defined) referred to under "Description of
Depositary Shares") on such record dates, fixed by the Board of Directors, as
specified in the Prospectus Supplement relating to such series of Series
Preferred Stock.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement relating to such series of Series Preferred Stock. If
the Board of Directors fails to declare a dividend payable on a dividend
payment date on any series of Series Preferred Stock for which dividends are
noncumulative, then the right to receive a dividend in respect of the dividend
period ending on such dividend payment date will be lost, and the Parent will
have no obligation to pay the dividend accrued for such period, whether or not
dividends on such series are declared payable on any future dividend payment
dates. Dividends on the shares of each series of
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Series Preferred Stock for which dividends are cumulative will accrue from the
date on which the Parent initially issues shares of such series.
Unless otherwise specified in the applicable Prospectus Supplement, if at
any time the Parent shall have failed to pay, or declare and set aside the
consideration sufficient to pay, full dividends on any series of Series
Preferred Stock constituting Offered Securities for the immediately preceding
dividend period (or, if such series is cumulative, for all prior dividend
periods), and until such dividends (or, if such series of Series Preferred
Stock is cumulative, full cumulative dividends) are paid, or declared and the
consideration sufficient to pay the same in full is set aside for such purpose
and for no other purpose, the Parent may not (i) declare or pay any dividend
on or make any distribution with respect to any class or series of capital
stock of the Parent ranking pari passu with or junior to such series of Series
Preferred Stock, except for dividends declared and paid on any such stock
ranking on a parity basis with such series of Series Preferred Stock
contemporaneously and on a pro rata basis with dividends declared and paid on
such series of Series Preferred Stock, or (ii) redeem or otherwise acquire any
shares of such series of Series Preferred Stock, any parity stock, or any
junior stock unless all then outstanding shares of such series of Series
Preferred Stock and any other class or series of parity stock that by the
terms of the instrument creating or evidencing such parity stock is required
to be redeemed under such circumstances are redeemed. Unless otherwise
specified in the applicable Prospectus Supplement, the failure of the Parent
to pay, or declare and set aside the consideration sufficient to pay, full
dividends (or, if such series of Series Preferred Stock is cumulative, full
cumulative dividends) on any series of Series Preferred Stock shall not
prevent the Parent from (i) paying any dividends on junior stock solely in
shares of junior stock or the redemption or other acquisition of junior stock
solely in exchange for (together with a cash adjustment for fractional shares,
if any) shares of junior stock or (ii) paying any dividends on parity stock
solely in shares of parity stock or junior stock (or both) or the redemption
or other acquisition of shares of such series of Series Preferred Stock or
parity stock solely in exchange for shares of junior stock.
LIQUIDATION PREFERENCES
In the event of any liquidation, dissolution, or winding up of the Parent,
whether voluntary or involuntary, the holders of each series of Series
Preferred Stock constituting Offered Securities will be entitled to receive
out of the assets of the Parent available for distribution to stockholders,
before any distribution of assets is made to the holders of any capital stock
of the Parent ranking junior to the shares of such series of Series Preferred
Stock, the amount set forth in the Prospectus Supplement relating to such
series of Series Preferred Stock. If, upon any voluntary or involuntary
liquidation, dissolution, or winding up of the Parent, the assets of the
Parent available for distribution to the holders of shares of such series of
Series Preferred Stock and any other shares of capital stock of the Parent
ranking on a parity with shares of such series of Series Preferred Stock upon
liquidation will not be sufficient to pay in full all amounts to which such
holders are entitled, no such distribution will be made on account of any
other class or series of capital stock ranking on a parity as to liquidation
preference with the shares of such series of Series Preferred Stock unless
proportionate distributative amounts are paid on account of shares of such
series of Series Preferred Stock and shares of such parity stock ratably in
proportion to the full respective preferential amounts to which they are
entitled. After payment to the holders of such series of Series Preferred
Stock of the full preferential amounts of the liquidating distribution to
which they are entitled, the holders thereof will be entitled to no further
participation in any distribution of assets by the Parent.
REDEMPTION
Offered Securities consisting of a series of Series Preferred Stock may be
redeemable, in whole or from time to time in part, at the option of the Parent
or the holder (or both), and may be subject to mandatory redemption pursuant
to a sinking fund or otherwise, in each case upon terms, at the times, and at
the redemption prices set forth in the Prospectus Supplement relating to such
series. Unless otherwise provided in the applicable Prospectus Supplement,
shares of a series of Series Preferred Stock redeemed by the Parent will be
restored to the status of authorized but unissued shares of Series Preferred
Stock.
Unless otherwise specified in the applicable Prospectus Supplement, in the
event that fewer than all of the outstanding shares of a series of Series
Preferred Stock are to be redeemed, whether by mandatory or optional
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redemption, the number of shares to be redeemed will be determined by lot or
pro rata (subject to rounding to avoid fractional shares) as may be determined
by the Parent in its sole discretion to be equitable. From and after the
redemption date (unless default is made by the Parent in providing for the
payment of the redemption price plus accumulated and unpaid dividends, if any)
dividends will cease to accumulate on the shares of such series of Series
Preferred Stock called for redemption and all rights of the holders thereof
(except the right to receive the redemption price plus accumulated and unpaid
dividends, if any) will cease.
Unless otherwise specified in the applicable Prospectus Supplement, if the
Parent fails to redeem any shares of a series of Series Preferred Stock
constituting Offered Securities required to be redeemed on a redemption date,
and until such shares are redeemed in full, the Parent may not declare or pay
any dividend on or make any distribution with respect to any class or series
of capital stock ranking junior to such series of Series Preferred Stock, and
neither the Parent nor any subsidiary may redeem any parity stock or junior
stock, or purchase or otherwise acquire any shares of such series of Series
Preferred Stock, parity stock or junior stock. Unless otherwise specified in
the applicable Prospectus Supplement, the failure of the Parent to so redeem
shares of such series of Series Preferred stock shall not prevent the Parent
from (i) paying any dividends on junior stock solely in shares of junior stock
or the redemption or other acquisition of junior stock solely in exchange for
(together with a cash adjustment for fractional shares, if any) shares of
junior stock or (ii) the redemption or other acquisition of shares of such
series of Series Preferred Stock or parity stock solely in exchange for shares
of parity stock or junior stock (or both).
VOTING RIGHTS
No series of Series Preferred Stock constituting Offered Securities will
entitle the holder to any voting rights, unless otherwise specified in the
applicable Prospectus Supplement.
For a discussion of certain terms of the outstanding preferred stock of the
Parent see "Description of Parent Capital Stock--Preferred Stock."
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DESCRIPTION OF DEPOSITARY SHARES
Offered Securities may consist of Depositary Shares represented by
Depositary Receipts (as defined below), with each Depositary Share equivalent
to a fractional interest in a share of a particular series of Series Preferred
Stock as specified in an accompanying Prospectus Supplement. The description
set forth below and in any Prospectus Supplement of certain provisions of the
Deposit Agreement (as defined below) and of the Depositary Shares and
Depositary Receipts does not purport to be complete and is subject to and
qualified in its entirety by reference to the Deposit Agreement and Depositary
Receipts relating to such series of Series Preferred Stock, forms of which are
filed as exhibits to the Registration Statement of which this Prospectus forms
a part.
GENERAL
The Parent may, at its option, elect to offer interests in fractions of
shares of a series of Series Preferred Stock in lieu of shares of such series
of Series Preferred Stock. In such event, the Parent will provide for the
issuance by a Depositary of receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent an interest in a fraction (to be set
forth in the related Prospectus Supplement) of a share of a particular series
of the Series Preferred Stock as described below.
The shares of any series of Series Preferred Stock underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") between the Parent and a bank or trust company selected by the
Parent having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000 (the "Depositary"). The Prospectus
Supplement relating to such Depositary Shares and the series of Series
Preferred Stock represented thereby will set forth the name and address of the
Depositary. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share will be entitled, in proportion to the applicable fraction of
a share of a series of Series Preferred Stock underlying such Depositary
Share, to all the rights and preferences of the series of Series Preferred
Stock underlying such Depositary Share (including dividend, voting,
redemption, conversion, and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement.
Pending the preparation of definitive Depositary Receipts, the Depositary
may, upon the written order of the Parent, issue temporary Depositary Receipts
substantially identical to (and entitling the holders thereof to all the
rights pertaining to) the definitive Depositary Receipts but not in definitive
form. Definitive Depositary Receipts will be prepared thereafter without
unreasonable delay, and temporary Depositary Receipts will be exchangeable for
definitive Depositary Receipts at the Parent's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions in respect of shares of a series of Series Preferred Stock to
the record holders of Depositary Shares in proportion, insofar as practicable,
to the number of Depositary Shares owned by such holders.
In the event of a distribution other than cash in respect of shares of a
series of Series Preferred Stock, the Depositary will distribute property
received by it to the record holders of Depositary Shares in proportion,
insofar as practicable, to the number of Depositary Shares owned by such
holders, unless the Depositary determines that it is not feasible to make such
distribution, in which case the Depositary may, with the approval of the
Parent, adopt such method as it deems equitable and practicable for the
purpose of effecting such distribution, including sale (at public or private
sale) of such property and distribution of the net proceeds from such sale to
such holders.
The amount distributed in any of the foregoing cases will be reduced by any
amount required to be withheld by the Parent or the Depositary on account of
taxes.
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REDEMPTION OF DEPOSITARY SHARES
If a series of Series Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the
proceeds received by the Depositary resulting from the redemption, in whole or
in part, of such series of Series Preferred Stock held by the Depositary. The
redemption price per Depositary Share will be equal to the applicable fraction
of the redemption price per share payable with respect to such series of
Series Preferred Stock. Whenever the Parent redeems shares of a series of
Series Preferred Stock held by the Depositary, the Depositary will redeem as
of the same redemption date the number of Depositary Shares relating to shares
of such series of Series Preferred Stock so redeemed. If less than all the
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed
will be selected by lot or pro rata as may be determined by the Depositary to
be equitable.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which
the holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.
RECORD DATE
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences, or privileges shall be offered with respect to the shares of a
series of Series Preferred Stock underlying the Depositary Shares, or (ii) the
Depositary shall receive notice of any meeting at which holders of shares of
such series of Series Preferred Stock are entitled to vote or of which holders
of shares of such series of Series Preferred Stock are entitled to notice, or
of any election on the part of the Parent to call for redemption any shares of
such series of Series Preferred Stock, the Depositary shall in each such
instance fix a record date (which shall be the same date as the record date
for the shares of such series of Series Preferred Stock) for the determination
of the holders of Depositary Shares (x) who shall be entitled to receive such
dividend, distribution, rights, preferences, or privileges, (y) who shall be
entitled to give instructions for the exercise of voting rights at any such
meeting or to receive notice of such meeting, or (z) whose interests shall be
subject to such redemption, subject to the provisions of the Deposit
Agreement.
VOTING
Upon receipt of notice of any meeting at which holders of shares of a series
of Series Preferred Stock underlying the Depositary Shares are entitled to
vote, the Depositary will mail the information contained in such notice of
meeting to the record holders of Depositary Shares relating to such series of
Series Preferred Stock. Each record holder of Depositary Shares on the record
date (which will be the same date as the record date for the underlying series
of Series Preferred Stock) will be entitled to instruct the Depositary as to
the exercise of the voting rights pertaining to the number of shares of the
series of Series Preferred Stock represented by such holder's Depositary
Shares. The Depositary will endeavor, insofar as practicable, to vote the
number of shares of the series of Series Preferred Stock represented by such
Depositary Shares in accordance with such instructions, and the Parent has
agreed to take all reasonable action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so.
The Depositary will abstain from voting shares of a series of Series
Preferred Stock to the extent it does not receive specific written voting
instructions from the holders of Depositary Shares representing such series of
Series Preferred Stock.
WITHDRAWAL OF UNDERLYING PREFERRED STOCK
Upon surrender of Depositary Receipts at the Corporate Office (as defined in
the Deposit Agreement) of the Depositary, the owner of the Depositary Shares
evidenced thereby will be entitled to delivery at such office of certificates
evidencing the number of shares of the series of Series Preferred Stock (but
only in whole shares of
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such series of Series Preferred Stock) represented by such Depositary
Receipts. If the Depositary Receipts delivered by a holder evidence a number
of Depositary Shares in excess of the number of Depositary Shares representing
the number of whole shares of the series of Series Preferred Stock to be
withdrawn, the Depositary will at the same time deliver to such holder a new
Depositary Receipt or Receipts evidencing such excess number of Depositary
Shares.
AMENDMENT AND TERMINATION OF DEPOSIT AGREEMENT
The form of Depositary Receipts and any provision of the Deposit Agreement
may at any time be amended by agreement between the Parent and the Depositary.
However, any amendment that imposes any fees, taxes, or other charges payable
by holders of Depositary Shares (other than taxes and other governmental
charges, fees, and other expenses payable by such holders as stated under
"Charges of Depositary"), or that otherwise prejudices any substantial
existing right of holders of Depositary Shares, will not take effect as to
outstanding Depositary Shares until the expiration of 90 days after notice of
such amendment has been mailed to the record holders of outstanding Depositary
Shares. Every holder of Depositary Shares at the time any such amendment
becomes effective shall be deemed to consent and agree to such amendment and
to be bound by the Deposit Agreement, as so amended.
Whenever so directed by the Parent, the Depositary will terminate the
Deposit Agreement after mailing notice of such termination to the record
holders of all Depositary Shares then outstanding at least 30 days prior to
the date fixed in such notice for such termination. The Depositary may
likewise terminate the Deposit Agreement if at any time 45 days shall have
expired after the Depositary shall have delivered to the Parent a written
notice of its election to resign and a successor depositary shall not have
been appointed and accepted its appointment. If any Depositary Shares remain
outstanding after the date of termination, the Depositary thereafter will
discontinue the transfer of Depositary Shares, will suspend the distribution
of dividends to the holders thereof, and will not give any further notices
(other than notice of such termination) or perform any further acts under the
Deposit Agreement except as provided below and except that the Depositary will
continue to collect dividends on the series of Series Preferred Stock
underlying such Depositary Shares and any other distributions with respect
thereto. At any time after the expiration of two years from the date of
termination, the Depositary may sell shares of the series of Series Preferred
Stock then held by it at public or private sale, at such place or places and
upon such terms as it deems proper and may thereafter hold the net proceeds of
any such sale, together with any money and other property then held by it,
without liability for interest thereon, for the pro rata benefit of the
holders of Depositary Shares. The Parent does not presently intend to
terminate any Deposit Agreement or to permit the resignation of any Depositary
without appointing a successor depositary.
CHARGES OF DEPOSITARY
The Parent will pay all charges of the Depositary, including charges in
connection with the initial deposit of shares of any series of Series
Preferred Stock, the initial execution and delivery of the Depositary
Receipts, the distribution of information to the holders of Depositary
Receipts with respect to matters on which such series of Series Preferred
Stock is entitled to vote, withdrawals of shares of such series of Series
Preferred Stock, or redemption or conversion of shares of such series of
Series Preferred Stock, except for taxes (including transfer taxes, if any)
and other governmental charges and such other charges as are provided in the
Deposit Agreement to be at the expense of holders of Depositary Receipts.
MISCELLANEOUS
The Depositary will make available for inspection by holders of Depositary
Receipts at its Corporate Office any reports and communications from the
Parent that are delivered to the Depositary and made generally available to
the holders of shares of the series of Series Preferred Stock underlying the
Depositary Shares.
Neither the Depositary nor the Parent will be liable if it is prevented or
delayed by law or any circumstance beyond its control from or in performing
its obligations under the Deposit Agreement.
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DESCRIPTION OF PARENT CAPITAL STOCK
The following description of certain terms of the Parent's common stock, par
value $1.00 per share (the "Common Stock"), and Preferred Stock (defined
below) does not purport to be complete and is qualified in its entirety by
reference to the Restated Certificate of Incorporation, as amended, of TCI
(including the Certificates of Designations with respect to outstanding series
of Series Preferred Stock) (the "Charter"), each of which is incorporated
herein by reference.
GENERAL
The Charter currently provides that the Parent is authorized to issue
3,602,375,096 shares of capital stock, including (i) 3,550,000,000 shares of
Common Stock, of which 1,750,000,000 shares are designated Series A TCI Group
Common Stock, 150,000,000 shares are designated Tele-Communications, Inc.
Series B TCI Group Common Stock (the "Series B TCI Group Common Stock" and,
together with the Series A TCI Group Common Stock, the "TCI Group Common
Stock"), 750,000,000 shares are designated Tele-Communications, Inc. Series A
Liberty Media Group Common Stock (the "Series A Liberty Media Group Common
Stock"), 75,000,000 shares are designated Tele-Communications, Inc. Series B
Liberty Media Group Common Stock (the "Series B Liberty Media Group Common
Stock" and, together with the Series A Liberty Media Group Common Stock, the
"Liberty Media Group Common Stock"), 750,000,000 shares are designated Tele-
Communications, Inc. Series A TCI Ventures Group Common Stock (the "Series A
TCI Ventures Group Common Stock") and 75,000,000 shares are designated Tele-
Communications, Inc. Series B TCI Ventures Group Common Stock (the "Series B
TCI Ventures Group Common Stock" and, together with the Series A TCI Ventures
Group Common Stock, the "TCI Ventures Group Common Stock") and (ii) 52,375,096
shares of preferred stock (the "Preferred Stock"), of which 700,000 shares are
designated Class A Preferred Stock, par value $.01 per share (the "Class A
Preferred Stock"), 1,675,096 shares are designated Class B 6% Cumulative
Redeemable Exchangeable Junior Preferred Stock, par value $.01 per share (the
"Class B Preferred Stock") and 50,000,000 shares are designated as Series
Preferred Stock, issuable in series. Of the Series Preferred Stock, 80,000
shares are designated as Convertible Preferred Stock, Series C (the "Series C
Preferred Stock"), 70,575 shares are designated as Convertible Preferred
Stock, Series C-TCI Group (the "Series C-TCI Group Preferred Stock"), 70,575
shares are designated as Convertible Preferred Stock, Series C-Liberty Media
Group (the "Series C-Liberty Media Group Preferred Stock"), 1,000,000 shares
are designated as Convertible Preferred Stock, Series D (the "Series D
Preferred Stock"), 400,000 shares are designated as Redeemable Convertible
Preferred Stock, Series E (the "Series E Preferred Stock"), 500,000 shares are
designated Convertible Redeemable Participating Preferred Stock, Series F (the
"Series F Preferred Stock"), 7,259,380 shares are designated as Redeemable
Convertible TCI Group Preferred Stock, Series G (the "Series G Preferred
Stock"), and 7,259,380 shares are designated as Redeemable Convertible Liberty
Media Group Preferred Stock, Series H (the "Series H Preferred Stock"). All of
the shares of Class A Preferred Stock have previously been redeemed and
retired and may not be reissued, thereby reducing the number of authorized
shares of Preferred Stock. 70,575 shares of Series C Preferred Stock have
previously been retired by the Parent, with the effect that such shares have
been restored to the status of authorized and unissued shares of Series
Preferred Stock, and may be reissued as shares of another series of Series
Preferred Stock but may not be reissued as Series C Preferred Stock. The
Parent does not intend to issue any additional shares of Series C Preferred
Stock and intends to remove any remaining shares of Series Preferred Stock
designated as Series C Preferred Stock from such designation as soon as
practicable. All of the shares of Series E Preferred Stock have previously
been redeemed and retired, with the effect that such shares have been restored
to the status of authorized and unissued shares of Series Preferred Stock, and
may be reissued as shares of another series of Series Preferred Stock but may
not be reissued as Series E Preferred Stock.
COMMON STOCK
As of September 30, 1997, 472,480,384 shares of Series A TCI Group Common
Stock (net of treasury stock and shares held by subsidiaries of the Parent),
38,544,680 shares of Series B TCI Group Common Stock (net of treasury stock
and shares held by subsidiaries of the Parent), 223,203,786 shares of Series A
Liberty Media Group Common Stock (net of treasury stock and shares held by
subsidiaries of the Parent), 21,175,465 shares of
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Series B Liberty Media Group Common Stock (net of shares held by subsidiaries
of the Parent), 188,661,300 shares of Series A TCI Ventures Group Common Stock
and 16,266,400 shares of Series B TCI Ventures Group Common Stock had been
issued and were outstanding and 125,645,656 shares of Series A TCI Group
Common Stock, 9,112,500 shares of Series B TCI Group Common Stock, 4,436,245
shares of Series A Liberty Media Group Common Stock and 2,278,125 shares of
Series B Liberty Media Group Common Stock were held by subsidiaries of the
Parent. As of that date, 114,611,215 shares of Series A TCI Group Common
Stock, 31,584,184 shares of Series A Liberty Media Group Common Stock and
18,547,213 shares of Series A TCI Ventures Group Common Stock were reserved
for issuance upon conversion, exchange or exercise of outstanding convertible
or exchangeable securities (other than the Series B TCI Group Common Stock,
the Series B Liberty Media Group Common Stock and the Series B TCI Ventures
Group Common Stock, and other than the Series F Preferred Stock held by
subsidiaries of the Parent) and options. In addition, the Parent has reserved
a number of shares of Series A TCI Group Common Stock equal to the number of
shares of Series B TCI Group Common Stock outstanding, a number of shares of
Series A Liberty Media Group Common Stock equal to the number of shares of
Series B Liberty Media Group Common Stock outstanding and a number of shares
of Series A TCI Ventures Group Common Stock equal to the number of shares of
Series B TCI Ventures Group Common Stock outstanding, in either case for
issuance upon conversion, at the option of the holder, of the Series B TCI
Group Common Stock, the Series B Liberty Media Group Common Stock and the
Series B TCI Ventures Group Common Stock, respectively. Additionally,
subsidiaries of the Parent own shares of Series F Preferred Stock, which are
convertible into an aggregate of 416,528,172 shares of Series A TCI Group
Common Stock.
Certain Definitions
As used herein, the following terms have the meanings specified below:
"Adjusted Liberty Media Group Outstanding Interest Fraction" means a
fraction the numerator of which is the number of outstanding shares of Liberty
Media Group Common Stock and the denominator of which is the sum of (a) such
number of outstanding shares, (b) the Number of Shares Issuable with Respect
to the Liberty Media Group Inter-Group Interest, (c) the number of shares of
Liberty Media Group Common Stock issuable upon conversion, exercise or
exchange of Pre-Distribution Convertible Securities and (d) the number of
Committed Acquisition Shares issuable.
"Adjusted TCI Ventures Group Outstanding Interest Fraction" means a fraction
the numerator of which is the number of outstanding shares of TCI Ventures
Group Common Stock and the denominator of which is the sum of (a) such number
of outstanding shares, (b) the Number of Shares Issuable with Respect to the
TCI Ventures Group Inter-Group Interest and (c) the number of shares of TCI
Ventures Group Common Stock issuable upon conversion, exercise or exchange of
Pre-Exchange Offer Securities.
"Appraisal Date," with respect to any determination of the Liberty Media
Group Private Market Value or the TCI Ventures Group Private Market Value,
shall mean the last day of the calendar month preceding the month in which the
Selection Date occurs.
"Appraiser" means each of the First Appraiser, the Second Appraiser and the
Mutually Designated Appraiser.
"Committed Acquisition Shares" means (i) the shares of Series A Liberty
Media Group Common Stock that the Parent had, prior to the record date for the
Liberty Media Group Distribution on August 10, 1995, agreed to issue, but as
of such record date had not issued, and (ii) the shares of Series A Liberty
Media Group Common Stock that are issuable upon conversion, exercise or
exchange of Convertible Securities that the Parent had, prior to the record
date for the Liberty Media Group Distribution, agreed to issue, but as of such
record date had not issued, in each case including obligations of the Parent
to issue shares of the Parent's Class A Common Stock, par value $1.00 per
share (which has been redesignated SeriesA TCI Group Common Stock), which as a
result of the Liberty Media Group Distribution, constitute obligations to
issue, among other securities, Series A Liberty
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Media Group Common Stock or Convertible Securities which are convertible into
or exercisable or exchangeable for Series A Liberty Media Group Common Stock;
provided, however, that Committed Acquisition Shares will not include any
shares of Liberty Media Group Common Stock issuable upon conversion, exercise
or exchange of Pre-Distribution Convertible Securities. The type and amount of
Committed Acquisition Shares issuable will be appropriately adjusted to
reflect subdivisions and combinations of the Series A Liberty Media Group
Common Stock and dividends or distributions of shares of Series A Liberty
Media Group Common Stock or Series B Liberty Media Group Common Stock to
holders of Series A Liberty Media Group Common Stock and other
reclassifications of the Series A Liberty Media Group Common Stock, in each
case occurring (or the record date for which occurs) after the Liberty Media
Group Distribution. The shares of Series A Liberty Media Group Common Stock
issuable upon conversion of the Series H Preferred Stock constitute Committed
Acquisition Shares.
"Convertible Securities" means any securities of the Parent (other than any
series of Common Stock) or any Subsidiary thereof that are convertible into,
exchangeable for or evidence the right to purchase any shares of any series of
Common Stock, whether upon conversion, exercise, exchange, pursuant to
antidilution provisions of such securities or otherwise.
"Disposition" means the sale, transfer, assignment or other disposition
(whether by merger, consolidation, sale or contribution of assets or stock or
otherwise) of properties or assets.
"DGCL" means the General Corporation Law of the State of Delaware.
"Exchange Offers" means those certain offers made by the Parent to exchange
(i) one share of Series A TCI Ventures Group Common Stock for each share of
Series A TCI Group Common Stock properly tendered and not validly withdrawn,
up to 188,661,300 shares of Series A TCI Group Common Stock (the "Series A
Maximum"), and (ii) one share of Series B TCI Ventures Group Common Stock for
each share of Series B TCI Group Common Stock properly tendered and not
validly withdrawn, up to 16,266,400 shares of Series B TCI Group Common Stock
(the "Series B Maximum"), upon the terms and subject to the conditions set
forth in the Offering Circular of the Parent, dated August 7, 1997, and the
related letters of transmittal.
"First Appraiser" means, with respect to any determination of the Liberty
Media Group Private Market Value or the TCI Ventures Group Private Market
Value, an investment banking firm of recognized national standing selected by
the Parent to make such determination.
"Higher Appraised Amount" means, with respect to any determination of the
Liberty Media Group Private Market Value or the TCI Ventures Group Private
Market Value, the higher of the respective final views of the First Appraiser
and the Second Appraiser as to such private market value.
"Initial Ventures Options" means those certain options to purchase shares of
Series A TCI Ventures Group Common Stock that were issued effective upon the
consummation of the Exchange Offers, in connection with the adjustment of the
Adjustable Options. For purposes of this definition, the term "Adjustable
Options" means those options to purchase shares of Series A TCI Group Common
Stock that were outstanding immediately prior to the consummation of the
Exchange Offers under any Existing Stock Plan (as defined below), which
options the Board of Directors and, if applicable, the committee of the Board
of Directors charged with the administration of such Existing Stock Plan,
determined to adjust for the effects of the Exchange Offers by the issuance,
in substitution for and in cancellation of each such Adjustable Option
effective upon the consummation of the Exchange Offers, of an Initial Ventures
Option to purchase a number of shares of Series A TCI Ventures Group Common
Stock initially equal to 30% (rounded up to the next whole number) of the
number of shares of Series A TCI Group Common Stock that would have been
issuable upon exercise of such Adjustable Option immediately prior to the
consummation of the Exchange Offers, and an option to purchase a number of
shares of Series A TCI Group Common Stock equal to 70% (rounded down to the
next whole number) of the number of shares of Series A TCI Group Common Stock
that would have been issuable upon exercise of such Adjustable Option
immediately prior to the consummation of the Exchange Offers, together with
such other securities as
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were then issuable upon exercise of such Adjustable Option (and, in each case,
having such other terms consistent with the terms of the Adjustable Option for
which they are exchanged as the Board of Directors or the committee, as
applicable, determines). The term "Existing Stock Plans" means each of the
following: the Tele-Communications, Inc. 1994 Stock Incentive Plan, the Tele-
Communications, Inc. 1995 Employee Stock Incentive Plan and the Tele-
Communications, Inc. 1996 Incentive Plan.
"Inter-Group Interest" of the TCI Group in the Liberty Media Group or the
TCI Ventures Group means any common stockholders' equity value of the Parent
attributable to the Liberty Media Group or the TCI Ventures Group, as the case
may be, that is not represented by outstanding shares of Liberty Media Group
Common Stock or TCI Ventures Group Common Stock, as the case may be. The TCI
Group's Inter-Group Interest in the Liberty Media Group is represented by the
Number of Shares Issuable with Respect to the Liberty Media Group Inter-Group
Interest and the TCI Group's Inter-Group Interest in the TCI Ventures Group is
represented by the Number of Shares Issuable with Respect to the TCI Ventures
Group Inter-Group Interest.
"Liberty Media Group" means as of any date of determination thereof:
(i) the interest of the Parent or any of its subsidiaries in Liberty
Media Corporation or any of its subsidiaries (including any successor
thereto by merger, consolidation or sale of all or substantially all of its
assets, whether or not in connection with a Related Business Transaction)
and their respective properties and assets,
(ii) all assets and liabilities of the Parent or any of its subsidiaries
to the extent attributed to any of the properties or assets referred to in
clause (i) of this sentence, whether or not such assets or liabilities are
assets and liabilities of Liberty Media Corporation or any of its
subsidiaries (or a successor as described in clause (i) of this sentence),
(iii) all assets and properties contributed or otherwise transferred to
the Liberty Media Group from the TCI Group, and
(iv) the interest of the Parent or any of its subsidiaries in the
businesses, assets and liabilities acquired by the Parent or any of its
subsidiaries for the Liberty Media Group, as determined by the Board of
Directors;
provided that (a) from and after any dividend or other distribution with
respect to any shares of Liberty Media Group Common Stock (other than a
dividend or other distribution payable in shares of Liberty Media Group Common
Stock, with respect to which adjustment will be made as described in clause
(i) of the definition of "Number of Shares Issuable with Respect to the
Liberty Media Group Inter-Group Interest," or in other securities of the
Parent attributed to the Liberty Media Group for which provision will be made
as described in the penultimate sentence of this definition), the Liberty
Media Group will no longer include an amount of assets or properties equal to
the aggregate amount of such kind of assets or properties so paid in respect
of shares of Liberty Media Group Common Stock multiplied by a fraction the
numerator of which is equal to the Liberty Media Group Inter-Group Interest
Fraction in effect immediately prior to the record date for such dividend or
other distribution and the denominator of which is equal to the Liberty Media
Group Outstanding Interest Fraction in effect immediately prior to the record
date for such dividend or other distribution and (b) from and after any
transfer of assets or properties from the Liberty Media Group to the TCI
Group, the Liberty Media Group will no longer include the assets or properties
so transferred. If the Parent pays a dividend or makes any other distribution
with respect to shares of Liberty Media Group Common Stock payable in
securities of the Parent attributed to the Liberty Media Group other than
Liberty Media Group Common Stock, the TCI Group will be deemed to hold an
amount of such other securities equal to the amount so distributed multiplied
by the fraction specified in clause (a) of this definition (determined as of a
time immediately prior to the record date for such dividend or other
distribution), and to the extent interest or dividends are paid or other
distributions are made on such other securities so distributed to the holders
of Liberty Media Group Common Stock, the Liberty Media Group will no longer
include a corresponding ratable amount of the kind of assets paid as such
interest or dividends or other distributions in respect of such securities so
deemed to be held by the TCI Group. The Parent may also, to the extent any
such other securities constitute Convertible Securities which are at the time
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convertible, exercisable or exchangeable, cause such Convertible Securities
deemed to be held by the TCI Group to be deemed to be converted, exercised or
exchanged (and to the extent the terms of such Convertible Securities require
payment or delivery of consideration in order to effect such conversion,
exercise or exchange, the Liberty Media Group will in such case include an
amount of the kind of properties or assets required to be paid or delivered as
such consideration for the amount of the Convertible Securities deemed
converted, exercised or exchanged as if such Convertible Securities were
outstanding), in which case such Convertible Securities will no longer be
deemed to be held by the TCI Group or attributed to the Liberty Media Group.
"Liberty Media Group Distribution" shall mean the share distribution of
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock made to the holders of record of Series A TCI Group Common
Stock and Series B TCI Group Common Stock as of the close of business on
August 4, 1995.
"Liberty Media Group Inter-Group Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the Number of Shares Issuable with
Respect to the Liberty Media Group Inter-Group Interest as of such date and
the denominator of which is the sum of (a) such Number of Shares Issuable with
Respect to the Liberty Media Group Inter-Group Interest as of such date and
(b) the aggregate number of shares of Liberty Media Group Common Stock
outstanding as of such date.
"Liberty Media Group Net Proceeds" shall mean, as of any date, with respect
to any Disposition of any of the properties and assets of the Liberty Media
Group, an amount, if any, equal to the gross proceeds of such Disposition
after any payment of, or reasonable provision for, (a) any taxes payable by
the Parent in respect of such Disposition or in respect of any resulting
dividend or redemption pursuant to clause (i) or (ii), respectively, of the
second paragraph under "--Conversion and Redemption--Mandatory Dividend,
Redemption or Conversion of Liberty Media Group Common Stock" (or which would
have been payable but for the utilization of tax benefits attributable to the
TCI Group or the TCI Ventures Group), (b) any transaction costs, including,
without limitation, any legal, investment banking and accounting fees and
expenses and (c) any liabilities and other obligations (contingent or
otherwise) of, or attributed to, the Liberty Media Group, including, without
limitation, any indemnity or guarantee obligations incurred in connection with
the Disposition or any liabilities for future purchase price adjustments and
any preferential amounts plus any accumulated and unpaid dividends and other
obligations (without duplication of amounts allocated for the satisfaction of
the Parent's obligations with respect to Pre-Distribution Convertible
Securities and Committed Acquisition Shares issuable which are included in the
determination of the Adjusted Liberty Media Group Outstanding Interest
Fraction) in respect of Preferred Stock attributed to the Liberty Media Group.
For purposes of this definition, any properties and assets of the Liberty
Media Group remaining after such Disposition shall constitute "reasonable
provision" for such amount of taxes, costs and liabilities (contingent or
otherwise) as can be supported by such properties and assets. To the extent
the proceeds of any Disposition include any securities or other property other
than cash, the Board of Directors shall determine the value of such securities
or property, including for the purpose of determining the equivalent value
thereof if the Board of Directors determines to pay a dividend or redemption
price in cash or securities or other property as provided in the penultimate
paragraph under "--Conversion and Redemption-- Mandatory Dividend, Redemption
or Conversion of Liberty Media Group Common Stock."
"Liberty Media Group Outstanding Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the aggregate number of shares of
Liberty Media Group Common Stock outstanding on such date and the denominator
of which is the sum of (a) such aggregate number of shares of Liberty Media
Group Common Stock outstanding on such date and (b) the Number of Shares
Issuable with Respect to the Liberty Media Group Inter-Group Interest as of
such date.
"Lower Appraised Amount," with respect to any determination of the Liberty
Media Group Private Market Value or the TCI Ventures Group Private Market
Value, shall mean the lower of the respective final views of the First
Appraiser and the Second Appraiser as to such private market value.
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"Market Capitalization" of any class or series of capital stock of the
Parent on any Trading Day shall mean the product of (i) the Market Value of
one share of such class or series on such Trading Day and (ii) the number of
shares of such class or series outstanding on such Trading Day.
"Market Value" of any class or series of capital stock of the Parent on any
day shall mean the average of the high and low reported sales prices regular
way of a share of such class or series on such day (if such day is a Trading
Day, and if such day is not a Trading Day, on the Trading Day immediately
preceding such day) or in case no such reported sale takes place on such
Trading Day the average of the reported closing bid and asked prices regular
way of a share of such class or series on such Trading Day, in either case on
the Nasdaq National Market, or if the shares of such class or series are not
quoted on the Nasdaq National Market on such Trading Day, the average of the
closing bid and asked prices of a share of such class or series in the over-
the-counter market on such Trading Day as furnished by any New York Stock
Exchange member firm selected from time to time by the Parent, or if such
closing bid and asked prices are not made available by any such New York Stock
Exchange member firm on such Trading Day, the market value of a share of such
class or series as determined by the Board of Directors; provided that for
purposes of determining the ratios described under "--Conversion and
Redemption--Conversion of Liberty Media Group Common Stock at the Option of
the Parent," "--Conversion and Redemption--Conversion of TCI Ventures Group
Common Stock at the Option of the Parent," "--Mandatory Dividend, Redemption
or Conversion of Liberty Media Group Common Stock," and "--Mandatory Dividend,
Redemption or Conversion of TCI Ventures Group Common Stock" and as described
under "--Liquidation Rights," (a) the "Market Value" of any share of any
series of Common Stock on any day prior to the "ex" date or any similar date
for any dividend or distribution paid or to be paid with respect to such
series of Common Stock shall be reduced by the fair market value of the per
share amount of such dividend or distribution as determined by the Board of
Directors and (b) the "Market Value" of any share of any series of Common
Stock on any day prior to (i) the effective date of any subdivision (by stock
split or otherwise) or combination (by reverse stock split or otherwise) of
outstanding shares of such series of Common Stock or (ii) the "ex" date or any
similar date for any dividend or distribution with respect to any such series
of Common Stock in shares of such series of Common Stock shall be
appropriately adjusted to reflect such subdivision, combination, dividend or
distribution.
"Mutually Appraised Amount," with respect to any determination of the
Liberty Media Group Private Market Value or the TCI Ventures Group Private
Market Value, shall mean the determination by the Mutually Designated
Appraiser of such private market value.
"Mutually Designated Appraiser" shall mean, if required with respect to any
determination of the Liberty Media Group Private Market Value or the TCI
Ventures Group Private Market Value, the investment banking firm of recognized
national standing jointly designated by the First Appraiser and the Second
Appraiser to make such determination.
"Number of Shares Issuable with Respect to the Liberty Media Group Inter-
Group Interest" is currently zero and will from time to time be
(i) adjusted as appropriate to reflect subdivisions (by stock split or
otherwise) and combinations (by reverse stock split or otherwise) of the
Series A Liberty Media Group Common Stock and dividends or distributions of
shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock to holders of Series A Liberty Media Group Common
Stock and other reclassifications of Series A Liberty Media Group Common
Stock,
(ii) decreased (but not to less than zero) by (a) the aggregate number of
shares of Series A Liberty Media Group Common Stock issued or sold by the
Parent after the Liberty Media Group Distribution other than Committed
Acquisition Shares, the proceeds of which are attributed to the TCI Group,
(b) the aggregate number of shares of Series A Liberty Media Group Common
Stock issued or delivered upon conversion, exercise or exchange of
Convertible Securities (other than Pre-Distribution Convertible Securities
and Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares), the proceeds of which are
attributed to the TCI Group, (c) the aggregate
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number of shares of Series A Liberty Media Group Common Stock issued or
delivered by the Parent as a dividend or distribution to holders of Series
A TCI Group Common Stock and Series B TCI Group Common Stock, (d) the
aggregate number of shares of Series A Liberty Media Group Common Stock
issued or delivered upon the conversion, exercise or exchange of any
Convertible Securities (other than Pre-Distribution Convertible Securities
and Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares) issued or delivered by the
Parent after the Liberty Media Group Distribution as a dividend or
distribution or by reclassification or exchange to holders of Series A TCI
Group Common Stock and Series B TCI Group Common Stock and (e) the
aggregate number of shares of Series A Liberty Media Group Common Stock
(rounded, if necessary, to the nearest whole number), equal to the
aggregate fair value (as determined by the Board of Directors) of assets or
properties attributed to the Liberty Media Group that are transferred from
the Liberty Media Group to the TCI Group in consideration of a reduction in
the Number of Shares Issuable with Respect to the Liberty Media Group
Inter-Group Interest, divided by the Market Value of one share of Series A
Liberty Media Group Common Stock as of the date of such transfer, and
(iii) increased by (a) the aggregate number of any shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock which are retired or otherwise cease to be outstanding following
their purchase with funds attributed to the TCI Group, (b) a number
(rounded, if necessary, to the nearest whole number), equal to the fair
value (as determined by the Board of Directors) of assets or properties
theretofore attributed to the TCI Group that are contributed to the Liberty
Media Group in consideration of an increase in the Number of Shares
Issuable with Respect to the Liberty Media Group Inter-Group Interest,
divided by the Market Value of one share of Series A Liberty Media Group
Common Stock as of the date of such contribution and (c) the aggregate
number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock into or for which Convertible Securities
are deemed to be converted, exercised or exchanged pursuant to the last
sentence of the definition of "TCI Group."
The Parent will not issue or sell shares of Series B Liberty Media Group
Common Stock in respect of a reduction in the Number of Shares Issuable with
Respect to the Liberty Media Group Inter-Group Interest. Whenever a change in
the Number of Shares Issuable with Respect to the Liberty Media Group Inter-
Group Interest occurs, the Parent will prepare and file a statement of such
change with the Secretary of the Parent.
"Number of Shares Issuable with Respect to the TCI Ventures Group Inter-
Group Interest" is currently zero and will from time to time, as applicable,
be
(i) adjusted as appropriate to reflect subdivisions (by stock split or
otherwise) and combinations (by reverse stock split or otherwise) of the
Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group
Common Stock and dividends or distributions of shares of Series A TCI
Ventures Group Common Stock or Series B TCI Ventures Group Common Stock to
holders of Series A TCI Ventures Group Common Stock and Series B TCI
Ventures Group Common Stock and other reclassifications of the Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock,
(ii) decreased (but not to less than zero) by (a) the aggregate number of
shares of Series A TCI Ventures Group Common Stock or Series B TCI Ventures
Group Common Stock issued or sold by the Parent after the consummation of
the Exchange Offers the proceeds of which are attributed to the TCI Group,
(b) the aggregate number of shares of Series A TCI Ventures Group Common
Stock or Series B TCI Ventures Group Common Stock issued or delivered upon
conversion, exercise or exchange of Convertible Securities (other than Pre-
Exchange Offer Securities), the proceeds of which are attributed to the TCI
Group, (c) the aggregate number of shares of Series A TCI Ventures Group
Common Stock or Series B TCI Ventures Group Common Stock issued or
delivered by the Parent as a dividend or distribution to holders of Series
A TCI Group Common Stock and Series B TCI Group Common Stock, (d) the
aggregate number of shares of Series A TCI Ventures Group Common Stock or
Series B TCI Ventures Group Common Stock issued or delivered upon the
conversion, exercise or exchange of any Convertible Securities (other than
Pre-Exchange Offer Securities) issued or delivered by the Parent after the
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consummation of the Exchange Offers as a dividend or distribution or by
reclassification or exchange to holders of Series A TCI Group Common Stock
and Series B TCI Group Common Stock and (e) the aggregate number of shares
of Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group
Common Stock (rounded, if necessary, to the nearest whole number), equal to
the aggregate fair value (as determined by the Board of Directors) of
assets or properties attributed to the TCI Ventures Group that are
transferred from the TCI Ventures Group to the TCI Group in consideration
of a reduction in the Number of Shares Issuable with Respect to the TCI
Ventures Group Inter-Group Interest, divided by the Market Value of one
share of Series A TCI Ventures Group Common Stock as of the date of such
transfer, and
(iii) increased by (a) the aggregate number of any shares of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock
which are retired or otherwise cease to be outstanding following their
purchase with funds attributed to the TCI Group, (b) a number (rounded, if
necessary, to the nearest whole number), equal to the fair value (as
determined by the Board of Directors) of assets or properties theretofore
attributed to the TCI Group that are contributed to the TCI Ventures Group
in consideration of an increase in the Number of Shares Issuable with
Respect to the TCI Ventures Group Inter-Group Interest, divided by the
Market Value of one share of Series A TCI Ventures Group Common Stock as of
the date of such contribution and (c) the aggregate number of shares of
Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group
Common Stock into or for which Convertible Securities are deemed to be
converted, exercised or exchanged pursuant to the last sentence of the
definition of "TCI Group."
Whenever a change in the Number of Shares Issuable with Respect to the TCI
Ventures Group Inter-Group Interest occurs, the Parent shall prepare and file
a statement of such change with the Secretary of the Parent.
"Pre-Distribution Convertible Securities" means Convertible Securities that
were outstanding on the record date for the Liberty Media Group Distribution
and were, prior to such date, convertible into or exercisable or exchangeable
for shares of the Parent's Class A Common Stock, par value $1.00 per share
(which has been redesignated Series A TCI Group Common Stock).
"Pre-Exchange Offer Securities" means the TCI-UA Notes and the Initial
Ventures Options.
"Qualifying Subsidiary" shall mean a Subsidiary of the Parent in which (i)
the Parent's ownership and voting interest is sufficient to satisfy the
requirements of the Internal Revenue Service for (x), in the case of a
Subsidiary that holds assets attributed to the Liberty Media Group, a
distribution of the Parent's interest in such Subsidiary to the holders of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock that is tax free to such holders or (y), in the case of a
Subsidiary that holds assets attributed to the TCI Ventures Group, a
distribution of the Parent's interest in such Subsidiary to the holders of
Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group
Common Stock that is tax free to such holders or (ii) the Parent owns,
directly or indirectly, all of the issued and outstanding capital stock.
"Related Business Transaction" shall mean any Disposition of all or
substantially all of the properties and assets of the Liberty Media Group or
the TCI Ventures Group, as the case may be, in which the Parent receives as
proceeds of such Disposition primarily equity securities (including, without
limitation, capital stock, convertible securities, partnership or limited
partnership interests and other types of equity securities, without regard to
the voting power or contractual or other management or governance rights
related to such equity securities) of the purchaser or acquiror of such assets
and properties of the Liberty Media Group or the TCI Ventures Group, as the
case may be, any entity which succeeds (by merger, formation of a joint
venture enterprise or otherwise) to such assets and properties of the Liberty
Media Group or the TCI Ventures Group, as the case may be, or a third party
issuer, which purchaser, acquiror or other issuer is engaged or proposes to
engage primarily in one or more businesses similar or complementary to the
businesses conducted by the Liberty Media Group or the TCI Ventures Group, as
the case may be, prior to such Disposition, as determined in good faith by the
Board of Directors.
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"Second Appraiser" means, with respect to any determination of the Liberty
Media Group Private Market Value or the TCI Ventures Group Private Market
Value, an investment banking firm of recognized national standing selected by
the Independent Committee to make such determination.
"Selection Date," with respect to any determination of the Liberty Media
Group Private Market Value or the TCI Ventures Group Private Market Value,
shall mean the date upon which the Second Appraiser for such determination is
selected by the Independent Committee.
"Subsidiary" shall mean, with respect to any person or entity, any
corporation or partnership 50% or more of whose outstanding voting securities
or partnership interests, as the case may be, are directly or indirectly owned
by such person or entity.
"TCI Group" means as of any date of determination thereof:
(i) the interest of the Parent or any of its subsidiaries in all of the
businesses in which the Parent or any of its subsidiaries (or any of their
predecessors or successors) is or has been engaged, directly or indirectly,
and the respective assets and liabilities of the Parent or any of its
subsidiaries, other than any businesses, assets or liabilities of the
Liberty Media Group or the TCI Ventures Group;
(ii) a proportionate interest in the businesses, assets and liabilities
of the Liberty Media Group equal to the Liberty Media Group Inter-Group
Interest Fraction as of such date and a proportionate interest in the
businesses, assets and liabilities of the TCI Ventures Group equal to the
TCI Ventures Group Inter-Group Interest Fraction as of such date;
(iii) from and after any dividend or other distribution with respect to
shares of Liberty Media Group Common Stock (other than a dividend or other
distribution payable in shares of Liberty Media Group Common Stock, with
respect to which adjustment will be made as described in clause (i) of the
definition of "Number of Shares Issuable with Respect to the Liberty Media
Group Inter-Group Interest," or in other securities of the Parent
attributed to the Liberty Media Group, for which provision will be made as
described in the second sentence of this definition), an amount of assets
or properties theretofore included in the Liberty Media Group equal to the
aggregate amount of such kind of assets or properties so paid in respect of
such dividend or other distribution with respect to shares of Liberty Media
Group Common Stock multiplied by a fraction the numerator of which is equal
to the Liberty Media Group Inter-Group Interest Fraction in effect
immediately prior to the record date for such dividend or other
distribution and the denominator of which is equal to the Liberty Media
Group Outstanding Interest Fraction in effect immediately prior to the
record date for such dividend or other distribution;
(iv) from and after any dividend or other distribution with respect to
shares of TCI Ventures Group Common Stock (other than a dividend or other
distribution payable in shares of TCI Ventures Group Common Stock, with
respect to which adjustment will be made as described in clause (i) of the
definition of "Number of Shares Issuable with Respect to the TCI Ventures
Group Inter-Group Interest," or in other securities of the Parent
attributed to the TCI Ventures Group, for which provision will be made as
described in the penultimate sentence of this definition), an amount of
assets or properties theretofore included in the TCI Ventures Group equal
to the aggregate amount of such kind of assets or properties so paid in
respect of such dividend or other distribution with respect to shares of
TCI Ventures Group Common Stock multiplied by a fraction the numerator of
which is equal to the TCI Ventures Group Inter-Group Interest Fraction in
effect immediately prior to the record date for such dividend or other
distribution and the denominator of which is equal to the TCI Ventures
Group Outstanding Interest Fraction in effect immediately prior to the
record date for such dividend or other distribution; and
(v) any assets or properties transferred from the Liberty Media Group or
the TCI Ventures Group to the TCI Group;
provided that, from and after any contribution or transfer of any assets or
properties from the TCI Group to the Liberty Media Group or the TCI Ventures
Group, the TCI Group will no longer include such assets or properties so
contributed or transferred (other than pursuant to its interest in the
businesses, assets and liabilities of the
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Liberty Media Group or the TCI Ventures Group, as applicable, described in
clause (ii) above). If the Parent pays a dividend or makes any other
distribution with respect to shares of Liberty Media Group Common Stock
payable in other securities of the Parent attributed to the Liberty Media
Group, the TCI Group will be deemed to hold an amount of such other securities
equal to the amount so distributed multiplied by the fraction specified in
clause (iii) of this definition (determined as of a time immediately prior to
the record date for such dividend or other distribution), and to the extent
interest or dividends are paid or other distributions are made on such other
securities so distributed to holders of Liberty Media Group Common Stock, the
TCI Group will include a corresponding ratable amount of the kind of assets
paid as such interest or dividends or other distributions in respect of such
securities so deemed to be held by the TCI Group. If the Parent pays a
dividend or makes any other distribution with respect to shares of TCI
Ventures Group Common Stock payable in other securities of the Parent
attributed to the TCI Ventures Group, the TCI Group will be deemed to hold an
amount of such other securities equal to the amount so distributed multiplied
by the fraction specified in clause (iv) of this definition (determined as of
a time immediately prior to the record date for such dividend or other
distribution), and to the extent interest or dividends are paid or other
distributions are made on such other securities so distributed to holders of
TCI Ventures Group Common Stock, the TCI Group will include a corresponding
ratable amount of the kind of assets paid as such interest or dividends or
other distribution in respect of such securities so deemed to be held by the
TCI Group. The Parent may also, to the extent any such other securities
constitute Convertible Securities which are at the time convertible,
exercisable or exchangeable, cause such Convertible Securities deemed to be
held by the TCI Group to be deemed to be converted, exercised or exchanged
(and to the extent the terms of such Convertible Securities require payment or
delivery of consideration in order to effect such conversion, exercise or
exchange, the TCI Group will in such case no longer include an amount of the
kind of properties or assets required to be paid or delivered as such
consideration for the amount of the Convertible Securities deemed converted,
exercised or exchanged as if such Convertible Securities were outstanding), in
which case such Convertible Securities will no longer be deemed to be held by
the TCI Group or attributed to the Liberty Media Group or the TCI Ventures
Group, as applicable.
"TCI-UA Notes" shall mean those certain convertible notes due December 12,
2021 issued by TCI UA, Inc., a Subsidiary of the Parent, which notes were,
prior to the consummation of the Exchange Offers, exchangeable for shares of
Series A TCI Group Common Stock and Series A Liberty Media Group Common Stock.
"TCI Ventures Group" shall mean, as of any date that any shares of Series A
TCI Ventures Group Common Stock or Series B TCI Ventures Group Common Stock
have been issued and continue to be outstanding:
(i) the interest of the Parent or of any of its subsidiaries in any of
the following persons or any of their respective subsidiaries (including
any successor thereto by merger, consolidation or sale of all or
substantially all of its assets, whether or not in connection with a
Related Business Transaction) and their respective properties and assets:
TCI Ventures Group, LLC, Tele-Communications International, Inc., TCI
Telephony Holdings, Inc., New Jersey Fiber Technologies, L.P., Louisville
Lightwave, Western Tele-Communications, Inc., TCI GCI, Inc., TCI UVSG,
Inc., Acclaim Entertainment, Inc., TCI TSX, Inc., Intessera, Inc., TCI-
TVGOS, Inc., TCI MCNS Holdings, Inc., TCI ETC Holdings, Inc., TCI Internet
Holdings, Inc., TCI Online Sports Holdings, Inc., TCI Online Village
Holdings, Inc., TCI INZ Sports Holdings, Inc., TCI Netscape Holdings, Inc.,
TCI Java, Inc., National Digital Television Center, Inc., TCI SUMMITrak of
Texas, Inc., TCI SUMMITrak, LLC, DigiVentures, LLC, Kitty Hawk Capital
Limited Partners, II, New Enterprise Associates, IV, Limited Partnership,
Venture First II, L.P., TVSM, Inc.,
(ii) all assets and liabilities of the Parent or any of its subsidiaries
to the extent attributed to any of the properties or assets referred to in
clause (i) of this sentence, whether or not such assets or liabilities are
assets and liabilities of any of the Persons named in clause (i) or any of
their respective subsidiaries (or any successor as described in clause (i)
of this sentence),
(iii) the proceeds of exercise of the Initial Ventures Options and the
expense of exercise of any related stock appreciation rights,
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(iv) all assets and properties contributed or otherwise transferred to
the TCI Ventures Group from the TCI Group, and
(v) the interest of the Parent or any of its subsidiaries in the
businesses, assets and liabilities acquired by the Parent or any of its
subsidiaries for the TCI Ventures Group, as determined by the Board of
Directors;
provided that (a) from and after any dividend or other distribution with
respect to any shares of TCI Ventures Group Common Stock (other than a
dividend or other distribution payable in shares of TCI Ventures Group Common
Stock, with respect to which adjustment shall be made as provided in clause
(i) of the definition of "Number of Shares Issuable with Respect to the TCI
Ventures Group Inter-Group Interest," or in other securities of the Parent
attributed to the TCI Ventures Group for which provision shall be made as set
forth in the penultimate sentence of this definition), the TCI Ventures Group
will no longer include an amount of assets or properties equal to the
aggregate amount of such kind of assets or properties so paid in respect of
shares of TCI Ventures Group Common Stock multiplied by a fraction the
numerator of which is equal to the TCI Ventures Group Inter-Group Interest
Fraction in effect immediately prior to the record date for such dividend or
other distribution and the denominator of which is equal to the TCI Ventures
Group Outstanding Interest Fraction in effect immediately prior to the record
date for such dividend or other distribution and (b) from and after any
transfer of assets or properties from the TCI Ventures Group to the TCI Group,
the TCI Ventures Group shall no longer include the assets or properties so
transferred. If the Parent pays a dividend or makes any other distribution
with respect to shares of TCI Ventures Group Common Stock payable in
securities of the Parent attributed to the TCI Ventures Group other than TCI
Ventures Group Common Stock, the TCI Group shall be deemed to hold an amount
of such other securities equal to the amount so distributed multiplied by the
fraction specified in clause (a) of this definition (determined as of a time
immediately prior to the record date for such dividend or other distribution),
and to the extent interest or dividends are paid or other distributions are
made on such other securities so distributed to the holders of TCI Ventures
Group Common Stock, the TCI Ventures Group will no longer include a
corresponding ratable amount of the kind of assets paid as such interest or
dividends or other distributions in respect of such securities so deemed to be
held by the TCI Group. The Parent may also, to the extent any such other
securities constitute Convertible Securities which are at the time
convertible, exercisable or exchangeable, cause such Convertible Securities
deemed to be held by the TCI Group to be deemed to be converted, exercised or
exchanged (and to the extent the terms of such Convertible Securities require
payment or delivery of consideration in order to effect such conversion,
exercise or exchange, the TCI Ventures Group shall in such case include an
amount of the kind of properties or assets required to be paid or delivered as
such consideration for the amount of the Convertible Securities deemed
converted, exercised or exchanged as if such Convertible Securities were
outstanding), in which case such Convertible Securities shall no longer be
deemed to be held by the TCI Group or attributed to the TCI Ventures Group.
"TCI Ventures Group Inter-Group Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the Number of Shares Issuable with
Respect to the TCI Ventures Group Inter-Group Interest as of such date and the
denominator of which is the sum of (a) such Number of Shares Issuable with
Respect to the TCI Ventures Group Inter-Group Interest as of such date and (b)
the aggregate number of shares of TCI Ventures Group Common Stock outstanding
as of such date.
"TCI Ventures Group Net Proceeds" shall mean, as of any date, with respect
to any Disposition of any of the properties and assets of the TCI Ventures
Group, an amount, if any, equal to the gross proceeds of such Disposition
after any payment of, or reasonable provision for, (a) any taxes payable by
the Parent in respect of such Disposition or in respect of any resulting
dividend or redemption pursuant to clause (i) or (ii), respectively, of the
second paragraph under "--Conversion and Redemption--Mandatory Dividend,
Redemption or Conversion of TCI Ventures Group Common Stock" (or which would
have been payable but for the utilization of tax benefits attributable to the
TCI Group or the Liberty Media Group), (b) any transaction costs, including,
without limitation, any legal, investment banking and accounting fees and
expenses and (c) any liabilities and other obligations (contingent or
otherwise) of, or attributed to, the TCI Ventures Group, including, without
limitation, any indemnity or guarantee obligations incurred in connection with
the Disposition or any liabilities for future purchase price adjustments and
any preferential amounts plus any accumulated and unpaid dividends
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and other obligations (without duplication of amounts allocated for the
satisfaction of the Parent's obligations with respect to Pre-Exchange Offer
Securities which are included in the determination of the Adjusted TCI
Ventures Group Outstanding Interest Fraction) in respect of Preferred Stock
attributed to the TCI Ventures Group. For purposes of this definition, any
properties and assets of the TCI Ventures Group remaining after such
Disposition shall constitute "reasonable provision" for such amount of taxes,
costs and liabilities (contingent or otherwise) as can be supported by such
properties and assets. To the extent the proceeds of any Disposition include
any securities or other property other than cash, the Board of Directors shall
determine the value of such securities or property, including for the purpose
of determining the equivalent value thereof if the Board of Directors
determines to pay a dividend or redemption price in cash or securities or
other property as provided in the third paragraph under "--Conversion and
Redemption--Mandatory Dividend, Redemption or Conversion of TCI Ventures Group
Common Stock."
"TCI Ventures Group Outstanding Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the aggregate number of shares of
TCI Ventures Group Common Stock outstanding on such date and the denominator
of which is the sum of (a) such aggregate number of shares of TCI Ventures
Group Common Stock outstanding on such date and (b) the Number of Shares
Issuable with Respect to the TCI Ventures Group Inter-Group Interest as of
such date.
"Trading Day" shall mean each weekday other than any day on which any
relevant class or series of capital stock of the Corporation is not traded on
the Nasdaq National Market System or in the over-the-counter market.
Voting Rights
Holders of Series A TCI Group Common Stock, Series A Liberty Media Group
Common Stock and Series A TCI Ventures Group Common Stock, in each case, are
entitled to one vote for each share of such stock held, and holders of Series
B TCI Group Common Stock, Series B Liberty Media Group Common Stock and Series
B TCI Ventures Group Common Stock, in each case, are entitled to ten votes for
each share of such stock held, on all matters presented to such stockholders.
Except as may otherwise be required by the laws of the State of Delaware or,
with respect to any class of Preferred Stock or any series of such a class, in
the Charter (including any resolution or resolutions providing for the
establishment of such class or series pursuant to authority vested in the
Board of Directors by the Charter), the holders of TCI Group Common Stock, the
holders of Liberty Media Group Common Stock, the holders of TCI Ventures Group
Common Stock and the holders of each class or series of Preferred Stock, if
any, entitled to vote thereon will vote as one class with respect to all
matters to be voted on by stockholders of the Parent.
None of the holders of Series A TCI Group Common Stock, Series B TCI Group
Common Stock, Series A Liberty Media Group Common Stock, Series B Liberty
Media Group Common Stock, Series A TCI Ventures Group Common Stock or Series B
TCI Ventures Group Common Stock have any rights to vote as a separate class or
series on any matter coming before the stockholders of the Parent, except with
respect to certain limited class and series voting rights provided under the
Delaware General Corporation Law ("DGCL"). Under the DGCL, the approval of the
holders of a majority of the outstanding shares of any class of capital stock
of a corporation, voting separately as a class, is required to approve any
amendment to the charter of such corporation that would alter or change the
powers, preferences or special rights of the shares of such class so as to
affect them adversely, provided that, if any amendment would alter or change
the powers, preferences or special rights of one or more series of the class
so as to affect them adversely, but would not so affect the entire class, then
only the shares of the series so affected by the amendment would be entitled
to vote thereon separately as a class. Because the Series A TCI Group Common
Stock, the Series B TCI Group Common Stock, the Series A Liberty Media Group
Common Stock, the Series B Liberty Media Group Common Stock, the Series A TCI
Ventures Group Common Stock and the Series B TCI Ventures Group Common Stock
are each a separate series of a single class of stock, each series will be
entitled to vote separately as a class upon an amendment to the Charter that
would alter or change the powers, preferences or special rights of such series
so as to affect them adversely only if the other series were not so affected.
The DGCL does not provide for any other separate voting rights of a class or
series of capital stock (other than with respect to a change in par value or,
in certain
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circumstances not applicable in the case of the Parent's outstanding stock, an
increase or decrease in the authorized shares of such class or series).
Consequently, because most matters brought to a stockholder vote will require
the approval of only a specified percentage of all of the Parent's outstanding
capital stock entitled to vote on such matters (including the TCI Group Common
Stock, the Liberty Media Group Common Stock and the TCI Ventures Group Common
Stock) voting together as a single class, if the holders of one or more series
of Common Stock have more than the number of votes required to approve any
such matter, such holders would be in a position to control the outcome of the
vote on such matter.
Dividends
Subject to the prior payment of dividends on, and other rights of, any of
the outstanding shares of Preferred Stock, dividends may be paid as determined
by the Board of Directors (i) on the TCI Group Common Stock out of the lesser
of (x) the TCI Group Available Dividend Amount and (y) funds of the Parent
legally available therefor under the DGCL, (ii) on the Liberty Media Group
Common Stock out of the lesser of (x) the Liberty Media Group Available
Dividend Amount and (y) funds of the Parent legally available therefor under
the DGCL, and (iii) on the TCI Ventures Group Common Stock out of the lesser
of (x) the TCI Ventures Group Available Dividend Amount and (y) funds of the
Parent legally available therefor under the DGCL. Under the DGCL, the amount
of the funds of the Parent legally available for the payment of dividends on
any series of Common Stock is determined on the basis of the entire
corporation and not just the TCI Group, the Liberty Media Group or the TCI
Ventures Group. Consequently, the amount of legally available funds will be
reduced by the amount of any net losses of the TCI Group, the Liberty Media
Group or the TCI Ventures Group and any dividends or distributions on, or
repurchases of, the TCI Group Common Stock, the Liberty Media Group Common
Stock or the TCI Ventures Group Common Stock, if any, and dividends on, or
certain repurchases of, Preferred Stock. Certain loan agreements to which
certain subsidiaries of the Parent are parties or are subject contain
restricted payment provisions that limit the amount of dividends, other than
stock dividends, that those companies may pay. Future loan agreements may also
contain similar restrictions and limits.
The "TCI Group Available Dividend Amount," as of any date, means either (i)
the excess of (a) an amount equal to the total assets of the TCI Group less
the total liabilities (not including preferred stock) of the TCI Group as of
such date over (b) the aggregate par value of, or any greater amount
determined to be capital in respect of, all outstanding shares of TCI Group
Common Stock and each class or series of Preferred Stock attributed to the TCI
Group or (ii) in case there is no such excess, an amount equal to the
Corporation Earnings (Loss) Attributable to the TCI Group (if positive) for
the fiscal year in which such date occurs and/or the preceding fiscal year.
The "Corporation Earnings (Loss) Attributable to the TCI Group," for any
period, means the net earnings or loss of the TCI Group for such period,
determined on a basis consistent with the determination of the net earnings or
loss of the TCI Group for such period as presented in the combined financial
statements of the TCI Group, including income and expenses of TCI attributed
to the operations of the TCI Group on a substantially consistent basis,
including, without limitation, corporate administrative costs, net interest
and income taxes. The TCI Group Available Dividend Amount is intended to be
similar to the amount that would be legally available for the payment of
dividends on the TCI Group Common Stock under the DGCL if the TCI Group were a
separate Delaware corporation. There can be no assurance that there will be a
TCI Group Available Dividend Amount.
The "Liberty Media Group Available Dividend Amount," as of any date, means
the product of the Liberty Media Group Outstanding Interest Fraction and
either (i) the excess of (a) an amount equal to the total assets of the
Liberty Media Group less the total liabilities (not including preferred stock)
of the Liberty Media Group as of such date over (b) the aggregate par value
of, or any greater amount determined to be capital in respect of, all
outstanding shares of Liberty Media Group Common Stock and each class or
series of Preferred Stock attributed to the Liberty Media Group or (ii) in
case there is no such excess, an amount equal to the Corporation Earnings
(Loss) Attributable to the Liberty Media Group (if positive) for the fiscal
year in which such date occurs and/or the preceding fiscal year. The
"Corporation Earnings (Loss) Attributable to the Liberty Media Group," for any
period, means the net earnings or loss of the Liberty Media Group for such
period determined on a basis consistent with the determination of the net
earnings or loss of the Liberty Media Group for such period as
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presented in the combined financial statements of the Liberty Media Group,
including income and expenses of the Parent attributed to the operations of
the Liberty Media Group on a substantially consistent basis, including,
without limitation, corporate administrative costs, net interest and income
taxes. The Liberty Media Group Available Dividend Amount is intended to be
similar to the amount that would be legally available for the payment of
dividends on the Liberty Media Group Common Stock under the DGCL if the
Liberty Media Group were a separate Delaware corporation. There can be no
assurance that there will be a Liberty Media Group Available Dividend Amount.
The "TCI Ventures Group Available Dividend Amount," as of any date, means
the product of the TCI Ventures Group Outstanding Interest Fraction and either
(i) the excess of (a) an amount equal to the total assets of the TCI Ventures
Group less the total liabilities (not including preferred stock) of the TCI
Ventures Group as of such date over (b) the aggregate par value of, or any
greater amount determined to be capital in respect of, all outstanding shares
of TCI Ventures Group Common Stock and each class or series of Preferred Stock
attributed to the TCI Ventures Group or (ii) in case there is no such excess,
an amount equal to the Corporation Earnings (Loss) Attributable to the TCI
Ventures Group (if positive) for the fiscal year in which such date occurs
and/or the preceding fiscal year. The "Corporation Earnings (Loss)
Attributable to the TCI Ventures Group," for any period, means the net
earnings or loss of the TCI Ventures Group for such period determined on a
basis consistent with the determination of the net earnings or loss of the TCI
Ventures Group for such period as presented in the combined financial
statements of the TCI Ventures Group, including income and expenses of the
Parent attributed to the operations of the TCI Ventures Group on a
substantially consistent basis, including, without limitation, corporate
administrative costs, net interest and income taxes. The TCI Ventures Group
Available Dividend Amount is intended to be similar to the amount that would
be legally available for the payment of dividends on the TCI Ventures Group
Common Stock under the DGCL if the TCI Ventures Group were a separate Delaware
corporation. There can be no assurance that there will be a TCI Ventures Group
Available Dividend Amount.
Except for dividends declared or paid as described below under "--Share
Distributions," "--Conversion and Redemption--Mandatory Dividend, Redemption
or Conversion of Liberty Media Group Common Stock," and "--Conversion and
Redemption--Mandatory Dividend, Redemption or Conversion of TCI Ventures Group
Common Stock," any dividends paid on the Series A TCI Group Common Stock or
the Series B TCI Group Common Stock will be paid only on both series, in equal
amounts per share; any dividends paid on the Series A Liberty Media Group
Common Stock or the Series B Liberty Media Group Common Stock will be paid
only on both series, in equal amounts per share; and any dividends paid on the
Series A TCI Ventures Group Common Stock or the Series B TCI Ventures Group
Common Stock will be paid only on both series, in equal amounts per share.
The Board of Directors, subject to the provisions described above and under
"--Share Distributions" below, has the authority and discretion to declare and
pay dividends on the TCI Group Common Stock, the Liberty Media Group Common
Stock or the TCI Ventures Group Common Stock in equal or unequal amounts,
notwithstanding the relationship among the TCI Group Available Dividend
Amount, the Liberty Media Group Available Dividend Amount and the TCI Ventures
Group Available Dividend Amount, the respective amounts of prior dividends
declared on, or liquidation rights of, the TCI Group Common Stock, the Liberty
Media Group Common Stock or the TCI Ventures Group Common Stock or any other
factor.
At the time of any dividend or other distribution on the outstanding shares
of Liberty Media Group Common Stock (including any dividend of Liberty Media
Group Net Proceeds from the Disposition of all or substantially all of the
properties and assets of the Liberty Media Group as described below under "--
Conversion and Redemption--Mandatory Dividend, Redemption or Conversion of
Liberty Media Group Common Stock"), the TCI Group will (if at such time there
is an Inter-Group Interest in the Liberty Media Group) be credited, and the
Liberty Media Group will be charged (in addition to the charge for the
dividend or other distribution paid or distributed in respect of outstanding
shares of Liberty Media Group Common Stock), with an amount equal to the
product of (i) the aggregate amount of such dividend or distribution paid or
distributed in respect of outstanding shares of Liberty Media Group Common
Stock times (ii) a fraction the numerator of which is the
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Liberty Media Group Inter-Group Interest Fraction and the denominator of which
is the Liberty Media Group Outstanding Interest Fraction.
At the time of any dividend or other distribution on the outstanding shares
of TCI Ventures Group Common Stock (including any dividend of TCI Ventures
Group Net Proceeds from the Disposition of all or substantially all of the
properties and assets of the TCI Ventures Group as described under "--
Conversion and Redemption--Mandatory Dividend, Redemption or Conversion of TCI
Ventures Group Common Stock"), the TCI Group will (if at such time there is an
Inter-Group Interest in the TCI Ventures Group) be credited, and the TCI
Ventures Group will be charged (in addition to the charge for the dividend or
other distribution paid or distributed in respect of outstanding shares of TCI
Ventures Group Common Stock), with an amount equal to the product of (i) the
aggregate amount of such dividend or distribution paid or distributed in
respect of outstanding shares of TCI Ventures Group Common Stock times (ii) a
fraction the numerator of which is the TCI Ventures Group Inter-Group Interest
Fraction and the denominator of which is the TCI Ventures Group Outstanding
Interest Fraction.
Share Distributions
Distributions on TCI Group Common Stock. If at any time after the initial
issuance of shares of TCI Ventures Group Common Stock, a distribution paid in
TCI Group Common Stock, TCI Ventures Group Common Stock, Liberty Media Group
Common Stock, or any other securities of the Parent or any other person (a
"share distribution"), is made with respect to the TCI Group Common Stock,
such share distribution will be declared and paid only as follows:
(i) a share distribution consisting of shares of Series A TCI Group
Common Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock, on an
equal per share basis; or consisting of shares of Series B TCI Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series B TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock, on an
equal per share basis; or consisting of shares of Series A TCI Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and, on an equal per share basis, shares of
Series B TCI Group Common Stock (or like Convertible Securities convertible
into or exercisable or exchangeable for shares of Series B TCI Group Common
Stock) to holders of Series B TCI Group Common Stock;
(ii) a share distribution consisting of shares of Series A Liberty Media
Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A Liberty Media Group
Common Stock) to holders of Series A TCI Group Common Stock and Series B
TCI Group Common Stock, on an equal per share basis; provided that the sum
of (A) the aggregate number of shares of Series A Liberty Media Group
Common Stock to be so issued (or the number of such shares which would be
issuable upon conversion, exercise or exchange of any Convertible
Securities to be so issued) and (B) the number of shares of such series
that are subject to issuance upon conversion, exercise or exchange of any
Convertible Securities then outstanding that are attributed to the TCI
Group (other than Pre-Distribution Convertible Securities and other than
Convertible Securities convertible into or exercisable or exchangeable for
Committed Acquisition Shares) is less than or equal to the Number of Shares
Issuable with Respect to the Liberty Media Group Inter-Group Interest;
(iii) a share distribution consisting of shares of Series A TCI Ventures
Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A TCI Ventures Group
Common Stock) to holders of Series A TCI Group Common Stock and Series B
TCI Group Common Stock, on an equal per share basis; or consisting of
shares of Series B TCI Ventures Group Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for shares of
Series B TCI Ventures Group Common Stock) to holders of Series A TCI Group
Common Stock and Series B TCI Group Common Stock, on an equal per share
basis; or consisting of shares of Series A TCI Ventures Group
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Common Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Ventures Group Common Stock) to
holders of Series A TCI Group Common Stock and, on an equal per share
basis, shares of Series B TCI Ventures Group Common Stock (or like
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series B TCI Ventures Group Common Stock) to holders of Series B
TCI Group Common Stock; provided that the sum of (A) the aggregate number
of shares of Series A TCI Ventures Group Common Stock and Series B TCI
Ventures Group Common Stock to be so distributed (or the number of such
shares which would be issuable upon conversion, exercise or exchange of any
Convertible Securities to be so distributed) and (B) the number of shares
of Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group
Common Stock that are subject to issuance upon conversion, exercise or
exchange of any Convertible Securities then outstanding that are attributed
to the TCI Group (other than Pre-Exchange Offer Securities) is less than or
equal to the Number of Shares Issuable with Respect to the TCI Ventures
Group Inter-Group Interest; and
(iv) a share distribution consisting of any class or series of securities
of the Parent or any other person other than TCI Group Common Stock,
Liberty Media Group Common Stock or TCI Ventures Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of TCI Group Common Stock, Liberty Media Group Common Stock or TCI
Ventures Group Common Stock), either on the basis of a distribution of
identical securities, on an equal per share basis, to holders of Series A
TCI Group Common Stock and Series B TCI Group Common Stock or on the basis
of a distribution of one class or series of securities to holders of Series
A TCI Group Common Stock and another class or series of securities to
holders of Series B TCI Group Common Stock, provided that the securities so
distributed (and, if the distribution consists of Convertible Securities,
the securities into which such Convertible Securities are convertible or
for which they are exercisable or exchangeable) do not differ in any
respect other than their relative voting rights and related differences in
designation, conversion, redemption and share distribution provisions, with
holders of shares of Series B TCI Group Common Stock receiving the class or
series having the higher relative voting rights (without regard to whether
such rights differ to a greater or lesser extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Group Common Stock and the
Series B TCI Group Common Stock), provided that if the securities so
distributed constitute capital stock of a Subsidiary of the Parent, such
rights will not differ to a greater extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Group Common Stock and the
Series B TCI Group Common Stock, and provided in each case that such
distribution is otherwise made on an equal per share basis.
The Parent will not reclassify, subdivide or combine the Series A TCI Group
Common Stock without reclassifying, subdividing or combining the Series B TCI
Group Common Stock, on an equal per share basis, and the Parent will not
reclassify, subdivide or combine the Series B TCI Group Common Stock without
reclassifying, subdividing or combining the Series A TCI Group Common Stock,
on an equal per share basis.
Distributions on Liberty Media Group Common Stock. If at any time a share
distribution is to be made with respect to the Liberty Media Group Common
Stock, such share distribution will be declared and paid only as follows (or
as described under "--Conversion and Redemption" with respect to the
redemptions and other distributions referred to therein):
(i) a share distribution consisting of shares of Series A Liberty Media
Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A Liberty Media Group
Common Stock) to holders of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock, on an equal per share basis; or
consisting of shares of Series B Liberty Media Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series B Liberty Media Group Common Stock) to holders of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock, on an equal per share basis; or consisting of shares of Series A
Liberty Media Group Common Stock (or Convertible Securities convertible
into or exercisable or exchangeable for shares of Series A Liberty Media
Group Common Stock) to holders of
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Series A Liberty Media Group Common Stock and, on an equal per share basis,
shares of Series B Liberty Media Group Common Stock (or like Convertible
Securities convertible into or exercisable or exchangeable for shares of
Series B Liberty Media Group Common Stock) to holders of Series B Liberty
Media Group Common Stock; and
(ii) a share distribution consisting of any class or series of securities
of the Parent or any other person other than as described in the
immediately preceding clause (i) and other than TCI Group Common Stock or
TCI Ventures Group Common Stock (or Convertible Securities convertible into
or exercisable or exchangeable for shares of TCI Group Common Stock or TCI
Ventures Group Common Stock), either on the basis of a distribution of
identical securities, on an equal per share basis, to holders of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock or on the basis of a distribution of one class or series of
securities to holders of Series A Liberty Media Group Common Stock and
another class or series of securities to holders of Series B Liberty Media
Group Common Stock, provided that the securities so distributed (and, if
the distribution consists of Convertible Securities, the securities into
which such Convertible Securities are convertible or for which they are
exercisable or exchangeable) do not differ in any respect other than their
relative voting rights and related differences in designation, conversion,
redemption and share distribution provisions, with holders of shares of
Series B Liberty Media Group Common Stock receiving the class or series
having the higher relative voting rights (without regard to whether such
rights differ to a greater or lesser extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A Liberty Media Group Common
Stock and the Series B Liberty Media Group Common Stock), provided that if
the securities so distributed constitute capital stock of a Subsidiary of
the Parent, such rights will not differ to a greater extent than the
corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Series A Liberty
Media Group Common Stock and the Series B Liberty Media Group Common Stock,
and provided in each case that such distribution is otherwise made on an
equal per share basis.
Because under the Charter the Liberty Media Group is not permitted to have
an Inter-Group Interest in either the TCI Group or the TCI Ventures Group, no
distributions on the Liberty Media Group Common Stock of shares of TCI Group
Common Stock (or related Convertible Securities) or TCI Ventures Group Common
Stock (or related Convertible Securities) are permitted.
The Parent will not reclassify, subdivide or combine the Series A Liberty
Media Group Common Stock without reclassifying, subdividing or combining the
Series B Liberty Media Group Common Stock, on an equal per share basis, and
the Parent will not reclassify, subdivide or combine the Series B Liberty
Media Group Common Stock without reclassifying, subdividing or combining the
Series A Liberty Media Group Common Stock, on an equal per share basis.
Distributions on TCI Ventures Group Common Stock. If at any time a share
distribution is to be made with respect to the TCI Ventures Group Common
Stock, such share distribution will be declared and paid only as follows (or
as described under "--Conversion and Redemption" with respect to the
redemptions and other distributions referred to therein):
(i) a share distribution consisting of shares of Series A TCI Ventures
Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A TCI Ventures Group
Common Stock) to holders of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock, on an equal per share basis; or
consisting of shares of Series B TCI Ventures Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series B TCI Ventures Group Common Stock) to holders of Series A
TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock, on an equal per share basis; or consisting of shares of Series A TCI
Ventures Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A TCI Ventures Group
Common Stock) to holders of Series A TCI Ventures Group Common Stock and,
on an equal per share basis, shares of Series B TCI Ventures Group Common
Stock (or like Convertible Securities convertible into or exercisable or
exchangeable for
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shares of Series B TCI Ventures Group Common Stock) to holders of Series B
TCI Ventures Group Common Stock; and
(ii) a share distribution consisting of any class or series of securities
of the Parent or any other person other than as described in the
immediately preceding clause (i) and other than TCI Group Common Stock or
Liberty Media Group Common Stock (or Convertible Securities convertible
into or exercisable or exchangeable for shares of TCI Group Common Stock or
Liberty Media Group Common Stock), either on the basis of a distribution of
identical securities, on an equal per share basis, to holders of Series A
TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock or on the basis of a distribution of one class or series of
securities to holders of Series A TCI Ventures Group Common Stock and
another class or series of securities to holders of Series B TCI Ventures
Group Common Stock, provided that the securities so distributed (and, if
the distribution consists of Convertible Securities, the securities into
which such Convertible Securities are convertible or for which they are
exercisable or exchangeable) do not differ in any respect other than their
relative voting rights and related differences in designation, conversion,
redemption and share distribution provisions, with holders of shares of
Series B TCI Ventures Group Common Stock receiving the class or series
having the higher relative voting rights (without regard to whether such
rights differ to a greater or lesser extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Ventures Group Common
Stock and the Series B TCI Ventures Group Common Stock), provided that if
the securities so distributed constitute capital stock of a Subsidiary of
the Parent, such rights will not differ to a greater extent than the
corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Series A TCI
Ventures Group Common Stock and the Series B TCI Ventures Group Common
Stock, and provided in each case that such distribution is otherwise made
on an equal per share basis.
Because under the Charter the TCI Ventures Group is not permitted to have an
Inter-Group Interest in either the TCI Group or the Liberty Media Group, no
distributions on the TCI Ventures Group Common Stock of shares of TCI Group
Common Stock (or related Convertible Securities) or Liberty Media Group Common
Stock (or related Convertible Securities) are permitted.
The Parent will not reclassify, subdivide or combine the Series A TCI
Ventures Group Common Stock without reclassifying, subdividing or combining
the Series B TCI Ventures Group Common Stock, on an equal per share basis, and
the Parent will not reclassify, subdivide or combine the Series B TCI Ventures
Group Common Stock without reclassifying, subdividing or combining the Series
A TCI Ventures Group Common Stock, on an equal per share basis.
Conversion and Redemption
Conversion at the Option of the Holder. Each share of Series B TCI Group
Common Stock is convertible, at the option of the holder thereof, into one
share of Series A TCI Group Common Stock. Each share of Series B Liberty Media
Group Common Stock is convertible, at the option of the holder thereof, into
one share of Series A Liberty Media Group Common Stock. Each share of Series B
TCI Ventures Group Common Stock is convertible, at the option of the holder
thereof, into one share of Series A TCI Ventures Group Common Stock. Shares of
Series A TCI Group Common Stock are not convertible into shares of Series B
TCI Group Common Stock; shares of Series A Liberty Media Group Common Stock
are not convertible into shares of Series B Liberty Media Group Common Stock;
and shares of Series A TCI Ventures Group Common Stock are not convertible
into shares of Series B TCI Ventures Group Common Stock.
Conversion of Liberty Media Group Common Stock at the Option of the
Parent. The Board of Directors may at any time declare that (i) all of the
outstanding shares of Series A Liberty Media Group Common Stock will be
converted into a number (or fraction) of fully paid and nonassessable shares
of Series A TCI Group Common Stock equal to the Liberty Media Group Optional
Conversion Ratio, and (ii) all of the outstanding shares of Series B Liberty
Media Group Common Stock will be converted into a number (or fraction) of
fully
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paid and nonassessable shares of Series B TCI Group Common Stock equal to the
Liberty Media Group Optional Conversion Ratio. As more fully described below,
the Liberty Media Group Optional Conversion Ratio is the ratio of the private
market value of a share of Liberty Media Group Common Stock determined by
appraisal to the public trading price of a share of TCI Group Common Stock.
Under the Charter, the "Liberty Media Group Optional Conversion Ratio" means
the quotient (calculated to the nearest five decimal places) obtained by
dividing (x) the Liberty Media Group Common Stock Per Share Value by (y) the
average Market Value of one share of Series A TCI Group Common Stock over the
20-Trading Day period ending on the Trading Day preceding the Appraisal Date.
The Liberty Media Group Common Stock Per Share Value will equal the quotient
obtained by dividing the Liberty Media Group Private Market Value by the
Adjusted Outstanding Shares of Liberty Media Group Common Stock, which will be
determined in the manner described below.
The "Liberty Media Group Private Market Value" means an amount equal to the
private market value of the Liberty Media Group as of the Appraisal Date. In
the event that the Parent determines to establish the Liberty Media Group
Private Market Value, the Parent shall designate the First Appraiser and a
committee of the Board of Directors all of whose members are independent
directors as determined under the Nasdaq National Market rules (the "
Independent Committee") shall designate the Second Appraiser. Not later than
20 days after the Selection Date, the First Appraiser and the Second Appraiser
will each determine its initial view as to the private market value of the
Liberty Media Group as of the Appraisal Date and will consult with one another
with respect thereto. Not later than the 30th day after the Selection Date,
the First Appraiser and the Second Appraiser will each have determined its
final view as to such private market value. If the Higher Appraised Amount is
not more than 120% of the Lower Appraised Amount, the Liberty Media Group
Private Market Value (subject to any adjustment described in the second
succeeding paragraph) will be the average of those two amounts. If the Higher
Appraised Amount is more than 120% of the Lower Appraised Amount, the First
Appraiser and the Second Appraiser will agree upon and jointly designate the
Mutually Designated Appraiser to determine such private market value. The
Mutually Designated Appraiser will not be provided with any of the work of the
First Appraiser and the Second Appraiser. The Mutually Designated Appraiser
will, no later than the 20th day after the date the Mutually Designated
Appraiser is designated, determine the Mutually Appraised Amount, and the
Liberty Media Group Private Market Value (subject to any adjustment described
in the second succeeding paragraph) will be (i) if the Mutually Appraised
Amount is between the Lower Appraised Amount and the Higher Appraised Amount,
(a) the average of (1) the Mutually Appraised Amount and (2) the Lower
Appraised Amount or the Higher Appraised Amount, whichever is closer to the
Mutually Appraised Amount, or (b) the Mutually Appraised Amount, if neither
the Lower Appraised Amount nor the Higher Appraised Amount is closer to the
Mutually Appraised Amount, or (ii) if the Mutually Appraised Amount is greater
than the Higher Appraised Amount or less than the Lower Appraised Amount, the
average of the Higher Appraised Amount and the Lower Appraised Amount. For
these purposes, if any such investment banking firm expresses its final view
of the private market value of the Liberty Media Group as a range of values,
such investment banking firm's final view of such private market value will be
deemed to be the midpoint of such range of values.
Each of the investment banking firms referred to in the immediately
preceding paragraph will be instructed to determine the private market value
of the Liberty Media Group as of the Appraisal Date based upon the amount a
willing purchaser would pay to a willing seller, in an arm's-length
transaction, if it were acquiring the Liberty Media Group, as if the Liberty
Media Group were a publicly traded non-controlled corporation and the
purchaser was acquiring all of the capital stock of such corporation and
without consideration of any potential regulatory constraints limiting the
potential purchasers of the Liberty Media Group other than that which would
have existed if the Liberty Media Group were a publicly traded non-controlled
entity.
Following the determination of the Liberty Media Group Private Market Value,
the investment banking firms whose final views of the private market value of
the Liberty Media Group were used in the calculation of the Liberty Media
Group Private Market Value will determine the Adjusted Outstanding Shares of
Liberty Media Group Common Stock together with any further appropriate
adjustments to the Liberty Media Group Private
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Market Value resulting from such determination. The "Adjusted Outstanding
Shares of Liberty Media Group Common Stock" means a number, as determined by
such investment banking firms as of the Appraisal Date, equal to the sum of
the number of shares of Liberty Media Group Common Stock outstanding, the
Number of Shares Issuable with Respect to the Liberty Media Group Inter-Group
Interest, the number of Committed Acquisition Shares issuable, the number of
shares of Liberty Media Group Common Stock issuable upon the conversion,
exercise or exchange of all Pre-Distribution Convertible Securities and the
number of shares of Liberty Media Group Common Stock issuable upon the
conversion, exercise or exchange of those Convertible Securities (other than
Pre-Distribution Convertible Securities and other than Convertible Securities
which are convertible into or exercisable or exchangeable for Committed
Acquisition Shares) the holders of which would derive an economic benefit from
conversion, exercise or exchange of such Convertible Securities which exceeds
the economic benefit of not converting, exercising or exchanging such
Convertible Securities. The "Liberty Media Group Common Stock Per Share Value"
means the quotient obtained by dividing the Liberty Media Group Private Market
Value by the Adjusted Outstanding Shares of Liberty Media Group Common Stock,
provided that if such investment banking firms do not agree on the
determinations provided for in this paragraph, the Liberty Media Group Common
Stock Per Share Value will be the average of the quotients so obtained on the
basis of the respective determinations of such firms.
If the Parent determines to convert shares of Series A Liberty Media Group
Common Stock into Series A TCI Group Common Stock and shares of Series B
Liberty Media Group Common Stock into Series B TCI Group Common Stock at the
Liberty Media Group Optional Conversion Ratio, such conversion will occur on a
conversion date on or prior to the 120th day following the Appraisal Date. If
the Parent determines not to undertake such conversion, the Parent may at any
time thereafter undertake to reestablish the Liberty Media Group Common Stock
Per Share Value as of a subsequent date.
Any such conversion would dilute the interests of holders of TCI Group
Common Stock and would preclude holders of Liberty Media Group Common Stock
from retaining their interest in a security reflecting separately the business
of the Liberty Media Group. In addition, the adjustments in respect of Pre-
Distribution Convertible Securities and Committed Acquisition Shares would
dilute the interests of holders of Liberty Media Group Common Stock upon any
conversion of shares of Liberty Media Group Common Stock into TCI Group Common
Stock at the Liberty Media Group Optional Conversion Ratio.
Conversion of TCI Ventures Group Common Stock at the Option of the
Parent. The Board of Directors may at any time declare that (i) all of the
outstanding shares of Series A TCI Ventures Group Common Stock will be
converted into a number (or fraction) of fully paid and nonassessable shares
of Series A TCI Group Common Stock equal to the TCI Ventures Group Optional
Conversion Ratio, and (ii) all of the outstanding shares of Series B TCI
Ventures Group Common Stock will be converted into a number (or fraction) of
fully paid and nonassessable shares of Series B TCI Group Common Stock equal
to the TCI Ventures Group Optional Conversion Ratio. As more fully described
below, the TCI Ventures Group Optional Conversion Ratio is the ratio of the
private market value of a share of TCI Ventures Group Common Stock determined
by appraisal to the public trading price of a share of TCI Group Common Stock.
Under the Charter, the "TCI Ventures Group Optional Conversion Ratio" means
the quotient (calculated to the nearest five decimal places) obtained by
dividing (x) the TCI Ventures Group Common Stock Per Share Value by (y) the
average Market Value of one share of Series A TCI Group Common Stock over the
20-Trading Day period ending on the Trading Day preceding the Appraisal Date.
The TCI Ventures Group Common Stock Per Share Value will equal the quotient
obtained by dividing the TCI Ventures Group Private Market Value by the
Adjusted Outstanding Shares of TCI Ventures Group Common Stock, which will be
determined in the manner described below.
The "TCI Ventures Group Private Market Value" means an amount equal to the
private market value of the TCI Ventures Group as of the Appraisal Date. In
the event that the Parent determines to establish the TCI Ventures Group
Private Market Value, the Parent shall designate the First Appraiser and the
Independent
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Committee shall designate the Second Appraiser. Not later than 20 days after
the Selection Date, the First Appraiser and the Second Appraiser will each
determine its initial view as to the private market value of the TCI Ventures
Group as of the Appraisal Date and will consult with one another with respect
thereto. Not later than the 30th day after the Selection Date, the First
Appraiser and the Second Appraiser will each have determined its final view as
to such private market value. If the Higher Appraised Amount is not more than
120% of the Lower Appraised Amount, the TCI Ventures Group Private Market
Value (subject to any adjustment described in the second succeeding paragraph)
will be the average of those two amounts. If the Higher Appraised Amount is
more than 120% of the Lower Appraised Amount, the First Appraiser and the
Second Appraiser will agree upon and jointly designate the Mutually Designated
Appraiser to determine such private market value. The Mutually Designated
Appraiser will not be provided with any of the work of the First Appraiser and
the Second Appraiser. The Mutually Designated Appraiser will, no later than
the 20th day after the date the Mutually Designated Appraiser is designated,
determine the Mutually Appraised Amount, and the TCI Ventures Group Private
Market Value (subject to any adjustment described in the second succeeding
paragraph) will be (i) if the Mutually Appraised Amount is between the Lower
Appraised Amount and the Higher Appraised Amount, (a) the average of (1) the
Mutually Appraised Amount and (2) the Lower Appraised Amount or the Higher
Appraised Amount, whichever is closer to the Mutually Appraised Amount, or (b)
the Mutually Appraised Amount, if neither the Lower Appraised Amount nor the
Higher Appraised Amount is closer to the Mutually Appraised Amount, or (ii) if
the Mutually Appraised Amount is greater than the Higher Appraised Amount or
less than the Lower Appraised Amount, the average of the Higher Appraised
Amount and the Lower Appraised Amount. For these purposes, if any such
investment banking firm expresses its final view of the private market value
of the TCI Ventures Group as a range of values, such investment banking firm's
final view of such private market value will be deemed to be the midpoint of
such range of values.
Each of the investment banking firms referred to in the immediately
preceding paragraph will be instructed to determine the private market value
of the TCI Ventures Group as of the Appraisal Date based upon the amount a
willing purchaser would pay to a willing seller, in an arm's-length
transaction, if it were acquiring the TCI Ventures Group, as if the TCI
Ventures Group were a publicly traded non-controlled corporation and the
purchaser was acquiring all of the capital stock of such corporation and
without consideration of any potential regulatory constraints limiting the
potential purchasers of the TCI Ventures Group other than that which would
have existed if the TCI Ventures Group were a publicly traded non-controlled
entity.
Following the determination of the TCI Ventures Group Private Market Value,
the investment banking firms whose final views of the private market value of
the TCI Ventures Group were used in the calculation of the TCI Ventures Group
Private Market Value will determine the Adjusted Outstanding Shares of TCI
Ventures Group Common Stock together with any further appropriate adjustments
to the TCI Ventures Group Private Market Value resulting from such
determination. The "Adjusted Outstanding Shares of TCI Ventures Group Common
Stock" means a number, as determined by such investment banking firms as of
the Appraisal Date, equal to the sum of the number of shares of TCI Ventures
Group Common Stock outstanding, the Number of Shares Issuable with Respect to
the TCI Ventures Group Inter-Group Interest, the number of shares of TCI
Ventures Group Common Stock issuable upon the conversion, exercise or exchange
of all Pre-Exchange Offer Securities, and the number of shares of TCI Ventures
Group Common Stock issuable upon the conversion, exercise or exchange of those
Convertible Securities (other than Pre-Exchange Offer Securities) the holders
of which would derive an economic benefit from conversion, exercise or
exchange of such Convertible Securities which exceeds the economic benefit of
not converting, exercising or exchanging such Convertible Securities. The "TCI
Ventures Group Common Stock Per Share Value" means the quotient obtained by
dividing the TCI Ventures Group Private Market Value by the Adjusted
Outstanding Shares of TCI Ventures Group Common Stock, provided that if such
investment banking firms do not agree on the determinations provided for in
this paragraph, the TCI Ventures Group Common Stock Per Share Value will be
the average of the quotients so obtained on the basis of the respective
determinations of such firms.
If the Parent determines to convert shares of Series A TCI Ventures Group
Common Stock into Series A TCI Group Common Stock and shares of Series B TCI
Ventures Group Common Stock into Series B TCI Group
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Common Stock at the TCI Ventures Group Optional Conversion Ratio, such
conversion will occur on a conversion date on or prior to the 120th day
following the Appraisal Date. If the Parent determines not to undertake such
conversion, the Parent may at any time thereafter undertake to reestablish the
TCI Ventures Group Common Stock Per Share Value as of a subsequent date.
Any such conversion would dilute the interests of holders of TCI Group
Common Stock and would preclude holders of TCI Ventures Group Common Stock
from retaining their interest in a security reflecting separately the business
of the TCI Ventures Group. In addition, the adjustments in respect of Pre-
Exchange Offer Securities would dilute the interests of holders of TCI
Ventures Group Common Stock upon any conversion of shares of TCI Ventures
Group Common Stock into TCI Group Common Stock at the TCI Ventures Group
Optional Conversion Ratio.
Mandatory Dividend, Redemption or Conversion of Liberty Media Group Common
Stock. Upon the Disposition, in one transaction or a series of related
transactions by the Parent and its subsidiaries of all or substantially all of
the properties and assets of the Liberty Media Group to one or more persons,
entities or groups, the Parent is required, on or prior to the 85th Trading
Day following the consummation of such Disposition, to take one of the actions
listed in the following paragraph. This requirement does not apply to a
Disposition (a) in connection with the Disposition by the Parent of all of the
Parent's properties and assets in one transaction or a series of related
transactions in connection with the liquidation, dissolution or winding up of
the Parent, (b) by dividend, other distribution or redemption in accordance
with any provision described under "--Conversion and Redemption--Redemption of
Liberty Media Group Common Stock in Exchange for Stock of Subsidiary," "--
Dividends," "--Share Distributions," or "--Liquidation Rights," (c) to any
person, entity or group which the Parent, directly or indirectly, after giving
effect to the Disposition, controls or (d) in connection with a Related
Business Transaction. For these purposes, "substantially all of the properties
and assets of the Liberty Media Group" means a portion of such properties and
assets that represents at least 80% of the then-current market value (as
determined by the Board of Directors) of the properties and assets of the
Liberty Media Group as of such date.
The action the Parent is required to take is to either:
(i) subject to the limitations described under "--Dividends," declare and
pay a dividend in cash and/or securities or other property (other than a
dividend or distribution of Common Stock) to the holders of the outstanding
shares of Liberty Media Group Common Stock equally on a share for share
basis (subject to the provisions described in the last sentence of the
penultimate paragraph under this caption "--Mandatory Dividend, Redemption
or Conversion of Liberty Media Group Common Stock"), in an aggregate amount
equal to the product of the Liberty Media Group Outstanding Interest
Fraction as of the record date for determining the holders entitled to
receive such dividend and the Liberty Media Group Net Proceeds;
(ii) provided that there are assets of the Parent legally available
therefor and the Liberty Media Group Available Dividend Amount would have
been sufficient to pay a dividend in lieu thereof as described in clause
(i) of this paragraph, then:
(A) if such Disposition involves all (not merely substantially all)
of the properties and assets of the Liberty Media Group, redeem all
outstanding shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock in exchange for cash and/or
securities or other property (other than Common Stock) in an aggregate
amount equal to the product of the Adjusted Liberty Media Group
Outstanding Interest Fraction as of the date of such redemption and the
Liberty Media Group Net Proceeds, such aggregate amount to be allocated
(subject to the provisions described in the last sentence of the
penultimate paragraph under this caption) to shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock
in the ratio of the number of shares of each such series outstanding
(so that the amount of consideration paid for the redemption of each
share of Series A Liberty Media Group Common Stock and each share of
Series B Liberty Media Group Common Stock is the same); or
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(B) if such Disposition involves substantially all (but not all) of
the properties and assets of the Liberty Media Group, apply an
aggregate amount of cash and/or securities or other property (other
than Common Stock) equal to the product of the Liberty Media Group
Outstanding Interest Fraction as of the date shares are selected for
redemption and the Liberty Media Group Net Proceeds of such Disposition
to the redemption of outstanding shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock, such
aggregate amount to be allocated (subject to the provisions described
in the last sentence of the penultimate paragraph under this caption)
to shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock in the ratio of the number of shares
of each such series outstanding, and the number of shares of each such
series to be redeemed to equal the lesser of (x) the whole number
nearest the number determined by dividing the aggregate amount so
allocated to the redemption of such series by the average Market Value
of one share of Series A Liberty Media Group Common Stock during the
ten-Trading Day period beginning on the 16th Trading Day following the
consummation of such Disposition and (y) the number of shares of such
series outstanding (so that the amount of consideration paid for the
redemption of each share of Series A Liberty Media Group Common Stock
and each share of Series B Liberty Media Group Common Stock is the
same); or
(iii) convert (A) each outstanding share of Series A Liberty Media Group
Common Stock into a number (or fraction) of fully paid and nonassessable
shares of Series A TCI Group Common Stock and (B) each outstanding share of
Series B Liberty Media Group Common Stock into a number (or fraction) of
fully paid and nonassessable shares of Series B TCI Group Common Stock, in
each case equal to 110% of the average daily ratio (calculated to the
nearest five decimal places) of the Market Value of one share of Series A
Liberty Media Group Common Stock to the Market Value of one share of Series
A TCI Group Common Stock during the ten-Trading Day period referred to in
clause (ii)(B) of this paragraph.
The Parent may elect to pay the dividend or redemption price referred to in
clause (i) or (ii) of the second paragraph under this caption "--Mandatory
Dividend, Redemption or Conversion or Liberty Media Group Common Stock" either
in the same form as the proceeds of the Disposition were received or in any
other combination of cash or securities or other property (other than Common
Stock) that the Board of Directors determines will have an aggregate market
value on a fully distributed basis, of not less than the amount of the Liberty
Media Group Net Proceeds. If the dividend or redemption price is paid in the
form of securities of an issuer other than the Parent, the Board of Directors
may determine either to (i) pay the dividend or redemption price in the form
of separate classes or series of securities, with one class or series of such
securities to holders of Series A Liberty Media Group Common Stock and another
class or series of securities to holders of Series B Liberty Media Group
Common Stock, provided that such securities (and, if such securities are
convertible into or exercisable or exchangeable for shares of another class or
series of securities, the securities so issuable upon such conversion,
exercise or exchange) do not differ in any respect other than their relative
voting rights and related differences in designation, conversion, redemption
and share distribution provisions, with holders of shares of Series B Liberty
Media Group Common Stock receiving the class or series having the higher
relative voting rights (without regard to whether such rights differ to a
greater or lesser extent than the corresponding differences in voting rights,
designation, conversion, redemption and share distribution provisions between
the Series A Liberty Media Group Common Stock and the Series B Liberty Media
Group Common Stock), provided that if such securities constitute capital stock
of a Subsidiary of the Parent, such rights will not differ to a greater extent
than the corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Series A Liberty
Media Group Common Stock and the Series B Liberty Media Group Common Stock,
and otherwise such securities will be distributed on an equal per share basis,
or (ii) pay the dividend or redemption price in the form of a single class of
securities without distinction between the shares received by the holders of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock. The Related Business Transaction exception to the foregoing
requirements would enable the Parent to enter into transactions in which the
properties or assets of the Liberty Media Group may be considered to be
"disposed of" in exchange for equity securities of an entity engaged or
proposing to engage in similar or complementary business areas to those of the
Liberty Media Group while maintaining the capital structure and delineation of
business groups of the Liberty Media Group.
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The effect of using the Adjusted Liberty Media Group Outstanding Interest
Fraction, instead of the Liberty Media Group Outstanding Interest Fraction, in
the determination of amounts to be paid in redemption of shares of Liberty
Media Group Common Stock following a Disposition of all of the properties and
assets of the Liberty Media Group is to allocate to the TCI Group a portion of
the Liberty Media Group Net Proceeds of the Disposition, in addition to the
amount so allocated in respect of any Inter-Group Interest, sufficient to
provide for the delivery of the portion of the consideration deliverable by
the Parent upon any post-Disposition conversion, exercise or exchange of Pre-
Distribution Convertible Securities that is in substitution for shares of
Liberty Media Group Common Stock that would have been issuable upon such
conversion, exercise or exchange if it had occurred prior to such Distribution
and to make similar provision for the Parent's obligation in respect of any
Committed Acquisition Shares that remain issuable. To the extent such Pre-
Distribution Convertible Securities and Committed Acquisition Shares are
included in the determination of the Adjusted Liberty Media Group Outstanding
Interest Fraction, the Parent's obligations in respect of such securities
would not be a reduction in the calculation of the Liberty Media Group Net
Proceeds. In the event any redemption of the Liberty Media Group Common Stock
or conversion of the Liberty Media Group Common Stock into TCI Group Common
Stock is made in circumstances in which securities or property are allocated
to the TCI Group in respect of Pre-Distribution Convertible Securities,
Committed Acquisition Shares or other Convertible Securities entitled to
receive such securities or property upon conversion, exercise or exchange, the
TCI Group will segregate and hold such securities or other property separate
(in the case of any securities or property other than TCI Group Common Stock),
or duly reserve shares of TCI Group Common Stock issuable upon such
conversion, exercise or exchange, for the benefit of the holders of Pre-
Distribution Convertible Securities, Committed Acquisition Shares or other
Convertible Securities. In the event the holders of any such Pre-Distribution
Convertible Securities or other Convertible Securities do not convert,
exercise or exchange such securities prior to the expiration of any conversion
or exercise right or the retirement of such security, or the acquisition
relating to such Committed Acquisition Shares is not consummated (or any
Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares are not converted, exercised or
exchanged), then the securities or other property so reserved shall revert to
the TCI Group and the former holders of Liberty Media Group Common Stock shall
have no interest in such securities or property.
At the time of any dividend made as a result of a Disposition referred to
above, the TCI Group will be credited, and the Liberty Media Group will be
charged (in addition to the charge for the dividend paid in respect of
outstanding shares of Liberty Media Group Common Stock), with an amount equal
to the product of (i) the aggregate amount paid in respect of such dividend
times (ii) a fraction the numerator of which is the Liberty Media Group Inter-
Group Interest Fraction and the denominator of which is the Liberty Media
Group Outstanding Interest Fraction.
The option to convert the Liberty Media Group Common Stock into TCI Group
Common Stock in the event of a Disposition provides the Parent with additional
flexibility by allowing the Parent to deliver consideration in the form of
shares of TCI Group Common Stock rather than cash or securities or other
properties. This alternative could be used, for example, in circumstances when
the Parent did not have sufficient legally available assets under the DGCL to
pay the full amount of an otherwise required dividend or redemption or when
the Parent desired to retain such proceeds.
If less than substantially all of the properties and assets of the Liberty
Media Group were disposed of by the Parent in one transaction, the Parent
would not be required to pay a dividend on, redeem or convert the outstanding
shares of Liberty Media Group Common Stock, even if an additional transaction
were consummated at a later time in which additional properties and assets of
the Liberty Media Group were disposed of by the Parent, which, together with
the properties and assets disposed of in the first transaction, would have
constituted substantially all of the properties and assets of the Liberty
Media Group at the time of the first transaction, unless such transactions
constituted a series of related transactions. The second transaction, however,
could trigger such a requirement if, at the time of the second transaction,
the properties and assets disposed of in such transaction constituted at least
substantially all of the properties and assets of the Liberty Media Group at
such time. If less than substantially all of the properties and assets of the
Liberty Media Group were disposed of by the Parent, the
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holders of the Liberty Media Group Common Stock would not be entitled to
receive any dividend or have their shares redeemed or converted for TCI Group
Common Stock, although the Board of Directors could determine, in its sole
discretion, to pay a dividend on the Liberty Media Group Common Stock in an
amount related to the proceeds of such Disposition.
Mandatory Dividend, Redemption or Conversion of TCI Ventures Group Common
Stock. Upon the Disposition in one transaction or a series of related
transactions by the Parent and its subsidiaries of all or substantially all of
the properties and assets of the TCI Ventures Group to any one or more
persons, entities or groups, the Parent is required, on or prior to the 85th
Trading Day following the consummation of such Disposition, to take one of the
actions listed in the following paragraph. This requirement does not apply to
a Disposition (a) in connection with the Disposition by the Parent of all of
the Parent's properties and assets in one transaction or a series of related
transactions in connection with the liquidation, dissolution or winding up of
the Parent, (b) by dividend, other distribution or redemption in accordance
with any provision described under "--Conversion and Redemption--Redemption of
TCI Ventures Group Common Stock in Exchange for Stock of Subsidiary" "--
Dividends," "--Share Distributions," or "--Liquidation Rights," (c) to any
person, entity or group which the Parent, directly or indirectly, after giving
effect to the Disposition, controls or (d) in connection with a Related
Business Transaction. For these purposes, "substantially all of the properties
and assets of the TCI Ventures Group" means a portion of such properties and
assets that represents at least 80% of the then-current market value (as
determined by the Board of Directors) of the properties and assets of the TCI
Ventures Group as of such date.
The action the Parent is required to take is to either:
(i) subject to the limitations described above under "--Dividends,"
declare and pay a dividend in cash and/or securities or other property
(other than a dividend or distribution of Common Stock) to the holders of
the outstanding shares of TCI Ventures Group Common Stock equally on a
share for share basis (subject to the provisions described in the second
sentence of the third paragraph under this caption "--Mandatory Dividends,
Redemption or Conversion of TCI Ventures Group Common Stock,") in an
aggregate amount equal to the product of the TCI Ventures Group Outstanding
Interest Fraction as of the record date for determining the holders
entitled to receive such dividend and the TCI Ventures Group Net Proceeds
of such Disposition;
(ii) provided that there are assets of the Parent legally available
therefor and the TCI Ventures Group Available Dividend Amount would have
been sufficient to pay a dividend in lieu thereof as described in clause
(i) of this paragraph, then:
(A) if such Disposition involves all (not merely substantially all)
of the properties and assets of the TCI Ventures Group, redeem all
outstanding shares of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock in exchange for cash and/or
securities or other property (other than Common Stock) in an aggregate
amount equal to the product of the Adjusted TCI Ventures Group
Outstanding Interest Fraction as of the date of such redemption and the
TCI Ventures Group Net Proceeds of such Disposition, such aggregate
amount to be allocated (subject to the provisions described in the
second sentence of the following paragraph) to shares of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock in the ratio of the number of shares of each such series
outstanding (so that the amount of consideration paid for the
redemption of each share of Series A TCI Ventures Group Common Stock
and each share of Series B TCI Ventures Group Common Stock is the
same); or
(B) if such Disposition involves substantially all (but not all) of
the properties and assets of the TCI Ventures Group, apply an aggregate
amount of cash and/or securities or other property (other than Common
Stock) equal to the product of the TCI Ventures Group Outstanding
Interest Fraction as of the date shares are selected for redemption and
the TCI Ventures Group Net Proceeds of such Disposition to the
redemption of outstanding shares of Series A TCI Ventures Group Common
Stock and Series B TCI Ventures Group Common Stock, such aggregate
amount to be allocated (subject to the provisions described in the
second sentence of the following paragraph) to shares of Series A TCI
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Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock in the ratio of the number of shares of each such series
outstanding, with the number of shares of each such series to be
redeemed to equal the lesser of (x) the whole number nearest the number
determined by dividing the aggregate amount so allocated to the
redemption of such series by the average Market Value of one share of
Series A TCI Ventures Group Common Stock during the ten-Trading Day
period beginning on the 16th Trading Day following the consummation of
such Disposition and (y) the number of shares of such series
outstanding (so that the amount of consideration paid for the
redemption of each share of Series A TCI Ventures Group Common Stock
and each share of Series B TCI Ventures Group Common Stock is the
same); or
(iii) convert (A) each outstanding share of Series A TCI Ventures Group
Common Stock into a number (or fraction) of fully paid and nonassessable
shares of Series A TCI Group Common Stock and (B) each outstanding share of
Series B TCI Ventures Group Common Stock into a number (or fraction) of
fully paid and nonassessable shares of Series B TCI Group Common Stock, in
each case equal to 110% of the average daily ratio (calculated to the
nearest five decimal places) of the Market Value of one share of Series A
TCI Ventures Group Common Stock to the Market Value of one share of Series
A TCI Group Common Stock during the ten-Trading Day period referred to in
clause (ii)(B) of this paragraph.
The Parent may elect to pay the dividend or redemption price referred to in
clause (i) or (ii) of the second paragraph under this caption "--Mandatory
Dividend, Redemption or Conversion of TCI Ventures Group Common Stock" either
in the same form as the proceeds of the Disposition were received or in any
other combination of cash or securities or other property (other than Common
Stock) that the Board of Directors determines will have an aggregate market
value on a fully distributed basis, of not less than the amount of the TCI
Ventures Group Net Proceeds. If the dividend or redemption price is paid in
the form of securities of an issuer other than the Parent, the Board of
Directors may determine either to (i) pay the dividend or redemption price in
the form of separate classes or series of securities, with one class or series
of such securities to holders of Series A TCI Ventures Group Common Stock and
another class or series of securities to holders of Series B TCI Ventures
Group Common Stock, provided that such securities (and, if such securities are
convertible into or exercisable or exchangeable for shares of another class or
series of securities, the securities so issuable upon such conversion,
exercise or exchange) do not differ in any respect other than their relative
voting rights and related differences in designation, conversion, redemption
and share distribution provisions, with holders of shares of Series B TCI
Ventures Group Common Stock receiving the class or series having the higher
relative voting rights (without regard to whether such rights differ to a
greater or lesser extent than the corresponding differences in voting rights,
designation, conversion, redemption and share distribution provisions between
the Series A TCI Ventures Group Common Stock and the Series B TCI Ventures
Group Common Stock), provided that if such securities constitute capital stock
of a Subsidiary of the Parent, such rights will not differ to a greater extent
than the corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Series A TCI Ventures
Group Common Stock and the Series B TCI Ventures Group Common Stock, and
otherwise such securities will be distributed on an equal per share basis, or
(ii) pay the dividend or redemption price in the form of a single class of
securities without distinction between the shares received by the holders of
Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group
Common Stock. The Related Business Transaction exception to the foregoing
requirements would enable the Parent to enter into transactions in which the
properties or assets of the TCI Ventures Group may be considered to be
"disposed of" in exchange for equity securities of an entity engaged or
proposing to engage in similar or complementary business areas to those of the
TCI Ventures Group while maintaining the capital structure and delineation of
business groups of the TCI Ventures Group.
The effect of using the Adjusted TCI Ventures Group Outstanding Interest
Fraction, instead of the TCI Ventures Group Outstanding Interest Fraction, in
the determination of amounts to be paid in redemption of shares of TCI
Ventures Group Common Stock following a Disposition of all of the properties
and assets of the TCI Ventures Group is to allocate to the TCI Group a portion
of the TCI Ventures Group Net Proceeds of the Disposition, in addition to the
amount so allocated in respect of any Inter-Group Interest, sufficient to
provide for the delivery of the portion of the consideration deliverable by
the Parent upon any post-Disposition
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conversion, exercise or exchange of Pre-Exchange Offer Securities that is in
substitution for shares of TCI Ventures Group Common Stock that would have
been issuable upon such conversion, exercise or exchange if it had occurred
prior to such Disposition. To the extent such Pre-Exchange Offer Securities
are included in the determination of the Adjusted TCI Ventures Group
Outstanding Interest Fraction, the Parent's obligations in respect of such
securities would not be a reduction in the calculation of the TCI Ventures
Group Net Proceeds. In the event any redemption of the TCI Ventures Group
Common Stock or conversion of the TCI Ventures Group Common Stock into TCI
Group Common Stock is made in circumstances in which securities or property
are allocated to the TCI Group in respect of Pre-Exchange Offer Securities or
other Convertible Securities entitled to receive such securities or property
upon conversion, exercise or exchange, the TCI Group will segregate and hold
such securities or other property separate (in the case of any securities or
property other than TCI Group Common Stock), or duly reserve shares of TCI
Group Common Stock issuable upon such conversion, exercise or exchange, for
the benefit of the holders of Pre-Exchange Offer Securities or other
Convertible Securities. In the event the holders of any such Pre-Exchange
Offer Securities or other Convertible Securities do not convert, exercise or
exchange such securities prior to the expiration of any conversion, exercise
or exchange right or the retirement of such security, then the securities or
other property so reserved shall revert to the TCI Group and the former
holders of TCI Ventures Group Common Stock shall have no interest in such
securities or property.
At the time of any dividend made as a result of a Disposition referred to
above, the TCI Group will be credited, and the TCI Ventures Group will be
charged (in addition to the charge for the dividend paid in respect of
outstanding shares of TCI Ventures Group Common Stock), with an amount equal
to the product of (i) the aggregate amount paid in respect of such dividend
times (ii) a fraction the numerator of which is the TCI Ventures Group Inter-
Group Interest Fraction and the denominator of which is the TCI Ventures Group
Outstanding Interest Fraction.
The option to convert the TCI Ventures Group Common Stock into TCI Group
Common Stock in the event of a Disposition provides the Parent with additional
flexibility by allowing the Parent to deliver consideration in the form of
shares of TCI Group Common Stock rather than cash or securities or other
properties. This alternative could be used, for example, in circumstances when
the Parent did not have sufficient legally available assets under the DGCL to
pay the full amount of an otherwise required dividend or redemption or when
the Parent desired to retain such proceeds.
If less than substantially all of the properties and assets of the TCI
Ventures Group were disposed of by the Parent in one transaction, the Parent
would not be required to pay a dividend on, redeem or convert the outstanding
shares of TCI Ventures Group Common Stock, even if an additional transaction
were consummated at a later time in which additional properties and assets of
the TCI Ventures Group were disposed of by the Parent, which, together with
the properties and assets disposed of in the first transaction, would have
constituted substantially all of the properties and assets of the TCI Ventures
Group at the time of the first transaction, unless such transactions
constituted a series of related transactions. The second transaction, however,
could trigger such a requirement if, at the time of the second transaction,
the properties and assets disposed of in such transaction constituted at least
substantially all of the properties and assets of the TCI Ventures Group at
such time. If less than substantially all of the properties and assets of the
TCI Ventures Group were disposed of by the Parent, the holders of the TCI
Ventures Group Common Stock would not be entitled to receive any dividend or
have their shares redeemed or converted for TCI Group Common Stock, although
the Board of Directors could determine, in its sole discretion, to pay a
dividend on the TCI Ventures Group Common Stock in an amount related to the
proceeds of such Disposition.
Redemption of Liberty Media Group Common Stock in Exchange for Stock of
Subsidiary. At any time at which all of the assets and liabilities attributed
to the Liberty Media Group have become and continue to be held directly or
indirectly by any one or more corporations that are Qualifying Subsidiaries
(the "Liberty Media Group Subsidiaries"), the Board of Directors may, subject
to the availability of assets of the Parent legally available therefor,
redeem, on a pro rata basis, all of the outstanding shares of Liberty Media
Group Common
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Stock in exchange for an aggregate number of outstanding fully paid and
nonassessable shares of common stock of each Liberty Media Group Subsidiary
equal to the product of the Adjusted Liberty Media Group Outstanding Interest
Fraction and the number of outstanding shares of common stock of such Liberty
Media Group Subsidiary that are owned by the Parent. The effect of using the
Adjusted Liberty Media Group Outstanding Interest Fraction, instead of the
Liberty Media Group Outstanding Interest Fraction, in the determination of the
number of shares of the Liberty Media Group Subsidiaries deliverable in such a
redemption is to allocate to the TCI Group a portion of the shares of the
Liberty Media Group Subsidiaries, in addition to the number of such shares so
allocated in respect of any Inter-Group Interest, sufficient to provide for
the delivery of the consideration deliverable by the Parent upon any post-
redemption conversion, exercise or exchange of Pre-Distribution Convertible
Securities that become so payable in substitution for shares of Liberty Media
Group Common Stock that would have been issuable upon such conversion,
exercise or exchange if it had occurred prior to such redemption and to make
similar provision for the Parent's obligations in respect of any Committed
Acquisition Shares that remain issuable.
In effecting such a redemption, the Board of Directors may determine either
to (i) redeem shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock in exchange for shares of separate classes or
series of common stock of each Liberty Media Group Subsidiary with relative
voting rights and related differences in designation, conversion, redemption
and share distribution provisions not greater than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock, with holders of shares of
Series B Liberty Media Group Common Stock receiving the class or series having
the higher relative voting rights, or (ii) redeem shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock in
exchange for shares of a single class of common stock of each Liberty Media
Group Subsidiary without distinction between the shares distributed to the
holders of the two series of Liberty Media Group Common Stock. If the Parent
determines to undertake a redemption as described in clause (i) of the
preceding sentence, the outstanding shares of common stock of each Liberty
Media Group Subsidiary not distributed to holders of Liberty Media Group
Common Stock shall consist solely of the class or series having the lower
relative voting rights.
Redemption of TCI Ventures Group Common Stock in Exchange for Stock of
Subsidiary. At any time at which all of the assets and liabilities attributed
to the TCI Ventures Group have become and continue to be held directly or
indirectly by any one or more corporations that are Qualifying Subsidiaries
(the "TCI Ventures Group Subsidiaries"), the Board of Directors may, subject
to the availability of assets of the Parent legally available therefor, redeem
on a pro rata basis, all of the outstanding shares of TCI Ventures Group
Common Stock in exchange for an aggregate number of outstanding, fully paid
and nonassessable shares of common stock of each TCI Ventures Group Subsidiary
equal to the product of the Adjusted TCI Ventures Group Outstanding Interest
Fraction and the number of outstanding shares of common stock of such TCI
Ventures Group Subsidiary that are owned by the Parent. The effect of using
the Adjusted TCI Ventures Group Outstanding Interest Fraction, instead of the
TCI Ventures Group Outstanding Interest Fraction, in the determination of the
number of shares of the TCI Ventures Group Subsidiaries deliverable in such a
redemption is to allocate to the TCI Group a portion of the shares of the TCI
Ventures Group Subsidiaries, in addition to the number of such shares so
allocated in respect of any Inter-Group Interest, sufficient to provide for
the delivery of the consideration deliverable by the Parent upon any post-
redemption conversion, exercise or exchange of Pre-Exchange Offer Securities
that become so payable in substitution for shares of TCI Ventures Group Common
Stock that would have been issuable upon such conversion, exercise or exchange
if it had occurred prior to such redemption.
In effecting such a redemption, the Board of Directors may determine either
to (i) redeem shares of Series A TCI Ventures Group Common Stock and Series B
TCI Ventures Group Common Stock in exchange for shares of separate classes or
series of common stock of each TCI Ventures Group Subsidiary with relative
voting rights and related differences in designation, conversion, redemption
and share distribution provisions not greater than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Ventures Group Common Stock
and Series B TCI Ventures Group
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Common Stock, with holders of shares of Series B TCI Ventures Group Common
Stock receiving the class or series having the higher relative voting rights,
or (ii) redeem shares of Series A TCI Ventures Group Common Stock and Series B
TCI Ventures Group Common Stock in exchange for shares of a single class of
common stock of each TCI Ventures Group Subsidiary without distinction between
the shares distributed to the holders of the two series of TCI Ventures Group
Common Stock.
Certain Provisions Respecting Convertible Securities. Unless the provisions
of any class or series of Pre-Distribution Convertible Securities or
Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares provide specifically to the
contrary, after any conversion date or redemption date on which all
outstanding shares of Liberty Media Group Common Stock were converted or
redeemed, any share of Liberty Media Group Common Stock that is issued on
conversion, exercise or exchange of any Pre-Distribution Convertible
Securities or any Convertible Securities which are convertible into or
exercisable or exchangeable for Committed Acquisition Shares will, immediately
upon issuance pursuant to such conversion, exercise or exchange and without
any notice or any other action on the part of the Parent or the Board of
Directors or the holder of such share of Liberty Media Group Common Stock, be
converted into or redeemed in exchange for, as applicable, the kind and amount
of shares of capital stock, cash and/or other securities or property that a
holder of such Pre-Distribution Convertible Securities or any Convertible
Securities which are convertible into or exercisable or exchangeable for
Committed Acquisition Shares would have been entitled to receive as a result
of such conversion and redemption had such securities been converted,
exercised or exchanged immediately prior to such action. With respect to any
Convertible Securities that are convertible into or exercisable or
exchangeable for shares of Liberty Media Group Common Stock and which are
created, established or otherwise first authorized for issuance subsequent to
the record date for the Liberty Media Group Distribution (other than Pre-
Distribution Convertible Securities and Convertible Securities which are
convertible into or exercisable or exchangeable for Committed Acquisition
Shares), the terms and provisions of which do not provide for adjustments
specifying the kind and amount of capital stock, cash and/or securities or
other property that such holder would be entitled to receive upon the
conversion, exercise or exchange of such Convertible Securities following any
conversion date or redemption date on which all outstanding shares of Liberty
Media Group Common Stock were converted or redeemed, then upon such
conversion, exercise or exchange of such Convertible Securities, any share of
Liberty Media Group Common Stock that is issued on conversion, exercise or
exchange of any such Convertible Securities will, immediately upon issuance
and without any notice or any other action on the part of the Parent or the
Board of Directors or the holder of such share of Liberty Media Group Common
Stock, be redeemed in exchange for, to the extent assets of the Parent are
legally available therefor, the amount of $.01 per share in cash.
Unless the provisions of the Pre-Exchange Offer Securities provide
specifically to the contrary, after any conversion date or redemption date on
which all outstanding shares of TCI Ventures Group Common Stock were converted
or redeemed, any share of TCI Ventures Group Common Stock that is issued on
conversion, exercise or exchange of any Pre-Exchange Offer Securities will,
immediately upon issuance pursuant to such conversion, exercise or exchange
and without any notice or any other action on the part of the Parent or its
Board of Directors or the holder of such share of TCI Ventures Group Common
Stock, be converted into or redeemed in exchange for, as applicable, the kind
and amount of shares of capital stock, cash and/or securities or other
property that a holder of such Pre-Exchange Offer Securities would have been
entitled to receive as a result of such conversion and redemption had such
Pre-Exchange Offer Securities been converted, exercised or exchanged
immediately prior to such action. Unless the provisions of any class or series
of Convertible Securities (other than Pre-Exchange Offer Securities) which are
convertible into or exercisable or exchangeable for shares of TCI Ventures
Group Common Stock provide specifically to the contrary, after any conversion
date or redemption date on which all outstanding shares of TCI Ventures Group
Common Stock were converted or redeemed, any share of TCI Ventures Group
Common Stock that is issued on conversion, exercise or exchange of any such
Convertible Securities will, immediately upon issuance pursuant to such
conversion, exercise or exchange and without any notice or any other action on
the part of the Parent or its Board of Directors or the holder of such share
of TCI Ventures Group Common Stock, be redeemed in exchange for, to the extent
assets of the Parent are legally available therefor, the amount of $.01 per
share in cash.
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General Conversion and Redemption Provisions. Not later than the 10th
Trading Day following the consummation of a Disposition referred to above
under "--Conversion and Redemption--Mandatory Dividend, Redemption or
Conversion of Liberty Media Group Common Stock," the Parent will announce
publicly by press release (i) the Liberty Media Group Net Proceeds of such
Disposition, (ii) the number of outstanding shares of Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock, (iii) the
number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock into or for which Convertible Securities are
then convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof (and stating which, if any, of such Convertible
Securities constitute Pre-Distribution Convertible Securities or Convertible
Securities which are convertible into or exercisable or exchangeable for
Committed Acquisition Shares) and the number of Committed Acquisition Shares
issuable, (iv) the Liberty Media Group Outstanding Interest Fraction as of a
recent date preceding the date of such notice and (v) the Adjusted Liberty
Media Group Outstanding Interest Fraction as of a recent date preceding the
date of such notice. Not earlier than the 26th Trading Day and not later than
the 30th Trading Day following the consummation of such Disposition, the
Parent will announce publicly by press release which of the actions described
in clause (i), (ii) or (iii) of the second paragraph under "--Conversion and
Redemption--Mandatory Dividend, Redemption or Conversion of Liberty Media
Group Common Stock" it has irrevocably determined to take.
If the Parent determines to pay a dividend described in clause (i) of the
second paragraph under "--Conversion and Redemption--Mandatory Dividend,
Redemption or Conversion of Liberty Media Group Common Stock," the Parent
will, not later than the 30th Trading Day following the consummation of such
Disposition, cause to be given to each holder of outstanding shares of Series
A Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock, a notice setting forth (i) the record date for determining holders
entitled to receive such dividend, which will be not earlier than the 40th
Trading Day and not later than the 50th Trading Day following the consummation
of such Disposition, (ii) the anticipated payment date of such dividend (which
will not be more than 85 Trading Days following the consummation of such
Disposition), (iii) the kind of shares of capital stock, cash and/or other
securities or property to be distributed in respect of shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock, (iv) the Liberty Media Group Net Proceeds of such Disposition, (v) the
Liberty Media Group Outstanding Interest Fraction as of a recent date
preceding the date of such notice, and (vi) the number of outstanding shares
of Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock and the number of shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock into or for which
outstanding Convertible Securities are then convertible, exercisable or
exchangeable and the conversion, exercise or exchange prices thereof.
If the Parent determines to undertake a redemption of shares of Liberty
Media Group Common Stock following a Disposition of all (not merely
substantially all) of the properties and assets of the Liberty Media Group as
described in clause (ii)(A) of the second paragraph under "--Conversion and
Redemption--Mandatory Dividend, Redemption or Conversion of Liberty Media
Group Common Stock," the Parent will cause to be given to each holder of
outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock a notice setting forth (i) a statement that
all shares of Liberty Media Group Common Stock outstanding on the redemption
date will be redeemed, (ii) the redemption date (which will not be more than
85 Trading Days following the consummation of such Disposition), (iii) the
kind of shares of capital stock, cash and/or other securities or property to
be paid as a redemption price in respect of shares of Liberty Media Group
Common Stock outstanding on the redemption date, (iv) the Liberty Media Group
Net Proceeds of such Disposition, (v) the Adjusted Liberty Media Group
Outstanding Interest Fraction as of a recent date preceding the date of such
notice, (vi) the place or places where certificates for shares of Liberty
Media Group Common Stock, properly endorsed or assigned for transfer (unless
the Parent waives such requirement), are to be surrendered for delivery of
certificates for shares of such capital stock, cash and/or other securities or
property, and (vii) the number of outstanding shares of Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock and the
number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock into or for which outstanding Convertible
Securities
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are then convertible, exercisable or exchangeable and the conversion, exercise
or exchange prices thereof (and stating which, if any, of such Convertible
Securities constitute Pre-Distribution Convertible Securities or Convertible
Securities which are convertible into or exercisable or exchangeable for
Committed Acquisition Shares) and the number of Committed Acquisition Shares
issuable. Such notice will be sent not less than 35 Trading Days nor more than
45 Trading Days prior to the redemption date.
If the Parent determines to undertake a redemption of shares of Liberty
Media Group Common Stock following a Disposition of substantially all (but not
all) of the properties and assets of the Liberty Media Group as described in
clause (ii)(B) of the second paragraph under "--Conversion and Redemption--
Mandatory Dividend, Redemption or Conversion of Liberty Media Group Common
Stock," the Parent will, not later than the 30th Trading Day following the
consummation of such Disposition, cause to be given to each holder of record
of outstanding shares of Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock a notice setting forth (i) a date not
earlier than the 40th Trading Day and not later than the 50th Trading Day
following the consummation of such Disposition which will be the date on which
shares of the Liberty Media Group Common Stock then outstanding will be
selected for redemption, (ii) the anticipated redemption date (which will not
be more than 85 Trading Days following the consummation of such Disposition),
(iii) the kind of shares of capital stock, cash and/or other securities or
property to be paid as a redemption price in respect of shares of Liberty
Media Group Common Stock selected for redemption, (iv) the Liberty Media Group
Net Proceeds of such Disposition, (v) the Liberty Media Group Outstanding
Interest Fraction as of a recent date preceding the date of such notice, (vi)
the number of outstanding shares of Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock and the number of shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock into or for which outstanding Convertible Securities are then
convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof and (vii) a statement that the Parent will not be
required to register a transfer of any shares of Liberty Media Group Common
Stock for a period of 15 Trading Days next preceding the date referred to in
clause (i) of this sentence. Promptly following the date referred to in clause
(i) of the preceding sentence, but not earlier than the 40th Trading Day and
not later than the 50th Trading Day following the consummation of such
Disposition, the Parent will cause to be given to each holder of shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock to be redeemed, a notice setting forth (i) the number of shares
of Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock held by such holder to be redeemed, (ii) a statement that such
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock will be redeemed, (iii) the redemption date (which will not
be more than 85 Trading Days following the consummation of such Disposition),
(iv) the kind and per share amount of shares of capital stock, cash and/or
other securities or property to be received by such holder with respect to
each share of such Liberty Media Group Common Stock to be redeemed, including
details as to the calculation thereof, and (v) the place or places where
certificates for shares of such Liberty Media Group Common Stock, properly
endorsed or assigned for transfer (unless the Parent waives such requirement),
are to be surrendered for delivery of certificates for shares of such capital
stock, cash and/or other securities or property. The outstanding shares of
Liberty Media Group Common Stock to be redeemed will be redeemed by the Parent
pro rata among the holders of Liberty Media Group Common Stock or by such
other method as may be determined by the Board of Directors to be equitable.
In the event of any conversion as described above under "--Conversion and
Redemption--Conversion of Liberty Media Group Common Stock at the Option of
the Parent" or "--Conversion and Redemption-Mandatory Dividend, Redemption or
Conversion of Liberty Media Group Common Stock," the Parent will cause to be
given to each holder of outstanding shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock a notice setting
forth (i) a statement that all outstanding shares of Liberty Media Group
Common Stock will be converted, (ii) the conversion date (which will not be
more than 85 Trading Days following the consummation of such Disposition in
the event of a conversion pursuant to the provisions described under "--
Conversion and Redemption--Mandatory Dividend, Redemption or Conversion of
Liberty Media Group Common Stock" and which will not be more than 120 days
after the Appraisal Date in the event of a conversion pursuant to the
provisions described under "--Conversion and Redemption--Conversion of Liberty
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Media Group Common Stock at the Option of the Parent"), (iii) the per share
number (or fraction) of shares of Series A TCI Group Common Stock or Series B
TCI Group Common Stock, as applicable, to be received with respect to each
share of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock, including details as to the calculation thereof, (iv) the
place or places where certificates for shares of Liberty Media Group Common
Stock, properly endorsed or assigned for transfer (unless the Parent waives
such requirement), are to be surrendered, and (v) the number of outstanding
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock, the number of Committed Acquisition Shares issuable and
the number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock into or for which outstanding Convertible
Securities are then convertible, exercisable or exchangeable and the
conversion, exercise or exchange prices thereof. Such notice will be sent not
less than 35 Trading Days nor more than 45 Trading Days prior to the
conversion date.
If the Parent determines to redeem shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock as described above
under "--Conversion and Redemption--Redemption of Liberty Media Group Common
Stock in Exchange for Stock of Subsidiary," the Parent will promptly cause to
be given to each holder of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock a notice setting forth (i) a
statement that all outstanding shares of Liberty Media Group Common Stock will
be redeemed in exchange for shares of common stock of the Liberty Media Group
Subsidiaries, (ii) the redemption date, (iii) the Adjusted Liberty Media Group
Outstanding Interest Fraction as of a recent date preceding the date of such
notice, (iv) the place or places where certificates for shares of Liberty
Media Group Common Stock, properly endorsed or assigned for transfer (unless
the Parent waives such requirement), are to be surrendered for delivery of
certificates for shares of common stock of the Liberty Media Group
Subsidiaries, and (v) the number of outstanding shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock and the
number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock into or for which outstanding Convertible
Securities are then convertible, exercisable or exchangeable and the
conversion, exercise or exchange prices thereof (and stating which, if any, of
such Convertible Securities constitute Pre-Distribution Convertible Securities
or Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares) and the number of Committed
Acquisition Shares issuable. Such notice will be sent by not less than 35
Trading Days nor more than 45 Trading Days prior to the redemption date.
In each case in which a notice is required to be given to holders of
outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock in accordance with the preceding five
paragraphs (other than a notice to holders of shares selected for redemption),
notice shall also be given, within the required time period, to each holder of
Convertible Securities that are convertible into or exercisable or
exchangeable for shares of either such series (unless provision for such
notice is otherwise made pursuant to the terms of such Convertible
Securities), which notice shall include, in addition to all of the information
set forth in the corresponding notice to holders of Liberty Media Group Common
Stock, a statement to the effect that the holders of such Convertible
Securities will be entitled to receive the dividend, participate in the
redemption of shares following a Disposition or in the selection of shares for
redemption, participate in the conversion of shares or participate in the
redemption of shares in exchange for stock of the Liberty Media Group
Subsidiaries only if such holder appropriately converts, exercises or
exchanges such Convertible Securities on or prior to the record date for the
dividend, redemption date, date fixed for selection of shares to be redeemed
or conversion date, as applicable, set forth in such notice. In the case of a
redemption or conversion of shares of Liberty Media Group Common Stock, the
notice to holders of Convertible Securities shall also state what, if
anything, such holders will be entitled to receive pursuant to the terms of
such Convertible Securities or, if applicable, the provision described under
"--Conversion and Redemption--Certain Provisions Respecting Convertible
Securities" if such holders convert, exercise or exchange such Convertible
Securities following the redemption date or conversion date, as applicable.
All notices required to be given in accordance with the preceding paragraphs
will be sent to a holder by first-class mail, postage prepaid, at the holder's
address as the same appears on the transfer books of the Parent.
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Neither the failure to mail any notice to any particular holder of Liberty
Media Group Common Stock or of Convertible Securities nor any defect therein
will affect the sufficiency thereof with respect to any other holder of
outstanding shares of Liberty Media Group Common Stock or of Convertible
Securities, or the validity of any conversion or redemption.
The Parent will not be required to issue or deliver fractional shares of any
class of capital stock or any fractional securities to any holder of Liberty
Media Group Common Stock upon any conversion, redemption, dividend or other
distribution described above. In connection with the determination of the
number of shares of any class of capital stock that is issuable or the amount
of securities that is deliverable to any holder of record upon any such
conversion, redemption, dividend or other distribution (including any
fractions of shares or securities), the Parent may aggregate the number of
shares of Liberty Media Group Common Stock held at the relevant time by such
holder of record. If the number of shares of any class of capital stock or the
amount of securities remaining to be issued or delivered to any holder of
Liberty Media Group Common Stock is a fraction, the Parent will, if such
fraction is not issued or delivered to such holder, pay a cash adjustment in
respect of such fraction in an amount equal to the fair market value of such
fraction on the fifth Trading Day prior to the date such payment is to be made
(without interest). For purposes of the preceding sentence, "fair market
value" of any fraction will be (i) in the case of any fraction of a share of
capital stock of the Parent, the product of such fraction and the Market Value
of one share of such capital stock and (ii) in the case of any other
fractional security, such value as is determined by the Board of Directors.
No adjustments in respect of dividends will be made upon the conversion or
redemption of any shares of Liberty Media Group Common Stock; provided,
however, that if the conversion date or the redemption date with respect to
the Liberty Media Group Common Stock is subsequent to the record date for the
payment of a dividend or other distribution thereon or with respect thereto,
the holders of shares of Liberty Media Group Common Stock at the close of
business on such record date will be entitled to receive the dividend or other
distribution payable on or with respect to such shares on the date set for
payment of such dividend or other distribution, notwithstanding the conversion
or redemption of such shares or the Parent's default in payment of the
dividend or distribution due on such date.
Before any holder of shares of Liberty Media Group Common Stock will be
entitled to receive certificates representing shares of any kind of capital
stock or cash and/or securities or other property to be received by such
holder with respect to any conversion or redemption of shares of Liberty Media
Group Common Stock, such holder is required to surrender at such place as the
Parent will specify certificates for such shares, properly endorsed or
assigned for transfer (unless the Parent waives such requirement). The Parent
will as soon as practicable after surrender of certificates representing
shares of Liberty Media Group Common Stock deliver to the person for whose
account such shares were so surrendered, or to the nominee or nominees of such
person, certificates representing the number of whole shares of the kind of
capital stock or cash and/or securities or other property to which such person
is entitled, together with any payment for fractional securities referred to
above. If less than all of the shares of Liberty Media Group Common Stock
represented by any one certificate are to be redeemed, the Parent will issue
and deliver a new certificate for the shares of Liberty Media Group Common
Stock not redeemed. The Parent will not be required to register a transfer of
(i) any shares of Liberty Media Group Common Stock for a period of 15 Trading
Days next preceding any selection of shares of Liberty Media Group Common
Stock to be redeemed or (ii) any shares of Liberty Media Group Common Stock
selected or called for redemption. Shares selected for redemption may not
thereafter be converted pursuant to the provisions described under the caption
"--Conversion at the Option of the Holder."
From and after any applicable conversion date or redemption date, all rights
of a holder of shares of Liberty Media Group Common Stock that were converted
or redeemed will cease except for the right, upon surrender of the
certificates representing shares of Liberty Media Group Common Stock, to
receive certificates representing shares of the kind and amount of capital
stock or cash and/or securities or other property for which such shares were
converted or redeemed, together with any payment for fractional securities,
and such holder will have no other or further rights in respect of the shares
of Liberty Media Group Common Stock so converted or redeemed,
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including, but not limited to, any rights with respect to any cash, securities
or other property which are reserved or otherwise designated by the Parent as
being held for the satisfaction of the Parent's obligations to pay or deliver
any cash, securities or other property upon the conversion, exercise or
exchange of any Convertible Securities outstanding as of the date of such
conversion or redemption or any Committed Acquisition Shares which may then be
issuable. No holder of a certificate that, immediately prior to the applicable
conversion date or redemption date for the Liberty Media Group Common Stock,
represented shares of Liberty Media Group Common Stock will be entitled to
receive any dividend or other distribution with respect to shares of any kind
of capital stock into or in exchange for which the Liberty Media Group Common
Stock was converted or redeemed until surrender of such holder's certificate
for a certificate or certificates representing shares of such kind of capital
stock. Upon such surrender, there will be paid to the holder the amount of any
dividends or other distributions (without interest) which theretofore became
payable with respect to a record date after the conversion date or redemption
date, as the case may be, but that were not paid by reason of the foregoing,
with respect to the number of whole shares of the kind of capital stock
represented by the certificate or certificates issued upon such surrender.
From and after a conversion date or redemption date, as the case may be, of
Liberty Media Group Common Stock, the Parent will, however, be entitled to
treat the certificates for shares of Liberty Media Group Common Stock that
have not yet been surrendered for conversion or redemption as evidencing the
ownership of the number of whole shares of the kind or kinds of capital stock
for which the shares of Liberty Media Group Common Stock represented by such
certificates have been converted or redeemed, notwithstanding the failure to
surrender such certificates.
The Parent will pay any and all documentary, stamp or similar issue or
transfer taxes that may be payable in respect of the issue or delivery of any
shares of capital stock and/or other securities on conversion or redemption of
shares of Liberty Media Group Common Stock. The Parent will not, however, be
required to pay any tax that may be payable in respect of any transfer
involved in the issue and delivery of any shares of capital stock in a name
other than that in which the shares of Liberty Media Group Common Stock so
converted or redeemed were registered and no such issue or delivery will be
made unless and until the person requesting such issue has paid to the Parent
the amount of any such tax, or has established to the satisfaction of the
Parent that such tax has been paid.
Provisions substantially the same as those described under this caption "--
General Conversion and Redemption Provisions," apply in the event of a
Disposition of all or substantially all of the properties and assets of the
TCI Ventures Group and a determination of the Parent to pay a dividend on or
undertake a partial or complete redemption of the TCI Ventures Group Common
Stock following such Disposition, in the event of any conversion of the TCI
Ventures Group Common Stock as described under "--Conversion and Redemption--
Conversion of TCI Ventures Group Common Stock at the Option of the Parent" or
"--Conversion and Redemption--Mandatory Dividend, Redemption or Conversion of
TCI Ventures Group Common Stock," and in the event of a redemption of the TCI
Ventures Group Common Stock in exchange for stock of one or more subsidiaries
as described under "--Conversion and Redemption--Redemption of TCI Ventures
Group Common Stock in Exchange for Stock of Subsidiary."
Liquidation Rights
In the event of a liquidation, dissolution or winding up of the Parent,
whether voluntary or involuntary, after payment or provision for payment of
the debts and other liabilities of the Parent and subject to the prior payment
in full of the preferential amounts to which any class or series of Preferred
Stock is entitled, (i) the holders of the shares of TCI Group Common Stock
will share equally, on a share for share basis, in a percentage of the funds
of the Parent remaining for distribution to its common stockholders equal to
100% multiplied by the average daily ratio (expressed as a decimal) of W/Z for
the 20-Trading Day period ending on the Trading Day prior to the date of the
public announcement of such liquidation, dissolution or winding up, (ii) the
holders of the shares of Liberty Media Group Common Stock will share equally,
on a share for share basis, in a percentage of the funds of the Parent
remaining for distribution to its common stockholders equal to 100% multiplied
by the average daily ratio (expressed as a decimal) of X/Z for such 20-Trading
Day period and (iii) the holders of the
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shares of TCI Ventures Group Common Stock will share equally, on a share for
share basis, in a percentage of the funds of the Parent remaining for
distribution to its common stockholders equal to 100% multiplied by the
average daily ratio (expressed as a decimal) of Y/Z for such 20-Trading Day
period, where W is the aggregate Market Capitalization of the Series A TCI
Group Common Stock and the Series B TCI Group Common Stock, X is the aggregate
Market Capitalization of the Series A Liberty Media Group Common Stock and the
Series B Liberty Media Group Common Stock, Y is the aggregate Market
Capitalization of the Series A TCI Ventures Group Common Stock and the Series
B TCI Ventures Group Common Stock, and Z is the aggregate Market
Capitalization of the Series A TCI Group Common Stock, the Series B TCI Group
Common Stock, the Series A Liberty Media Group Common Stock, the Series B
Liberty Media Group Common Stock, the Series A TCI Ventures Group Common Stock
and the Series B TCI Ventures Group Common Stock. Neither a consolidation,
merger nor sale of assets will be construed to be a "liquidation,"
"dissolution" or "winding up" of the Parent.
No holder of Liberty Media Group Common Stock or TCI Ventures Group Common
Stock will have any special right to receive specific assets of the Liberty
Media Group or the TCI Ventures Group, as the case may be, in the case of any
dissolution, liquidation or winding up of the Parent.
Determinations by the Board of Directors
The Charter provides that any determinations made by the Board of Directors
under any provision described under "Common Stock" will be final and binding
on all stockholders of the Parent, except as may otherwise be required by law.
Such a determination would not be binding if it were established that the
determination was made in breach of a fiduciary duty of the Board of
Directors. The Parent will prepare a statement of any such determination by
the Board of Directors respecting the fair market value of any properties,
assets or securities and will file such statement with the Secretary of the
Parent.
Preemptive Rights
Holders of the TCI Group Common Stock, the Liberty Media Group Common Stock
and the TCI Ventures Group Common Stock do not have any preemptive rights to
subscribe for any additional shares of capital stock or other obligations
convertible into or exercisable for shares of capital stock that may hereafter
be issued by the Parent.
PREFERRED STOCK
General
As of December 31, 1997, 1,620,026 shares of Class B Preferred Stock, 70,575
shares of Series C-TCI Group Preferred Stock, 70,575 shares of Series C-
Liberty Media Group Preferred Stock, 994,876 shares of Series D Preferred
Stock, 278,307 shares of Series F Preferred Stock, 6,693,027 shares of Series
G Preferred Stock and 6,693,127 shares of Series H Preferred Stock were
outstanding. On December 31, 1997, all of the issued and outstanding shares of
Series C Preferred Stock were retired. All of the outstanding shares of Series
F Preferred Stock and 67,536 shares of Class B Preferred Stock are held by
subsidiaries of the Parent.
Class B Preferred Stock
The holders of Class B Preferred Stock are entitled to receive cumulative
dividends, when and as declared by the TCI Board of Directors out of
unrestricted funds legally available therefor, in preference to dividends on
Common Stock. Dividends accrue cumulatively (but without compounding) at an
annual rate of 6% of the stated liquidation value of $100 per share (the
"Stated Liquidation Value"), whether or not such dividends are declared or
funds are legally available for payment of dividends. Accrued dividends are
payable annually and, in the sole discretion of the TCI Board of Directors,
may be declared and paid in cash, in shares of Series A TCI Group Common Stock
or in any combination of the foregoing. Accrued dividends not paid as provided
above on any dividend payment date accumulate and such accumulated unpaid
dividends may be declared and paid in cash, shares of Series A TCI Group
Common Stock or any combination thereof at any time without reference to any
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regular dividend payment date, to holders of record of Class B Preferred Stock
as of a special record date fixed by the TCI Board of Directors. No interest
or additional dividends will accrue or be payable with respect to any dividend
payment on the Class B Preferred Stock that may be in arrears or with respect
to that portion of any other payment on the Class B Preferred Stock that is in
arrears which consists of accumulated or accrued and unpaid dividends.
Upon the liquidation, dissolution or winding up of TCI, the holders of Class
B Preferred Stock will be entitled, after payment of preferential amounts on
any class or series of Preferred Stock ranking prior to the Class B Preferred
Stock with respect to liquidating distributions, to receive from the assets of
TCI available for distribution to stockholders an amount in cash or property
or a combination thereof, per share, equal to the Stated Liquidation Value
thereof, plus all accumulated and accrued but unpaid dividends thereon to the
date of payment.
The Class B Preferred Stock is redeemable at the option of TCI, in whole at
any time or in part from time to time, for a redemption price per share
payable in cash equal to the Stated Liquidation Value thereof, plus all
accumulated and accrued but unpaid dividends thereon to and including the
redemption date.
The Class B Preferred Stock is exchangeable at the option of TCI in whole
but not in part at any time for junior subordinated debt securities of TCI
("Junior Exchange Notes"). If TCI exercises its optional exchange right, each
holder of outstanding shares of Class B Preferred Stock will be entitled to
receive in exchange therefor newly issued Junior Exchange Notes of a series
authorized and established for the purpose of such exchange, the aggregate
principal amount of which will be equal to the aggregate Stated Liquidation
Value of the shares of Class B Preferred Stock so exchanged by such holder,
plus all accumulated and accrued but unpaid dividends thereon to and including
the exchange date. The Junior Exchange Notes will mature on the 15th
anniversary of the date of issuance and will be subject to earlier redemption
at the option of TCI, in whole or in part, for a redemption price equal to the
principal amount thereof plus accrued but unpaid interest. Interest will
accrue, and be payable annually, on the principal amount of the Junior
Exchange Notes at a rate per annum to be determined prior to issuance by
adding a spread of 215 basis points to the "Fifteen Year Treasury Rate" (as
defined in the Indenture pursuant to which the Junior Exchange Notes will be
issued). Interest will accrue on overdue principal at the same rate, but will
not accrue on overdue interest.
The Class B Preferred Stock ranks senior to the Common Stock and ranks
junior to the Series C-TCI Group Preferred Stock, the Series C-Liberty Media
Group Preferred Stock, the Series D Preferred Stock, the Series F Preferred
Stock, the Series G Preferred Stock and the Series H Preferred Stock as to
dividend rights, rights to redemption and rights on liquidation.
The holders of Class B Preferred Stock have the right to vote, on the basis
of one vote per share, together with the Common Stock and any class or series
of Preferred Stock of TCI entitled to vote thereon, in any general election of
directors of TCI. Except as provided above or required by the DGCL, the Class
B Preferred Stock has no voting rights.
Series Preferred Stock
The Series Preferred Stock is issuable, from time to time, in one or more
series, with such powers, designations, preferences and relative
participating, optional or other rights, and qualifications, limitations or
restrictions thereof, as is stated and expressed in a resolution or
resolutions providing for the issue of each such series adopted by the TCI
Board of Directors.
All shares of any one series of the Series Preferred Stock are required to
be alike in every particular. Except to the extent otherwise provided in the
resolution or resolutions providing for the issue of any series of Series
Preferred Stock, the holders of shares of such series will have no voting
rights except as may be required by Delaware law.
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Series C Preferred Stock, Series C-TCI Group Preferred Stock and Series C-
Liberty Media Group Preferred Stock
Series C Preferred Stock. TCI does not intend to issue any additional shares
of Series C Preferred Stock and intends to remove any remaining shares of
Series Preferred Stock designated as Series C Preferred Stock from such
designation as soon as practicable.
Series C-TCI Group Preferred Stock. The liquidation value of the Series C-
TCI Group Preferred Stock is $2,208.35 per share. The liquidation and
redemption features of the Series C-TCI Group Preferred Stock, each of which
is discussed in greater detail below, are determined by reference to such
liquidation value. No dividends are required to be paid on the Series C-TCI
Group Preferred Stock.
Upon the liquidation, dissolution or winding up of TCI, holders of the
Series C-TCI Group Preferred Stock will be entitled to receive from the assets
of TCI available for distribution to stockholders an amount in cash, per
share, equal to the liquidation value of the Series C-TCI Group Preferred
Stock. The Series C-TCI Group Preferred Stock shall not rank junior to any
other classes or series of stock of TCI in respect of the right to participate
in any distribution upon liquidation, dissolution or winding up of TCI.
The Series C-TCI Group Preferred Stock is subject to optional redemption by
TCI at any time after August 8, 2001, in whole or in part, at a redemption
price, per share, equal to the liquidation value per share of the Series C-TCI
Group Preferred Stock. The Series C-TCI Group Preferred Stock is required to
be redeemed by TCI at any time on or after August 8, 2001 at the option of the
holder, in whole or in part (provided that the aggregate liquidation value of
the shares to be redeemed is in excess of $1 million), in each case at a
redemption price, per share, equal to the liquidation value.
The Series C-TCI Group Preferred Stock ranks senior to the Common Stock and
the Class B Preferred Stock and on a parity with all other currently
outstanding classes and series of Preferred Stock as to rights to receive
assets upon liquidation, dissolution or winding up of the affairs of TCI.
As of December 31, 1997, subject to anti-dilution adjustments, each share of
Series C-TCI Group Preferred Stock is currently convertible, at the option of
the holder, into 132.86 shares of Series A TCI Group Common Stock. Subject to
the provisions described in the immediately following paragraph, if the
holders of Series C-TCI Group Preferred Stock would be entitled to receive
upon conversion thereof any TCI capital stock which is redeemable or
exchangeable at the election of TCI ("Series C-TCI Group Redeemable Capital
Stock"), and all of the outstanding shares or other units of such Series C-TCI
Group Redeemable Capital Stock are redeemed, exchanged or otherwise acquired
in full, then, from and after such event (a "Series C-TCI Group Redemption
Event"), the holders of Series C-TCI Group Preferred Stock then outstanding
shall be entitled to receive upon conversion of such shares, in lieu of shares
of such Series C-TCI Group Redeemable Capital Stock, the kind and amount of
shares of stock and other securities and property receivable upon such Series
C-TCI Group Redemption Event by a holder of the number of shares or units of
Series C-TCI Group Redeemable Capital Stock into which such shares of Series
C-TCI Group Preferred Stock could have been converted immediately prior to the
effectiveness of such Series C-TCI Group Redemption Event (assuming that such
holder failed to exercise any applicable right of election with respect
thereto and received per share or unit of such Series C-TCI Group Redeemable
Capital Stock the kind and amount of stock and other securities and property
received per share or unit by the holders of a plurality of the non-electing
shares or units thereof) and, thereafter, the holders of the Series C-TCI
Group Preferred Stock shall have no other conversion rights with respect to
such Series C-TCI Group Redeemable Capital Stock.
Notwithstanding the foregoing, if (i) the redemption price for the shares of
such Series C-TCI Group Redeemable Capital Stock is paid in whole or in part
in securities ("Series C-TCI Group Redemption Securities") of an issuer other
than TCI (the "Series C-TCI Group Other Issuer") and (ii) in connection with
such Series C-TCI Group Redemption Event, the "Mirror Preferred Stock
Condition" is met, as such term is
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defined in the Certificate of Designations for the Series C-TCI Group
Preferred Stock, the Series C-TCI Group Preferred Stock shall not be
convertible into such Series C-TCI Group Redemption Securities and, from and
after the applicable redemption date, the holders of any shares of Series C-
TCI Group Preferred Stock that have not been exchanged for Series C-TCI Group
Exchange Preferred Stock (as defined below) of TCI and Series C-TCI Group
Mirror Preferred Stock (as defined below) of the Series C-TCI Group Other
Issuer, shall have no conversion rights, except for any conversion right that
may have existed immediately prior to the effective date of the Series C-TCI
Group Redemption Event with respect to any shares of stock or other securities
or property other than the Series C-TCI Group Redeemable Capital Stock so
redeemed. TCI is obligated to use all commercially reasonable efforts to
ensure that the Mirror Preferred Stock Condition is satisfied. Generally, the
Mirror Preferred Stock Condition shall be satisfied if TCI makes appropriate
provisions so that holders of Series C-TCI Group Preferred Stock shall have
the right, exercisable on the effective date of the Series C-TCI Group
Redemption Event, to exchange their shares of Series C-TCI Group Preferred
Stock for Series C-TCI Group Exchange Preferred Stock of TCI and Series C-TCI
Group Mirror Preferred Stock of the Series C-TCI Group Other Issuer that
together have an aggregate liquidation preference equal to the liquidation
preference of the Series C-TCI Group Preferred Stock to be so exchanged (as in
effect on the effective date of the Series C-TCI Group Redemption Event).
If TCI distributes the stock of a subsidiary of TCI as a dividend to all
holders of Series A TCI Group Common Stock (a "TCI Group Spin Off"), TCI shall
make appropriate provision so the holders of the Series C-TCI Group Preferred
Stock have the right to exchange their shares of Series C-TCI Group Preferred
Stock on the effective date of the TCI Group Spin Off for Series C-TCI Group
Exchange Preferred Stock of TCI and Series C-TCI Group Mirror Preferred Stock
of such subsidiary. The sum of the initial liquidation values of such shares
of Series C-TCI Group Exchange Preferred Stock of TCI and the Series C-TCI
Group Mirror Preferred Stock delivered in exchange for a share of Series C-TCI
Group Preferred Stock shall equal the liquidation value of a share of Series
C-TCI Group Preferred Stock on the effective date of the TCI Group Spin Off.
From and after the effective date of the TCI Group Spin Off, holders of any
shares of Series C-TCI Group Preferred Stock that have not been exchanged for
Series C-TCI Group Mirror Preferred Stock and Series C-TCI Group Exchange
Preferred Stock shall have no conversion rights with respect to the stock of
the subsidiary distributed in the TCI Group Spin Off.
In the event an "Exchange Offer" is made by TCI or a subsidiary of TCI (the
applicable of the foregoing being the "Series C-TCI Group Offeror"), the
Series C-TCI Group Offeror shall concurrently therewith make an equivalent
offer to the holders of Series C-TCI Group Preferred Stock pursuant to which
such holders may tender shares, based upon the number of shares of Series A
TCI Group Common Stock into which such tendered shares are then convertible
(and in lieu of tendering outstanding shares of Series A TCI Group Common
Stock), together with such other consideration as may be required to be
tendered pursuant to such Exchange Offer, and receive in exchange therefor, in
lieu of securities of the Series C-TCI Group Offeror (and other property, if
applicable), Series C-TCI Group Mirror Preferred Stock with an aggregate
liquidation preference equal to the aggregate liquidation value of the shares
of Series C-TCI Group Preferred Stock exchanged therefor. Whether or not a
holder of shares of Series C-TCI Group Preferred Stock elects to accept such
offer and tender such shares, no adjustment to the conversion rate will be
made in connection with the Exchange Offer. For the purposes of the foregoing,
"Exchange Offer" means an issuer tender offer (within the meaning of Rule 13e-
4(a)(2) under the Exchange Act), including, without limitation, one that is
effected through the distribution of rights or warrants, made to holders of
Series A TCI Group Common Stock (or to holders of other stock of TCI
receivable by a holder of Series C-TCI Group Preferred Stock upon conversion
thereof), to issue stock of TCI or of a subsidiary of TCI and/or other
property to a tendering stockholder in exchange for shares of Series A TCI
Group Common Stock (or such other stock).
The holders of Series C-TCI Group Preferred Stock are entitled to vote on an
as converted basis on all matters submitted to a vote of holders of the
capital stock of TCI entitled to vote generally on the election of directors.
Holders of Series C-TCI Group Preferred Stock are not entitled to vote as a
separate class except as otherwise may be required by the DGCL.
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As used in this description of the Series C-TCI Group Preferred Stock, the
following terms have the meanings specified below:
"Series C-TCI Group Exchange Preferred Stock" means a series of
convertible preferred stock of TCI, having terms, conditions, designations,
voting powers, rights on liquidation and other preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof that are identical, or as nearly so as
is practicable in the judgment of the Board of Directors of TCI, to those
of the Series C-TCI Group Preferred Stock for which such Series C-TCI Group
Exchange Preferred Stock is exchanged, except that the Series C-TCI Group
Exchange Preferred Stock will not be convertible into, and the holders will
have no conversion rights thereunder with respect to, (x) in the case of a
redemption of Series C-TCI Group Redeemable Capital Stock, the Series C-TCI
Group Redeemable Capital Stock redeemed, or the Series C-TCI Group
Redemption Securities issued, in the Series C-TCI Group Redemption Event,
and (y) in the case of a TCI Group Spin Off, the stock of the subsidiary
distributed in such TCI Group Spin Off.
"Series C-TCI Group Mirror Preferred Stock" means convertible preferred
stock issued by (a) in the case of a redemption of Series C-TCI Group
Redeemable Capital Stock, the issuer of the applicable Series C-TCI Group
Redemption Securities, (b) in the case of a TCI Group Spin Off, the
subsidiary whose stock is distributed in the TCI Group Spin Off, and (c) in
the case of an Exchange Offer, the issuer of the applicable Series C-TCI
Group Exchange Securities, and having terms, conditions, designations,
voting powers, rights on liquidation and other preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof that are identical, or as nearly so as
practicable in the judgment of the Board of Directors of TCI, to those of
the Series C-TCI Group Preferred Stock for which such Series C-TCI Group
Mirror Preferred Stock is exchanged, except that the Series C-TCI Group
Mirror Preferred Stock shall be convertible into the kind and amount of
Series C-TCI Group Redemption Securities, Series C-TCI Group Exchange
Securities or stock of a subsidiary whose stock is distributed in a TCI
Group Spin Off, as applicable, and other securities and property that the
holder of a share of Series C-TCI Group Preferred Stock in respect of which
such Series C-TCI Group Mirror Preferred Stock is issued pursuant to the
terms hereof would have received (x) in the case of the redemption of
Series C-TCI Group Redeemable Capital Stock, upon such redemption had such
share of Series C-TCI Group Preferred Stock been converted immediately
prior to the effective date of the Series C-TCI Group Redemption Event, (y)
in the case of a TCI Group Spin Off, in such TCI Group Spin Off had such
share of Series C-TCI Group Preferred Stock been converted immediately
prior to the record date for such TCI Group Spin Off and (z) in the case of
an Exchange Offer, upon consummation thereof had such share of Series C-TCI
Group Preferred Stock that such holder elects to tender been converted and
the shares of Series A TCI Group Common Stock received upon such conversion
been tendered in full pursuant to such Exchange Offer prior to the
expiration thereof and the same percentage of such tendered shares had been
accepted for exchange as the percentage of validly tendered shares of
Series A TCI Group Common Stock were accepted for exchange pursuant to such
Exchange Offer, as the case may be.
Series C-Liberty Media Group Preferred Stock. The liquidation value of the
Series C-Liberty Media Group Preferred Stock is $579.31 per share. The
liquidation and redemption features of the Series C-Liberty Media Group
Preferred Stock, each of which is discussed in greater detail below, are
determined by reference to such liquidation value. No dividends are required
to be paid on the Series C-Liberty Media Group Preferred Stock.
Upon the liquidation, dissolution or winding up of TCI, holders of the
Series C-Liberty Media Group Preferred Stock will be entitled to receive from
the assets of TCI available for distribution to stockholders an amount in
cash, per share, equal to the liquidation value of the Series C-Liberty Media
Group Preferred Stock. The Series C-Liberty Media Group Preferred Stock shall
not rank junior to any other classes or series of stock of TCI in respect of
the right to participate in any distribution upon liquidation, dissolution or
winding up of TCI.
The Series C-Liberty Media Group Preferred Stock is subject to optional
redemption by TCI at any time after August 8, 2001, in whole or in part, at a
redemption price, per share, equal to the liquidation value per share of the
Series C-Liberty Media Group Preferred Stock. The Series C-Liberty Media Group
Preferred Stock
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is required to be redeemed by TCI at any time on or after August 8, 2001 at
the option of the holder, in whole or in part (provided that the aggregate
liquidation value of the shares to be redeemed is in excess of $1 million), in
each case at a redemption price, per share, equal to the liquidation value.
The Series C-Liberty Media Group Preferred Stock ranks senior to the Common
Stock and the Class B Preferred Stock and on a parity with all other currently
outstanding classes and series of Preferred Stock as to rights to receive
assets upon liquidation, dissolution or winding up of the affairs of TCI.
As of December 31, 1997, subject to anti-dilution adjustments, each share of
Series C-Liberty Media Group Preferred Stock is currently convertible, at the
option of the holder, into 37.5 shares of Series A Liberty Media Group Common
Stock. Subject to the provisions described in the immediately following
paragraph, if (i) TCI redeems all the outstanding shares of Series A Liberty
Media Group Common Stock in accordance with the terms thereof, or (ii) the
holders of Series C-Liberty Media Group Preferred Stock would be entitled to
receive upon conversion thereof any TCI capital stock which is redeemable or
exchangeable at the election of TCI ("Series C-Liberty Media Group Redeemable
Capital Stock"), and all of the outstanding shares or other units of such
Series C-Liberty Media Group Redeemable Capital Stock are redeemed, exchanged
or otherwise acquired in full, then, from and after either such event (each
event referred to in clause (i) and (ii) being a "Series C-Liberty Media Group
Redemption Event"), the holders of Series C-Liberty Media Group Preferred
Stock then outstanding shall be entitled to receive upon conversion of such
shares of Series C-Liberty Media Group Preferred Stock, in lieu of shares of
Series A Liberty Media Group Common Stock or such Series C-Liberty Media Group
Redeemable Capital Stock, as the case may be, the kind and amount of shares of
stock and other securities and property receivable upon such Series C-Liberty
Media Group Redemption Event by a holder of the number of shares of Series A
Liberty Media Group Common Stock or shares or units of such Series C-Liberty
Media Group Redeemable Capital Stock, as the case may be, into which such
shares of Series C-Liberty Media Group Preferred Stock could have been
converted immediately prior to the effectiveness of such Series C-Liberty
Media Group Redemption Event (assuming that such holder failed to exercise any
applicable right of election with respect thereto and received per share of
Series A Liberty Media Group Common Stock or per share or unit of such Series
C-Liberty Media Group Redeemable Capital Stock, as the case may be, the kind
and amount of stock and other securities and property received per share or
unit by the holders of a plurality of the non-electing shares or units
thereof) and, thereafter, the holders of the Series C-Liberty Media Group
Preferred Stock shall have no other conversion rights with respect to the
Series A Liberty Media Group Common Stock or such Series C-Liberty Media Group
Redeemable Capital Stock, as the case may be.
Notwithstanding the foregoing, if (i) the redemption price for the shares of
Series A Liberty Media Group Common Stock or such Series C-Liberty Media Group
Redeemable Capital Stock, as the case may be, is paid in whole or in part in
securities ("Series C-Liberty Media Group Redemption Securities") of an issuer
other than TCI (the "Series C-Liberty Media Group Other Issuer") and (ii) in
connection with such Series C-Liberty Media Group Redemption Event, the
"Mirror Preferred Stock Condition" is met, as such term is defined in the
Certificate of Designations for the Series C-Liberty Media Group Preferred
Stock, the Series C-Liberty Media Group Preferred Stock shall not be
convertible into such Series C-Liberty Media Group Redemption Securities and,
from and after the applicable redemption date, the holders of any shares of
Series C-Liberty Media Group Preferred Stock that have not been exchanged for
Series C-Liberty Media Group Mirror Preferred Stock (as defined below) of the
Series C-Liberty Media Group Other Issuer shall have no conversion rights,
except for any conversion right that may have existed immediately prior to the
effective date of the Series C-Liberty Media Group Redemption Event with
respect to any shares of stock or other securities or property other than the
Series A Liberty Media Group Common Stock or Series C-Liberty Media Group
Redeemable Capital Stock so redeemed. TCI is obligated to use all commercially
reasonable efforts to ensure that the Mirror Preferred Stock Condition is
satisfied. Generally, the Mirror Preferred Stock Condition will be satisfied
in connection with a redemption of the Series A Liberty Media Group Common
Stock or the Series C-Liberty Media Group Redeemable Capital Stock into which
the Series C-Liberty Media Group Preferred Stock is then convertible,
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assuming that the Series C-Liberty Media Group Preferred Stock is not then
convertible into any other shares of stock or other securities or property, if
appropriate provision is made so that the holders of the Series C-Liberty
Media Group Preferred Stock have the right to exchange their shares of Series
C-Liberty Media Group Preferred Stock on the effective date of the Series C-
Liberty Media Group Redemption Event for shares of Series C-Liberty Media
Group Mirror Preferred Stock of the issuer of the Series C-Liberty Media Group
Redemption Securities, which Series C-Liberty Media Group Mirror Preferred
Stock shall have an aggregate liquidation preference equal to the aggregate
liquidation value of the shares of Series C-Liberty Media Group Preferred
Stock to be exchanged therefor.
If, before giving effect to a Series C-Liberty Media Group Redemption Event,
a holder of Series C-Liberty Media Group Preferred Stock would be entitled to
receive upon conversion of such Series C-Liberty Media Group Preferred Stock
any shares of stock or other securities or property (other than cash in lieu
of fractional securities) in addition to the Series A Liberty Media Group
Common Stock or Series C-Liberty Media Group Redeemable Capital Stock being
redeemed, and the redemption price payable upon such Series C-Liberty Media
Group Redemption Event will include Series C-Liberty Media Group Redemption
Securities, then the Mirror Preferred Stock Condition will be satisfied if
appropriate provision is made so that the holders of the Series C- Liberty
Media Group Preferred Stock have the right to exchange their shares of Series
C-Liberty Media Group Preferred Stock on the effective date of the Series C-
Liberty Media Group Redemption Event for Series C-Liberty Media Group Exchange
Preferred Stock (as defined below) of TCI and Series C-Liberty Media Group
Mirror Preferred Stock of the issuer of the Series C-Liberty Media Group
Redemption Securities. The sum of the initial liquidation preferences of the
shares of Series C-Liberty Media Group Exchange Preferred Stock and Series C-
Liberty Media Group Mirror Preferred Stock delivered in exchange for a share
of Series C-Liberty Media Group Preferred Stock will equal the liquidation
value of a share of Series C-Liberty Media Group Preferred Stock on the
effective date of the Series C-Liberty Media Group Redemption Event.
If TCI distributes the stock of a subsidiary of TCI as a dividend to all
holders of Series A Liberty Media Group Common Stock (a "Liberty Media Group
Spin Off"), TCI shall make appropriate provision so the holders of the Series
C-Liberty Media Group Preferred Stock have the right to exchange their shares
of Series C-Liberty Media Group Preferred Stock on the effective date of the
Liberty Media Group Spin Off for Series C-Liberty Media Group Exchange
Preferred Stock of TCI and Series C-Liberty Media Group Mirror Preferred Stock
of such subsidiary. The sum of the initial liquidation values of such shares
of Series C-Liberty Media Group Exchange Preferred Stock of TCI and the Series
C-Liberty Media Group Mirror Preferred Stock delivered in exchange for a share
of Series C-Liberty Media Group Preferred Stock shall equal the liquidation
value of a share of Series C-Liberty Media Group Preferred Stock on the
effective date of the Liberty Media Group Spin Off. From and after the
effective date of the Liberty Media Group Spin Off, holders of any shares of
Series C-Liberty Media Group Preferred Stock that have not been exchanged for
Series C-Liberty Media Group Mirror Preferred Stock and Series C-Liberty Media
Group Exchange Preferred Stock shall have no conversion rights with respect to
the stock of the subsidiary distributed in the Liberty Media Group Spin Off.
In the event an "Exchange Offer" is made by TCI or a subsidiary of TCI (the
applicable of the foregoing being the "Series C-Liberty Media Group Offeror"),
the Series C-Liberty Media Group Offeror shall concurrently therewith make an
equivalent offer to the holders of Series C-Liberty Media Group Preferred
Stock pursuant to which such holders may tender shares, based upon the number
of shares of Series A Liberty Media Group Common Stock into which such
tendered shares are then convertible (and in lieu of tendering outstanding
shares of Series A Liberty Media Group Common Stock), together with such other
consideration as may be required to be tendered pursuant to such Exchange
Offer, and receive in exchange therefor, in lieu of securities of the Series
C-Liberty Media Group Offeror (and other property, if applicable), Series C-
Liberty Media Group Mirror Preferred Stock with an aggregate liquidation
preference equal to the aggregate liquidation value of the shares of Series C-
Liberty Media Group Preferred Stock exchanged therefor. Whether or not a
holder of shares of Series C-Liberty Media Group Preferred Stock elects to
accept such offer and tender such shares, no adjustment to the conversion rate
will be made in connection with the Exchange Offer. For the purposes of the
foregoing, "Exchange Offer" means an issuer tender offer (within the meaning
of Rule 13e-4(a)(2) under the Exchange Act), including, without limitation,
one that is effected through the distribution of rights or warrants, made to
holders of Series A Liberty Media Group Common Stock (or to holders of other
stock of TCI receivable
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by a holder of Series C-Liberty Media Group Preferred Stock upon conversion
thereof), to issue stock of TCI or of a subsidiary of TCI and/or other
property to a tendering stockholder in exchange for shares of Series A Liberty
Media Group Common Stock (or such other stock).
The holders of Series C-Liberty Media Group Preferred Stock are entitled to
vote on an as converted basis on all matters submitted to a vote of holders of
the capital stock of TCI entitled to vote generally on the election of
directors. Holders of Series C-Liberty Media Group Preferred Stock are not
entitled to vote as a separate class except as otherwise may be required by
the DGCL.
As used in this description of the Series C-Liberty Media Group Preferred
Stock, the following terms have the meanings specified below:
"Series C-Liberty Media Group Exchange Preferred Stock" means a series of
convertible preferred stock of TCI, having terms, conditions, designations,
voting powers, rights on liquidation and other preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof that are identical, or as nearly so as
is practicable in the judgment of the Board of Directors of TCI, to those
of the Series C-Liberty Media Group Preferred Stock for which such Series
C-Liberty Media Group Exchange Preferred Stock is exchanged, except that
the Series C-Liberty Media Group Exchange Preferred Stock will not be
convertible into, and the holders will have no conversion rights thereunder
with respect to, (x) in the case of a redemption of Series A Liberty Media
Group Common Stock or Series C-Liberty Media Group Redeemable Capital
Stock, the Series A Liberty Media Group Common Stock or Series C-Liberty
Media Group Redeemable Capital Stock redeemed, or the Series C-Liberty
Media Group Redemption Securities issued, in the Series C-Liberty Media
Group Redemption Event, and (y) in the case of a Liberty Media Group Spin
Off, the stock of the subsidiary distributed in such Liberty Media Group
Spin Off.
"Series C-Liberty Media Group Mirror Preferred Stock" means convertible
preferred stock issued by (a) in the case of a redemption of Series A
Liberty Media Group Common Stock or Series C-Liberty Media Group Redeemable
Capital Stock, the issuer of the applicable Series C-Liberty Media Group
Redemption Securities, (b) in the case of a Liberty Media Group Spin Off,
the subsidiary whose stock is distributed in the Liberty Media Group Spin
Off, and (c) in the case of an Exchange Offer, the issuer of the applicable
securities issued in exchange for shares of Series A Liberty Media Group
Common Stock, and having terms, conditions, designations, voting powers,
rights on liquidation and other preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof that are identical, or as nearly so as practicable in
the judgment of the Board of Directors of TCI, to those of the Series C-
Liberty Media Group Preferred Stock for which such Series C-Liberty Media
Group Mirror Preferred Stock is exchanged, except that the Series C-Liberty
Media Group Mirror Preferred Stock shall be convertible into the kind and
amount of Series C-Liberty Media Group Redemption Securities, exchange
securities or stock of a subsidiary whose stock is distributed in a Liberty
Media Group Spin Off, as applicable, and other securities and property that
the holder of a share of Series C-Liberty Media Group Preferred Stock in
respect of which such Series C-Liberty Media Group Mirror Preferred Stock
is issued pursuant to the terms hereof would have received (x) in the case
of the redemption of Series A Liberty Media Group Common Stock or Series C-
Liberty Media Group Redeemable Capital Stock, upon such redemption had such
share of Series C-Liberty Media Group Preferred Stock been converted
immediately prior to the effective date of the Series C-Liberty Media Group
Redemption Event, (y) in the case of a Liberty Media Group Spin Off, in
such Liberty Media Group Spin Off had such share of Series C-Liberty Media
Group Preferred Stock been converted immediately prior to the record date
for such Liberty Media Group Spin Off and (z) in the case of an Exchange
Offer, upon consummation thereof had such share of Series C-Liberty Media
Group Preferred Stock that such holder elects to tender been converted and
the shares of Series A Liberty Media Group Common Stock received upon such
conversion been tendered in full pursuant to such Exchange Offer prior to
the expiration thereof and the same percentage of such tendered shares had
been accepted for exchange as the percentage of validly tendered shares of
Series A Liberty Media Group Common Stock were accepted for exchange
pursuant to such Exchange Offer, as the case may be.
Series D Preferred Stock
The dividend, liquidation and redemption features of the Series D Preferred
Stock, each of which is discussed below, are determined by reference to the
liquidation value of the Series D Preferred Stock, which as
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of any date of determination is equal, on a per share basis, to the sum of (i)
$300, plus (ii) all dividends accrued on such share through the dividend
payment date on or immediately preceding such date of determination to the
extent not paid on or before such date, plus (iii) for purposes of determining
liquidation and redemption payments, an amount equal to all unpaid dividends
accrued on the sum of clauses (i) and (ii) above, to such date of
determination.
The holders of Series D Preferred Stock are entitled to receive cumulative
cash dividends out of funds legally available therefor. Dividends accrue on a
daily basis at an annual rate of 5 1/2% of the liquidation value per share,
whether or not such dividends are declared or funds are legally or
contractually available for payment of dividends, except that if TCI fails to
redeem shares of Series D Preferred Stock required to be redeemed on a
redemption date, dividends thereafter will accrue cumulatively at an annual
rate of 10% of the liquidation value per share until such shares are redeemed.
To the extent any cash dividends are not paid on any dividend payment date,
the amount of such dividends will be automatically converted, to the extent
permissible under the DGCL, into shares of Series A TCI Group Common Stock at
a conversion rate equal to 95% of the then "current market price" (as defined
in the certificate of designation establishing the Series D Preferred Stock)
of the Series A TCI Group Common Stock, and upon issuance of shares of Series
A TCI Group Common Stock to holders of Series D Preferred Stock in respect of
such conversion such dividend will be deemed paid for all purposes. Dividends
not so paid or deemed paid on any dividend payment date are added to the
liquidation value on such date and remain a part thereof until such dividends
and all dividends accrued thereon are paid in full. Dividends will accrue on
such unpaid dividends at the rate of 5 1/2% per annum (10% under the
circumstances described above), unless such dividends remain unpaid for two
consecutive quarters, in which event such rate will increase to 10% per annum
until such dividends and all dividends accrued thereon are paid in full.
Upon the liquidation, dissolution or winding up of TCI, holders of Series D
Preferred Stock will be entitled to receive from the assets of TCI available
for distribution to stockholders an amount in cash, per share, equal to the
liquidation value of the Series D Preferred Stock.
The Series D Preferred Stock is subject to optional redemption by TCI at any
time after January 26, 2000, in whole or from time to time in part, at a
redemption price, per share, equal to the then liquidation value of the Series
D Preferred Stock. Shares of Series D Preferred Stock may also be redeemed at
the option of TCI after January 26, 1998, in whole or from time to time in
part, at a redemption price per share equal to the then liquidation value of
the Series D Preferred Stock, if the market value per share of the Series A
TCI Group Common Stock has exceeded $37.50 (as adjusted for dividends on the
Series A TCI Group Common Stock payable in Series A TCI Group Common Stock,
stock splits and reverse stock splits in respect of the Series A TCI Group
Common Stock) for the period specified in the certificate of designation
establishing the Series D Preferred Stock. The Series D Preferred Stock is
also subject to redemption, in whole or in part, at the holder's option, at
any time after January 26, 2005, provided that the aggregate liquidation value
of the shares to be redeemed is in excess of $50,000 (or, if all of the shares
of Series D Preferred Stock held by such holder have an aggregate liquidation
value of less than $50,000, all but not less than all of such shares of Series
D Preferred Stock), in each case at a redemption price, per share, equal to
the then liquidation value of the Series D Preferred Stock. If TCI fails to
effect any redemption of Series D Preferred Stock called for redemption or
which a holder has validly requested be redeemed, the holders thereof will
have the option to convert their shares of Series D Preferred Stock into
Series A TCI Group Common Stock at a conversion rate equal to the quotient
obtained by dividing the redemption price by 95% of the "current market price"
of the Series A TCI Group Common Stock on the redemption date, provided that
in the case of a failure by TCI to redeem shares at the request of a holder,
the exercise of the foregoing conversion right will be delayed for one year.
The Series D Preferred Stock ranks senior to the Common Stock and the Class
B Preferred Stock, and ranks on a parity basis with the Series C-TCI Group
Preferred Stock, the Series C-Liberty Media Group Preferred Stock, the Series
F Preferred Stock, the Series G Preferred Stock and the Series H Preferred
Stock as to dividend rights, rights to redemption and rights on liquidation.
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As of December 31, 1997, subject to anti-dilution adjustments, each share of
Series D Preferred Stock is convertible, at the option of the holder, into 10
shares of Series A TCI Group Common Stock, two and one-half shares of Series A
Liberty Media Group Common Stock (and, upon conversion of shares of the Series
D Preferred Stock, each holder of Series D Preferred Stock is entitled to
receive one additional share of Series A Liberty Media Group Common Stock for
every two such shares received upon conversion), and one share of TCI
Satellite Entertainment, Inc. Series A Common Stock. If TCI distributes to all
holders of Series A TCI Group Common Stock rights or warrants to subscribe for
or purchase shares of capital stock of TCI (other than shares of Series A TCI
Group Common Stock or Series B TCI Group Common Stock) or a subsidiary of TCI,
which capital stock (a) is common stock of its issuer or (b) participates in
one or more business operations of the issuer thereof in such a manner that if
such operations were owned by a corporation and such capital stock were issued
thereby such capital stock would be common stock of such corporation ("Special
Securities"), each holder of Series D Preferred Stock will have the option, in
lieu of any anti-dilution adjustment that would otherwise apply to the
conversion rate of the Series D Preferred Stock, to exchange a specified
portion of its shares of Series D Preferred Stock for shares of a new series
of convertible preferred stock of the issuer of the Special Securities having
terms similar to the Series D Preferred Stock but convertible into Special
Securities.
The Series D Preferred Stock has no voting rights, except as required by the
DGCL and except that without the consent of the holders of 66 2/3% in
liquidation value of the Series D Preferred Stock, TCI may not create any
series of Preferred Stock that is senior as to dividend rights, rights to
redemption, or rights on liquidation to the Series D Preferred Stock.
Series F Preferred Stock
The holders of the Series F Preferred Stock are entitled to participate, on
an as-converted basis, with the holders of the Series A TCI Group Common
Stock, with respect to any cash dividends or distributions declared and paid
on the Series A TCI Group Common Stock. Dividends or distributions on the
Series A TCI Group Common Stock which are not paid in cash would result in
adjustment of the rate at which the Series F Preferred Stock is convertible
into Series A TCI Group Common Stock.
Upon the liquidation, dissolution or winding up of TCI, holders of Series F
Preferred Stock will be entitled to receive from the assets of TCI available
for distribution to stockholders an amount in cash or property or a
combination thereof, per share, equal to $.01. After receipt of their
liquidation preference and subject to the preferential rights of any other
class or series of Preferred Stock, the holders of Series F Preferred Stock
are entitled to receive from the assets of TCI available for distribution to
common stockholders an amount equal to the amount to be distributed per share
of Series A TCI Group Common Stock in such liquidation, dissolution or winding
up multiplied by the number of shares of Series A TCI Group Common Stock into
which a share of Series F Preferred Stock is then convertible.
The Series F Preferred Stock is subject to optional redemption by TCI at any
time after the 30th business day following issuance, in whole or in part, at a
redemption price, per share, equal to $24,875 (as adjusted in respect of stock
splits, reverse splits and other events affecting the shares of Series F
Preferred Stock), plus any dividends which have been declared but are unpaid
as of the date fixed for such redemption. TCI will pay the redemption price
(or designated portion thereof) of the shares of Series F Preferred Stock
called for redemption by issuing to the holder thereof, in respect of its
shares to be redeemed, a number of shares of Series A TCI Group Common Stock
equal to the aggregate redemption price (or designated portion thereof) of the
shares to be redeemed divided by the average market price of the Series A TCI
Group Common Stock for a period specified, and subject to the adjustments
described, in the certificate of designations establishing the Series F
Preferred Stock.
The Series F Preferred Stock ranks senior to the Common Stock and the Class
B Preferred Stock, and ranks on a parity basis with the Series C-TCI Group
Preferred Stock, the Series C-Liberty Media Group Preferred Stock, the Series
D Preferred Stock, the Series G Preferred Stock and the Series H Preferred
Stock as to dividend rights, rights to redemption and rights on liquidation.
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Shares of Series F Preferred Stock are currently convertible, at the option
of the holder, into Series A TCI Group Common Stock at a rate of 1,496.65
shares of Series A TCI Group Common Stock for each share of Series F Preferred
Stock, subject to anti-dilution adjustments. In addition, any shares of Series
F Preferred Stock which cease to be held by TCI or a subsidiary of TCI will
automatically be converted into shares of Series A TCI Group Common Stock.
The holders of Series F Preferred Stock have the right to vote, on the basis
of one vote per share, together with the Common Stock and any class or series
of Preferred Stock entitled to vote thereon, in any general election of
directors of TCI. Except as provided above or required by the DGCL, the Series
F Preferred Stock has no voting rights.
Series G Preferred Stock
The dividend, liquidation and redemption features of the Series G Preferred
Stock, each of which is discussed below, are determined by reference to the
liquidation preference of the Series G Preferred Stock, which as of any date
of determination is equal, on a per share basis, to the sum of (i) $21.60,
plus (ii) an amount equal to all dividends accrued on such share which have
been added to and remain a part of the liquidation preference as of such date,
plus (iii) for purposes of determining liquidation and redemption payments, an
amount equal to all unpaid dividends accrued on the sum of the amounts
specified in clauses (i) and (ii) above during the period from the immediately
preceding dividend payment date through and including the date in question.
The holders of Series G Preferred Stock are entitled to receive cumulative
dividends, when and as declared by the TCI Board of Directors out of
unrestricted funds legally available therefor, in preference to dividends on
Common Stock and the Class B Preferred Stock. Dividends accrue on the Series G
Preferred Stock from and after January 25, 1997, on a daily basis at the rate
of 4% per annum of the liquidation preference per share, whether or not such
dividends are declared or funds are available for payment of dividends.
Dividends not paid on any dividend payment date are added to the liquidation
preference on such date and remain a part thereof until such dividends are
paid. The rate per annum at which dividends will accrue on that portion of the
liquidation preference that consists of unpaid dividends that were added to
the liquidation preference on a dividend payment date and that remain unpaid
on the next succeeding dividend payment date will increase to 8.625% per annum
from and after such next succeeding dividend payment date. Accrued dividends
are payable semiannually and, in the sole discretion of the TCI Board of
Directors, may be declared and paid in cash, in shares of Series A TCI Group
Common Stock or in any combination of the foregoing. Accrued dividends not
paid as provided above on any dividend payment date accumulate and such
accumulated unpaid dividends may be declared and paid in cash, shares of
Series A TCI Group Common Stock or any combination thereof at any time without
reference to any regular dividend payment, to holders of record of Series G
Preferred Stock as of a special record date fixed by the TCI Board of
Directors.
Upon the liquidation, dissolution or winding up of TCI, the holders of
Series G Preferred Stock will be entitled, after payment of preferential
amounts on any class or series of Preferred Stock ranking prior to the Series
G Preferred Stock with respect to liquidating distributions, to receive from
the assets of TCI available for distribution to stockholders an amount in cash
or property or a combination thereof, per share, equal to the liquidation
preference thereof as of the date of payment or distribution.
The Series G Preferred Stock is redeemable at the option of TCI, in whole at
any time or in part from time to time on or after February 1, 2001 for a
redemption price per share payable in cash equal to the liquidation preference
thereof on such redemption date. TCI is required to redeem the Series G
Preferred Stock out of funds legally available therefor on February 1, 2016,
for a redemption price per share payable in cash equal to the liquidation
preference thereof on such redemption date.
The Series G Preferred Stock ranks senior to the Common Stock and the Class
B Preferred Stock and on a parity with all other currently outstanding classes
and series of Preferred Stock as to dividend rights, rights to redemption and
rights on liquidation.
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As of December 31, 1997, subject to antidilution adjustments, each share of
Series G Preferred Stock is convertible, at the option of the holder, into
1.190 shares of Series A TCI Group Common Stock. Subject to the provisions
described in the immediately following paragraph, if the holders of Series G
Preferred Stock would be entitled to receive upon conversion thereof any
shares of a class or series of TCI capital stock, which is redeemable or
exchangeable at the election of TCI ("Series G Redeemable Capital Stock"), and
such Series G Redeemable Capital Stock is redeemed, exchanged or otherwise
acquired in full, then, from and after such event (a "Series G Redemption
Event"), the holders of Series G Preferred Stock then outstanding shall be
entitled to receive upon conversion of such shares, in lieu of shares of such
Series G Redeemable Capital Stock, the kind and amount of securities, cash or
other assets receivable upon such Series G Redemption Event by a holder of the
number of shares of Series G Redeemable Capital Stock into which such shares
of Series G Preferred Stock could have been converted immediately prior to the
effectiveness of such Series G Redemption Event (assuming that such holder
failed to exercise any applicable right of election with respect thereto and
received per share of such Series G Redeemable Capital Stock the kind and
amount of securities, cash or other assets received per share by the holders
of a plurality of the non-electing shares thereof) and, thereafter, the
holders of the Series G Preferred Stock shall have no other conversion rights
with respect to such Series G Redeemable Capital Stock.
Notwithstanding the foregoing, the provisions described in the immediately
preceding paragraph shall not apply, and the holders of any shares of Series G
Preferred Stock that are not exchanged as described in the second sentence of
this paragraph shall not have any conversion rights with respect to Series G
Redeemable Capital Stock so redeemed, exchanged or otherwise acquired, after
the Series G Redemption Event relating thereto, if (i) the redemption price
for the shares of such Series G Redeemable Capital Stock is paid in whole or
in part in securities ("Series G Redemption Securities") of an issuer other
than TCI (the "Series G Other Issuer") and (ii) in connection with such Series
G Redemption Event, the "Mirror Preferred Stock Condition" is met, as such
term is defined in the certificate of designations for the Series G Preferred
Stock. Generally, the Mirror Preferred Stock Condition shall be satisfied if
TCI makes appropriate provisions so that holders of Series G Preferred Stock
shall have the right, exercisable on the effective date of the Series G
Redemption Event, to exchange their shares of Series G Preferred Stock for
convertible preferred stock of TCI and convertible preferred stock of the
Series G Other Issuer that together have an aggregate liquidation preference
equal to the liquidation preference of the Series G Preferred Stock to be so
exchanged (as in effect on the effective date of the Series G Redemption
Event) and that otherwise each have terms, conditions, designations, dividend
rights, voting powers, rights on liquidation and other preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions applicable to such convertible preferred stock
that are identical, or as nearly so as is practicable in the good faith
judgment of the Board of Directors of TCI, to those of the Series G Preferred
Stock for which such convertible preferred stock is to be exchanged, except
that applicable time periods under the Series G Preferred Stock will be tacked
to corresponding time periods under such convertible preferred stock, and
except that (x) the convertible preferred stock of the Series G Other Issuer
will be convertible into the kind and amount of Series G Redemption
Securities, cash and other assets that the holder of a share of Series G
Preferred Stock in respect of which such convertible preferred stock is issued
would have received in the Series G Redemption Event, had such shares of
Series G Preferred Stock been converted prior to the Series G Redemption
Event, and (y) the convertible preferred stock of TCI will not be convertible
into, and the holders thereof will have no conversion rights thereunder with
respect to, the Series G Redeemable Capital Stock subject to the Series G
Redemption Event. The Mirror Preferred Stock Condition shall be deemed to have
been satisfied in connection with any Series G Redemption Event only if the
Board of Directors of TCI determines (i) that receipt of such convertible
preferred stock of TCI and/or the Series G Other Issuer in exchange for the
Series G Preferred Stock in connection with such Series G Redemption Event
would not result in the recognition of gain or loss by the holders of such
Series G Preferred Stock for United States federal income tax purposes; (ii)
that an adjustment made in the conversion rate of the Series G Preferred Stock
with respect to such Series G Redemption Event, as described in the
immediately preceding paragraph, would result in the recognition of gain or
loss by the holders of Series G Preferred Stock for United States federal
income tax purposes; or (iii) that receipt of Series G Redemption Securities
in redemption of the Series G Redeemable Capital Stock to be redeemed in such
Series G Redemption Event would result in the recognition of gain or loss by
the holders of such Series G Redeemable Capital Stock.
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The holders of Series G Preferred Stock have the right to vote, on the basis
of one vote per share, together with the Common Stock, the Class B Preferred
Stock and any other class or series of Preferred Stock entitled to vote
thereon, in any general election of directors of TCI. The number of authorized
shares of Series G Preferred Stock may be increased or decreased (but not
below the number of shares of Series G Preferred Stock then outstanding) by
the affirmative vote of the holders of at least 66 2/3% of the then
outstanding Voting Securities (as defined in the Charter) voting together as a
single class. Except as provided above or required by the DGCL, the Series G
Preferred Stock has no voting rights.
Series H Preferred Stock
The dividend, liquidation and redemption features of the Series H Preferred
Stock, each of which is discussed below, are determined by reference to the
liquidation preference of the Series H Preferred Stock, which as of any date
of determination is equal, on a per share basis, to the sum of (i) $5.40, plus
(ii) an amount equal to all dividends accrued on such share which have been
added to and remain a part of the liquidation preference as of such date, plus
(iii) for purposes of determining liquidation and redemption payments, an
amount equal to all unpaid dividends accrued on the sum of the amounts
specified in clauses (i) and (ii) above during the period from the immediately
preceding dividend payment date through and including the date in question.
The holders of Series H Preferred Stock are entitled to receive cumulative
dividends, when and as declared by the TCI Board of Directors out of
unrestricted funds legally available therefor, in preference to dividends on
Common Stock and the Class B Preferred Stock. Dividends accrue on the Series H
Preferred Stock from and after January 25, 1997, on a daily basis at the rate
of 4% per annum of the liquidation preference per share, whether or not such
dividends are declared or funds are available for payment of dividends.
Dividends not paid on any dividend payment date are added to the liquidation
preference on such date and remain a part thereof until such dividends are
paid. The rate per annum at which dividends will accrue on that portion of the
liquidation preference that consists of unpaid dividends that were added to
the liquidation preference on a dividend payment date and that remain unpaid
on the next succeeding dividend payment date will increase to 8.625% per annum
from and after such next succeeding dividend payment date. Accrued dividends
are payable semiannually and, in the sole discretion of the TCI Board of
Directors, may be declared and paid in cash, in shares of Series A TCI Group
Common Stock or in any combination of the foregoing. Accrued dividends not
paid as provided above on any dividend payment date accumulate and such
accumulated unpaid dividends may be declared and paid in cash, shares of
Series A TCI Group Common Stock or any combination thereof at any time without
reference to any regular dividend payment, to holders of record of Series H
Preferred Stock as of a special record date fixed by the TCI Board of
Directors.
Upon the liquidation, dissolution or winding up of TCI, the holders of
Series H Preferred Stock will be entitled, after payment of preferential
amounts on any class or series of Preferred Stock ranking prior to the Series
H Preferred Stock with respect to liquidating distributions, to receive from
the assets of TCI available for distribution to stockholders an amount in cash
or property or a combination thereof, per share, equal to the liquidation
preference thereof as of the date of payment or distribution.
The Series H Preferred Stock is redeemable at the option of TCI, in whole at
any time or in part from time to time on or after February 1, 2001, for a
redemption price per share payable in cash equal to the liquidation preference
thereof on such redemption date. TCI is required to redeem the Series H
Preferred Stock out of funds legally available therefor on February 1, 2016,
for a redemption price per share payable in cash equal to the liquidation
preference thereof on such redemption date.
The Series H Preferred Stock ranks senior to the Common Stock and the Class
B Preferred Stock and on a parity with all other currently outstanding classes
and series of Preferred Stock as to dividend rights, rights to redemption and
rights on liquidation.
As of December 31, 1997, subject to antidilution adjustments, each share of
Series H Preferred Stock is convertible, at the option of the holder, into
.2625 of one share of Series A Liberty Media Group Common Stock, and, upon
conversion of shares of the Series H Preferred Stock each holder of Series H
Preferred Stock is entitled
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to receive one additional share of Series A Liberty Media Group Common Stock
for every two such shares received upon such conversion. Subject to the
provisions described in the immediately following paragraph, if (i) TCI
redeems all the outstanding shares of Series A Liberty Media Group Common
Stock in accordance with the terms thereof, or (ii) the holders of Series H
Preferred Stock would be entitled to receive upon conversion thereof any
shares of a class or series of TCI capital stock, which is redeemable or
exchangeable at the election of TCI ("Series H Redeemable Capital Stock"), and
such Series H Redeemable Capital Stock is redeemed, exchanged or otherwise
acquired in full, then, from and after either such event (a "Series H
Redemption Event"), the holders of Series H Preferred Stock then outstanding
shall be entitled to receive upon conversion of such shares of Series H
Preferred Stock, in lieu of shares of Series A Liberty Media Group Common
Stock or such Series H Redeemable Capital Stock, as the case may be, the kind
and amount of securities, cash or other assets receivable upon such Series H
Redemption Event by a holder of the number of shares of Series A Liberty Media
Group Common Stock or such Series H Redeemable Capital Stock, as the case may
be, into which such shares of Series H Preferred Stock could have been
converted immediately prior to the effectiveness of such Series H Redemption
Event (assuming that such holder failed to exercise any applicable right of
election with respect thereto and received per share of Series A Liberty Media
Group Common Stock or per share of such Series H Redeemable Capital Stock, as
the case may be, the kind and amount of securities, cash or other assets
received per share by the holders of a plurality of the non-electing shares
thereof) and, thereafter, the holders of the Series H Preferred Stock shall
have no other conversion rights with respect to the Series A Liberty Media
Group Common Stock or such Series H Redeemable Capital Stock, as the case may
be.
Notwithstanding the foregoing, the provisions described in the immediately
preceding paragraph shall not apply, and the holders of any shares of Series H
Preferred Stock that are not exchanged as described in the second sentence of
this paragraph shall not have any conversion rights with respect to the Series
A Liberty Media Group Common Stock or such Series H Redeemable Capital Stock,
as the case may be, after the Series H Redemption Event relating thereto, if
(i) the redemption price for the shares of Series A Liberty Media Group Common
Stock or such Series H Redeemable Capital Stock, as the case may be, is paid
in whole or in part in securities ("Series H Redemption Securities") of an
issuer other than TCI (the "Series H Other Issuer") and (ii) in connection
with such Series H Redemption Event, the "Mirror Preferred Stock Condition" is
met, as such term is defined in the certificate of designations for the Series
H Preferred Stock. Generally, the Mirror Preferred Stock Condition shall be
satisfied if TCI makes appropriate provisions so that holders of Series H
Preferred Stock shall have the right, exercisable on the effective date of the
Series H Redemption Event, to exchange their shares of Series H Preferred
Stock for (A) if the Series H Preferred Stock is not then convertible into any
security, cash or assets other than the stock that is the subject of the
Series H Redemption Event (i.e., Series A Liberty Media Group Common Stock or
such Series H Redeemable Capital Stock, as the case may be), convertible
preferred stock of the Series H Other Issuer having a liquidation preference
equal to the liquidation preference of the Series H Preferred Stock to be so
exchanged, as in effect on the effective date of the Series H Redemption
Event, or (B) if the Series H Preferred Stock is then convertible into any
security, cash or assets in addition to the stock that is the subject of the
Series H Redemption Event (any such additional securities, cash or assets,
collectively, the "Additional Conversion Property"), convertible preferred
stock of TCI and convertible preferred stock of the Series H Other Issuer
having an aggregate liquidation preference equal to the liquidation preference
of the Series H Preferred Stock to be so exchanged, as in effect on the
effective date of the Series H Redemption Event; provided, however, that in
either case, the convertible preferred stock into which shares of Series H
Preferred Stock may be exchanged shall otherwise have terms, conditions,
designations, dividend rights, voting powers, rights on liquidation and other
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions applicable to such convertible
preferred stock that are identical, or as nearly so as is practicable in the
good faith judgment of the Board of Directors of TCI, to those of the Series H
Preferred Stock for which such convertible preferred stock is to be exchanged,
except that applicable time periods under the Series H Preferred Stock will be
tacked to corresponding time periods under such convertible preferred stock,
and except that (x) the convertible preferred stock of the Series H Other
Issuer will be convertible into the kind and amount of Series H Redemption
Securities, cash and other assets that the holders of shares of Series H
Preferred Stock in respect of which such convertible preferred stock is issued
would have received in the Series H Redemption Event had such shares of Series
H Preferred Stock been converted in full prior to the Series H Redemption
Event,
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and (y) any convertible preferred stock of TCI will be convertible into the
Additional Conversion Property, and will not be convertible into, and the
holders thereof will have no conversion rights thereunder with respect to, the
Series A Liberty Media Group Common Stock or Series H Redeemable Capital
Stock, as the case may be, subject to the Series H Redemption Event. The
Mirror Preferred Stock Condition shall be deemed to have been satisfied in
connection with any Series H Redemption Event only if the Board of Directors
of TCI determines (i) that receipt of such convertible preferred stock of TCI
and/or the Series H Other Issuer in exchange for Series H Preferred Stock in
connection with such Series H Redemption Event would not result in the
recognition of gain or loss by the holders of such Series H Preferred Stock
for United States federal income tax purposes; (ii) that an adjustment made in
the conversion rate of the Series H Preferred Stock with respect to such
Series H Redemption Event, as described in the immediately preceding
paragraph, would result in the recognition of gain or loss by the holders of
Series H Preferred Stock for United States federal income tax purposes; or
(iii) that receipt of Series H Redemption Securities in redemption of the
Series A Liberty Media Group Common Stock or Series H Redeemable Capital Stock
to be redeemed in such Series H Redemption Event would result in the
recognition of gain or loss by the holders of such Series A Liberty Media
Group Common Stock or Series H Redeemable Capital Stock, as the case may be.
The holders of Series H Preferred Stock have the right to vote, on the basis
of one vote per share, together with the Common Stock, the Class B Preferred
Stock and any other class or series of Preferred Stock entitled to vote
thereon, in any general election of directors of TCI. The number of authorized
shares of Series H Preferred Stock may be increased or decreased (but not
below the number of shares of Series H Preferred Stock then outstanding) by
the affirmative vote of the holders of at least 66 2/3% of the then
outstanding Voting Securities (as defined in the Charter) voting together as a
single class. Except as provided above or required by the DGCL, the Series H
Preferred Stock has no voting rights.
Limitations on Rights of Holders of Parity Stock and Junior Stock
For so long as any dividends are in arrears on any outstanding class or
series of Preferred Stock, and until all dividends accrued up to the
immediately preceding dividend payment date on such Preferred Stock and on any
class or series of Preferred Stock ranking on a parity with such Preferred
Stock ("Parity Stock") shall have been paid or declared and set apart so as to
be available for payment in full thereof and for no other purpose, neither TCI
nor any subsidiary thereof may purchase or otherwise acquire any shares of
such Preferred Stock, Parity Stock or any class or series of capital stock
ranking junior to such Preferred Stock ("Junior Stock"), or set aside any
money or assets for any such purpose, unless all of the outstanding shares of
such Preferred Stock and Parity Stock are redeemed. For so long as any
dividends are in arrears on any outstanding class or series of Preferred Stock
and until all dividends accrued up to the immediately preceding dividend
payment date on such Preferred Stock shall have been paid or declared and set
apart so as to be available for payment in full thereof and for no other
purpose, TCI may not declare or pay any dividend on or make any distribution
with respect to the Parity Stock or Junior Stock or set aside any money or
assets for any such purpose.
If TCI fails to redeem shares of Class B Preferred Stock or Series F
Preferred Stock required to be redeemed on a redemption date, TCI may not
redeem or exchange any Parity Stock or Junior Stock or declare or pay any
dividend on or make any distribution with respect to any Junior Stock or set
aside money or assets for any such purpose, and neither TCI nor any subsidiary
thereof may purchase or otherwise acquire any shares of such Preferred Stock,
Parity Stock or Junior Stock or set aside any money or assets for any such
purpose, until all shares of such class or series of Preferred Stock are
redeemed in full. If TCI fails to redeem shares of Series C-TCI Group
Preferred Stock, Series C-Liberty Media Group Preferred Stock or Series D
Preferred Stock required to be redeemed on a redemption date, neither TCI nor
any subsidiary thereof may purchase or otherwise acquire any shares of such
series of Preferred Stock or Junior Stock or redeem, or discharge any sinking
fund obligation with respect to, any Junior Stock, until all shares of such
series of Preferred Stock are redeemed in full. If TCI fails to redeem shares
of Series G Preferred Stock or Series H Preferred Stock required to be
redeemed on a redemption date, TCI may not redeem any Junior Stock or Parity
Stock or declare or pay any dividend on or make any distribution with respect
to any Junior Stock or Parity Stock, or set aside any money or assets for any
such
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purpose, and neither TCI nor any subsidiary thereof may purchase or otherwise
acquire any shares of such series of Preferred Stock, Parity Stock or Junior
Stock, or set aside any money or assets for any such purpose, until all such
shares are redeemed in full. Neither TCI nor any subsidiary thereof may
redeem, exchange, purchase or otherwise acquire any shares of Parity Stock or
Junior Stock, or set aside any money or assets for such purpose, if after
giving effect to such purchase or acquisition the amount that would be
available for distribution to the holders of Class B Preferred Stock and
Series F Preferred Stock upon liquidation, dissolution or winding up of TCI,
if such liquidation, dissolution or winding up were to occur on the date fixed
for such purchase or acquisition of shares of Parity Stock or Junior Stock,
would be less than the aggregate liquidation preference of all then
outstanding shares of such class or series of Preferred Stock. The failure of
TCI (i) to redeem on any date fixed for redemption any outstanding shares of
Class B Preferred Stock or Series F Preferred Stock or (ii) to pay dividends
on, in the case of Class B Preferred Stock, any Parity Stock, and, in the case
of Series F Preferred Stock, such series of Preferred Stock, shall not prevent
TCI from paying any dividends on Parity Stock solely in shares of Parity Stock
or Junior Stock or on Junior Stock solely in exchange for shares of Junior
Stock or the purchase or other acquisition of such Preferred Stock or Parity
Stock solely in shares of Parity Stock or Junior Stock or of Junior Stock
solely in exchange for shares of Junior Stock. The failure of TCI to (i) to
redeem on any date fixed for redemption any outstanding shares of Series G
Preferred Stock or Series H Preferred Stock or (ii) to pay dividends on any
Parity Stock, shall not prevent TCI from paying dividends on any Junior Stock
solely in shares of Junior Stock, paying dividends on any Parity Stock solely
in shares of Parity Stock and/or Junior Stock or the redemption, exchange,
purchase or acquisition of such series of Preferred Stock or Parity Stock
solely in exchange for shares of Parity Stock and/or Junior Stock.
ANTI-TAKEOVER CONSIDERATIONS
The DGCL, the Charter and the Parent's Bylaws contain provisions which may
serve to discourage or make more difficult a change in control of the Parent
without the support of the Board of Directors or without meeting various other
conditions. The principal provisions of the DGCL, the Charter and the Parent's
Bylaws with respect to the foregoing are outlined below.
DGCL Section 203, in general, prohibits a "business combination" between a
corporation and an "interested stockholder" within three years of the time
such stockholder became an "interested stockholder," unless (i) prior to such
time the board of directors of the corporation approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, (ii) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, exclusive of shares owned
by directors who are also officers and by certain employee stock plans or
(iii) at or subsequent to such time, the business combination is approved by
the board of directors and authorized by the affirmative vote at a
stockholders' meeting of at least 66 2/3% of the outstanding voting stock
which is not owned by the interested stockholder. The term "business
combination" is defined to include, among other transactions between the
interested stockholder and the corporation or any direct or indirect majority-
owned subsidiary thereof, a merger or consolidation; a sale, pledge, transfer
or other disposition (including as part of a dissolution) of assets having an
aggregate market value equal to 10% or more of either the aggregate market
value of all assets of the corporation on a consolidated basis or the
aggregate market value of all the outstanding stock of the corporation;
certain transactions that would increase the interested stockholder's
proportionate share ownership of the stock of any class or series of the
corporation or such subsidiary; and any receipt by the interested stockholder
of the benefit of any loans, advances, guarantees, pledges or other financial
benefits provided by or through the corporation or any such subsidiary. In
general, and subject to certain exceptions, an "interested stockholder" is any
person who is the owner of 15% or more of the outstanding voting stock (or, in
the case of a corporation with classes of voting stock with disparate voting
power, 15% or more of the voting power of the outstanding voting stock) of the
corporation, and the affiliates and associates of such person. The term
"owner" is broadly defined to include any person or entity that individually
or with or through such person or entity's affiliates or associates, among
other things, beneficially owns such stock, or has the right to acquire such
stock (whether such right is exercisable immediately or only after the passage
of time) pursuant to any
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agreement or understanding or upon the exercise of warrants or options or
otherwise or has the right to vote such stock pursuant to any agreement or
understanding, or has an agreement or understanding with the beneficial owner
of such stock for the purpose of acquiring, holding, voting or disposing of
such stock. The restrictions of DGCL Section 203 do not apply to corporations
that have elected, in the manner provided therein, not to be subject to such
section or, with certain exceptions, which do not have a class of voting stock
that is listed on a national securities exchange or authorized for quotation
on The Nasdaq Stock Market or held of record by more than 2,000 stockholders.
The Charter does not contain any provision "opting out" of the application
of DGCL Section 203 and the Parent has not taken any of the actions necessary
for it to "opt out" of such provision. As a result, the provisions of Section
203 will remain applicable to transactions between the Parent and any of its
"interested stockholders."
The Charter also contains certain provisions which could make a change in
control of the Parent more difficult. For example, the Charter requires,
subject to the rights, if any, of any class or series of Preferred Stock, the
affirmative vote of 66 2/3% of the total voting power of the outstanding
shares of Voting Securities, voting together as a single class, to approve (i)
a merger or consolidation of the Parent with, or into, another corporation,
other than a merger or consolidation which does not require the consent of
stockholders under the DGCL or a merger or consolidation which has been
approved by 75% of the members of the Board of Directors (in which case, in
accordance with the DGCL, the affirmative vote of a majority of the total
voting power of the outstanding Voting Securities would, with certain
exceptions, be required for approval), (ii) the sale, lease or exchange of all
or substantially all of the property and assets of the Parent or (iii) the
dissolution of the Parent. "Voting Securities" is defined in the Charter as
the TCI Group Common Stock, the Liberty Media Group Common Stock, the TCI
Ventures Group Common Stock and any class or series of Preferred Stock
entitled to vote generally with the holders of Common Stock on matters
submitted to stockholders for a vote, which currently would include the Series
C-TCI Group Preferred Stock and the Series C-Liberty Media Group Preferred
Stock. The Charter also provides for a Board of Directors of not less than
three members, divided into three classes of approximately equal size, with
each class to be elected for a three-year term at the annual meeting of
stockholders
at which such class of directors' term expires. The exact number of directors,
currently ten, is fixed by the Board of Directors. The holders of Voting
Securities and of Class B Preferred Stock, Series G Preferred Stock and Series
H Preferred Stock, voting together as a single class, vote in elections for
directors. (The holders of the Parent's Series F Preferred Stock are entitled
to vote in the election of directors; however, the DGCL prohibits the voting
of such shares because such shares are held by subsidiaries of the Parent.)
Stockholders of the Parent do not have cumulative voting rights.
The Charter authorizes the issuance of 50,000,000 shares of Series Preferred
Stock, of which 33,901,240 remain available for issuance as of September 30,
1997. On December 31, 1997, TCI issued 70,575 shares of Series C-TCI Group
Preferred Stock and 70,575 shares of Series C-Liberty Media Group Preferred
Stock, and retired 70,575 shares of Series C Preferred Stock (with the effect
that such retired shares have been restored to the status of authorized and
unissued shares of Series Preferred Stock, and may be reissued as shares of
another series of Series Preferred Stock but may not be reissued as Series C
Preferred Stock). Under the Charter, the Board of Directors is authorized,
without further action by the stockholders of the Parent, to establish the
preferences, limitations and relative rights of the Series Preferred Stock. In
addition, 1,900,000,000 shares of TCI Group Common Stock, 825,000,000 shares
of Liberty Media Group Common Stock and 825,000,000 shares of TCI Ventures
Group Common Stock are currently authorized by the Charter, of which
1,043,774,248 shares of TCI Group Common Stock, 561,120,509 shares of Liberty
Media Group Common Stock and 620,072,300 shares of TCI Ventures Group Common
Stock remain available for issuance as of September 30, 1997 (in each case
without taking into consideration shares reserved for issuance upon
conversion, exchange or exercise of outstanding convertible or exchangeable
securities and options). The issue and sale of shares of TCI Group Common
Stock, Liberty Media Group Common Stock, TCI Ventures Group Common Stock
and/or Series Preferred Stock could occur in connection with an attempt to
acquire control of the Parent, and the terms of such shares of Series
Preferred Stock could be designed in part to impede the acquisition of such
control.
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The Charter requires the affirmative vote of 66 2/3% of the total voting
power of the outstanding shares of Voting Securities, voting together as a
single class, to approve any amendment, alteration or repeal of any provision
of the Charter or the addition or insertion of other provisions therein.
The Charter and the Parent's Bylaws provide that a special meeting of
stockholders will be held at any time, subject to the rights of the holders of
any class or series of Preferred Stock, upon the call of the Secretary of the
Parent upon (i) the written request of the holders of not less than 66 2/3% of
the total voting power of the outstanding shares of Voting Securities or (ii)
at the request of not less than 75% of the members of the Board of Directors.
Subject to the rights of any class or series of Preferred Stock, the Parent's
Bylaws require that written notice of the intent to make a nomination at a
meeting of stockholders must be received by the Secretary of the Parent, at
the Parent's principal executive offices, not later than (a) with respect to
an election of directors to be held at an annual meeting of stockholders, 90
days in advance of such meeting, and (b) with respect to an election of
directors to be held at a special meeting of stockholders, the close of
business on the seventh day following the day on which notice of such meeting
is first given to stockholders. The notice must contain: (1) the name and
address of the stockholder who intends to make the nomination and of the
person or persons to be nominated; (2) a representation that the stockholder
is a holder of record of the Parent's Voting Securities entitled to vote at
the meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (3) a description of
all arrangements or understandings between the stockholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the stockholder; (4)
such other information regarding each nominee proposed by such stockholder as
would have been required to be included in a proxy statement filed pursuant to
the proxy rules of the Commission had each proposed nominee been nominated, or
intended to be nominated, by the Board of Directors; and (5) the consent of
each nominee to serve as a director of the Parent if so elected. Any action to
remove directors is required to be for "cause" (as defined in the Charter) and
be approved by the holders of 66 2/3% of the total voting power of the
outstanding shares entitled to vote in the election of directors (which would
include the Class B Preferred Stock, the Series G Preferred Stock and the
Series H Preferred Stock, in addition to the Voting Securities).
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PLAN OF DISTRIBUTION
The Company or the Parent (or both) may sell the Offered Securities to or
through underwriters or dealers, which may be a group of underwriters
represented by one or more managing underwriters, and also may sell the
Offered Securities directly to other purchasers or through agents.
The distribution of the Offered Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed,
or at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If an underwriter or underwriters are utilized in the sale, the Company or
the Parent (or both) will execute an underwriting agreement with such
underwriters and the names of the underwriters and the terms of the
transaction will be set forth in the Prospectus Supplement, which will be used
by the underwriters to make resales of the Offered Securities. Unless
otherwise indicated in the Prospectus Supplement, the obligations of any
underwriters to purchase the Offered Securities will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all of
the Offered Securities if any are purchased.
If a dealer is utilized in the sale, the Company or the Parent (or both)
will sell the Offered Securities to the dealer as principal. The dealer may
then resell the Offered Securities to the public at varying prices to be
determined by such dealer at the time of resale.
Offers to purchase Offered Securities may be solicited by the Company or the
Parent (or both) or agents designated by the Company or the Parent (or both)
from time to time. Unless otherwise indicated in the Prospectus Supplement,
any such agent will be acting on a best efforts basis for the period of its
appointment.
Each underwriter, dealer and agent participating in the distribution of any
Offered Securities which are issuable in bearer form will agree that it will
not, directly or indirectly, offer any Offered Securities in bearer form for
sale or resale in the United States or its possessions or to United States
persons (subject to certain exceptions) or deliver any Offered Securities in
bearer form within the United States or its possessions. See "Description of
Debt Securities--Limitations on Issuance of Bearer Debt Securities."
In connection with the sale of the Offered Securities, underwriters, dealers
and agents may receive compensation in the form of discounts, concessions or
commissions from the Company or the Parent (or both) or from purchasers of the
Offered Securities for whom they may act as agents. Underwriters, dealers and
agents that participate in the distribution of the Offered Securities may be
deemed to be underwriters as that term is defined in the Securities Act, and
any discounts, concessions or commissions received by them from the Company or
the Parent (or both) and any profits on the resale of the Offered Securities
by them may be deemed to be underwriting discounts and commissions under the
Securities Act. Any such person who may be deemed to be an underwriter will be
identified and any such compensation received from the Company or the Parent
(or both) will be described in the Prospectus Supplement.
If so indicated in the Prospectus Supplement, the Company or the Parent (or
both) will authorize agents and underwriters to solicit offers by certain
specified institutions to purchase Offered Securities from the Company or the
Parent (or both) at the public offering price set forth in the Prospectus
Supplement pursuant to contracts providing for payment and delivery on a
specified date in the future. Institutions with whom such contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and other institutions but shall in all cases be subject to the
approval of the Company or the Parent (or both). The obligations of any
purchaser under any such contract will not be subject to any conditions except
that (i) the purchase by such purchaser of the Offered Securities shall not at
the time of delivery be prohibited under the laws of the jurisdiction to which
such purchaser is subject, and (ii) if the Offered Securities being sold to
such purchaser are also being sold to underwriters, the Company or
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the Parent (or both) shall have sold to such underwriters the Offered
Securities, not sold for delayed delivery, pursuant to the underwriting
agreement referred to in the related Prospectus Supplement. The agents and
underwriters will not have any responsibility in respect of the validity of
performance of such contracts. The Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Agents, underwriters and dealers may be entitled under agreements entered
into with the Company or the Parent to indemnification by the Company or the
Parent against certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments which the agents,
underwriters or dealers may be required to make in respect thereof. Agents,
underwriters and dealers may be customers of, engage in transactions with, or
perform services for the Company and the Parent in the ordinary course of
business.
The anticipated place and time of delivery for the Offered Securities will
be set forth in the Prospectus Supplement.
LEGAL MATTERS
The validity of the Offered Securities and the Guarantees, if any, offered
hereby will be passed upon for the Company and the Parent by Stephen M. Brett,
Esq., Executive Vice President of the Company and Executive Vice President and
General Counsel of the Parent. If agents or underwriters are utilized, the
legality of the Offered Securities and the Guarantees, if any, offered hereby
will be passed upon for such agents or underwriters by such counsel, which
will be named in the Prospectus Supplement, as such agents or underwriters may
select.
EXPERTS
The consolidated balance sheets of Tele-Communications, Inc. and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1996, and all related
financial statement schedules, which appear in the December 31, 1996 Annual
Report on Form 10-K of Tele-Communications, Inc., as amended by Form 10-K/A
(Amendment No. 1), have been incorporated by reference herein and in the
Registration Statement in reliance upon the reports, dated March 24, 1997, of
KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
The consolidated balance sheets of TCI Communications, Inc. and subsidiaries
as of December 31, 1996 and 1995, and the related consolidated statements of
operations, stockholder's equity, and cash flows for each of the years in the
three-year period ended December 31, 1996, and all related financial statement
schedules, which appear in the December 31, 1996 Annual Report on Form 10-K of
TCI Communications, Inc., as amended by Form 10-K/A (Amendment No. 1), have
been incorporated by reference herein and in the Registration Statement in
reliance upon the reports, dated March 24, 1997, of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The combined balance sheets of TCI Group as of December 31, 1996 and 1995,
and the related combined statements of operations, equity, and cash flows for
each of the years in the three-year period ended December 31, 1996, which
appear in the December 31, 1996 Annual Report on Form 10-K of Tele-
Communications, Inc., as amended by Form 10-K/A (Amendment No. 1), have been
incorporated by reference herein and in the Registration Statement in reliance
upon the report, dated March 24, 1997, of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The report of
KPMG Peat Marwick LLP covering the combined financial statements above refers
to the effects of not consolidating TCI Group's interest in Liberty Media
Group for all periods that TCI Group has an interest in Liberty Media Group.
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The combined balance sheets of Liberty Media Group as of December 31, 1996
and 1995, and the related combined statements of operations, equity, and cash
flows for each of the years in the three-year period ended December 31, 1996,
which appear in the December 31, 1996 Annual Report on Form 10-K of Tele-
Communications, Inc., as amended by Form 10-K/A (Amendment No. 1), have been
incorporated by reference herein and in the Registration Statement in reliance
upon the report, dated March 24, 1997, of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The consolidated balance sheet of Telewest Communications plc and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of operations and cash flows for each of the years in three-year
period ended December 31, 1996, which appear in the December 31, 1996 Annual
Report on Form 10-K of Tele-Communications, Inc., as amended by Form 10-K/A
(Amendment No. 1), have been incorporated by reference herein and in the
Registration Statement in reliance upon the report, dated March 11, 1997, of
KPMG Audit Plc, chartered accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated balance sheets of Sprint Spectrum Holding Company, L.P. and
subsidiaries, development stage enterprises, as of December 31, 1996 and 1995
and the related consolidated statements of operations, changes in partners'
capital and cash flows for each of the two years in the period ended December
31, 1996, for the period from October 24, 1994 (date of inception) to December
31, 1994 and for the cumulative period from October 24, 1994 (date of
inception) to December 31, 1996, incorporated in this prospectus by reference
from Tele-Communications, Inc. Annual Report on Form 10-K, as amended on Form
10-K/A (Amendment No. 1), for the year ended December 31, 1996 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report (which expresses an unqualified opinion and includes an explanatory
paragraph referring to the developmental stage of Sprint Spectrum Holding
Company, L.P. and subsidiaries), which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The financial statements of American PCS, L.P., not separately presented in
this Prospectus, have been audited by Price Waterhouse LLP, independent
accountants, whose report thereon has been incorporated by reference herein.
Such financial statements, to the extent they have been included in the
financial statements of Sprint Spectrum Holding Company, L.P., have been so
included in the Annual Report on Form 10-K, as amended on Form 10-K/A
(Amendment No. 1), of Tele-Communications, Inc. in reliance on their report
given on the authority of said firm as experts in auditing and accounting.
American PCS, L.P. has agreed to indemnify Price Waterhouse LLP for the
payment of all legal costs and expenses incurred in Price Waterhouse LLP's
successful defense of any legal action or proceeding that arises as a result
of the consent of Price Waterhouse LLP to the incorporation of its audit
report on American PCS, L.P.'s 1996 financial statements in the Registration
Statement, of which this Prospectus comprises a part, of Tele-Communications,
Inc. and TCI Communications, Inc.
The combined financial statements of VII Cable which appear in TCI's Current
Report on Form 8-K dated June 19, 1996, have been incorporated by reference
herein in reliance on the report dated February 14, 1996 of Price Waterhouse
LLP, independent accountants, incorporated by reference herein, given on the
authority of said firm as experts in auditing and accounting.
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- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PRO-
SPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY PRICING SUPPLEMENT IN CONNECTION WITH
THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY PRICING
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT. THIS PRO-
SPECTUS SUPPLEMENT, THE PROSPECTUS AND ANY PRICING SUPPLEMENT DO NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUP-
PLEMENT, THE PROSPECTUS OR ANY PRICING SUPPLEMENT NOR ANY SALE MADE HEREUNDER
OR THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE IN-
FORMATION HEREIN OR IN THE PROSPECTUS OR ANY PRICING SUPPLEMENT IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF.
---------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors............................................................. S-2
Description of Notes..................................................... S-2
Book-Entry System........................................................ S-17
Certain United States Tax Considerations................................. S-19
Plan of Distribution..................................................... S-25
PROSPECTUS
Available Information.................................................... 2
Incorporation of Documents by Reference.................................. 2
The Company and the Parent............................................... 4
Use of Proceeds.......................................................... 4
Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends............................................................... 5
Description of Debt Securities........................................... 6
Description of Series Preferred Stock.................................... 25
Description of Depositary Shares......................................... 28
Description of Parent Capital Stock...................................... 31
Common Stock............................................................ 31
Preferred Stock......................................................... 65
Plan of Distribution..................................................... 83
Legal Matters............................................................ 84
Experts.................................................................. 84
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TCI COMMUNICATIONS, INC.
$750,000,000
MEDIUM-TERM NOTES, SERIES D
DUE NINE MONTHS OR
MORE FROM DATE OF ISSUE
----------------------
PROSPECTUS SUPPLEMENT
----------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
LEHMAN BROTHERS
SALOMON SMITH BARNEY
JANUARY , 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The aggregate estimated expenses, other than underwriting discounts and
commissions, in connection with the offering pursuant to this Registration
Statement are currently anticipated to be as follows:
<TABLE>
<S> <C>
Registration Fee................................................ $ 885,000
Blue Sky Fees and Expenses (including counsel fees)............. 15,000
Printing and Engraving Expenses................................. 200,000
Legal Fees and Expenses......................................... 60,000
Accounting Fees and Expenses.................................... 25,000
Rating Agency Fees.............................................. 50,000
Miscellaneous................................................... 5,000
----------
Total......................................................... $1,240,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") provides,
generally, that a corporation shall have the power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding (except actions by or in the
right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation against all expenses,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful. A corporation may similarly
indemnify such person for expenses actually and reasonably incurred by such
person in connection with the defense or settlement of any action or suit by
or in the right of the corporation, provided such person acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, and, in the case of claims, issues and
matters as to which such person shall have been adjudged liable to the
corporation, provided that a court shall have determined, upon application,
that, despite the adjudication of liability but in view of all of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
Section 102(b)(7) of the DGCL provides, generally, that the certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such
provision may not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under section 174
of Title 8 of the DGCL, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision may eliminate or limit
the liability of a director for any act or omission occurring prior to the
date when such provision becomes effective.
Section D of Article V of TCI Communications, Inc.'s (the "Company")
Restated Certificate of Incorporation provides as follows:
"1. Limitation On Liability.
To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or may hereafter be amended, a director of the Corporation
shall not be liable to the Corporation or any of its stockholders for monetary
damages for breach of fiduciary duty as a director. Any repeal or modification
of this paragraph 1 shall be prospective only and shall not adversely affect
any limitation, right or protection of a director of the Corporation existing
at the time of such repeal or modification.
II-1
<PAGE>
2. Indemnification.
(a) RIGHT TO INDEMNIFICATION. The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he, or a person for whom he is the
legal representative, is or was a director or officer of the Corporation or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
(including attorneys' fees) reasonably incurred by such person. Such right of
indemnification shall inure whether or not the claim asserted is based on
matters which antedate the adoption of this Section D. The Corporation shall
be required to indemnify a person in connection with a proceeding (or part
thereof) initiated by such person only if the proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation.
(b) PREPAYMENT OF EXPENSES. The Corporation shall pay the expenses
(including attorneys' fees) incurred by a director or officer in defending any
proceeding in advance of its final disposition, provided, however, that the
payment of expenses incurred by a director or officer in advance of the final
disposition of the proceeding shall be made only upon receipt of an
undertaking by the director or officer to repay all amounts advanced if it
should be ultimately determined that the director or officer is not entitled
to be indemnified under this paragraph or otherwise.
(c) CLAIMS. If a claim for indemnification or payment of expenses under this
paragraph is not paid in full within 60 days after a written claim therefor
has been received by the Corporation, the claimant may file suit to recover
the unpaid amount of such claim and, if successful in whole or in part, shall
be entitled to be paid the expense of prosecuting such claim. In any such
action the Corporation shall have the burden of proving that the claimant was
not entitled to the requested indemnification or payment of expenses under
applicable law.
(d) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by this
paragraph shall not be exclusive of any other rights which such person may
have or hereafter acquires under any statute, provision of this Certificate,
the Bylaws, agreement, vote of stockholders or disinterested directors or
otherwise.
(e) OTHER INDEMNIFICATION. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, enterprise or nonprofit entity shall be reduced by any amount such
person may collect as indemnification from such other corporation,
partnership, joint venture, trust, enterprise or nonprofit entity.
3. Amendment or Repeal.
Any repeal or modification of the foregoing provisions of this Section D
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification."
The Company may purchase liability insurance policies covering its directors
and officers.
In addition, pursuant to Section 6 of the form of Debt Underwriting
Agreement, the Underwriters will agree to indemnify and hold harmless the
Company and its directors and officers and each person, if any, who controls
the Company within the meaning of either the Securities Act of 1933, as
amended (the "Securities Act") or the Securities Exchange Act of 1934, as
amended ("Exchange Act"), against certain liabilities including civil
liabilities under the Securities Act or the Exchange Act.
II-2
<PAGE>
Article V, Section E of Tele-Communications, Inc.'s (the "Parent") Restated
Certificate of Incorporation provides as follows:
"1. Limitation on Liability.
To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or may hereafter be amended, a director of the Corporation
shall not be liable to the Corporation or any of its stockholders for monetary
damages for breach of fiduciary duty as a director. Any repeal or modification
of this paragraph 1 shall be prospective only and shall not adversely affect
any limitation, right or protection of a director of the Corporation existing
at the time of such repeal or modification.
2. Indemnification.
(a) RIGHT TO INDEMNIFICATION. The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he, or a person for whom he is the
legal representative, is or was a director or officer of the Corporation or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint
venture, trust, enterprise or nonprofit entity, including service with
respect to employee benefit plans, against all liability and loss suffered
and expenses (including attorneys' fees) reasonably incurred by such
person. Such right of indemnification shall inure whether or not the claim
asserted is based on matters which antedate the adoption of this Section E.
The Corporation shall be required to indemnify a person in connection with
a proceeding (or part thereof) initiated by such person only if the
proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
(b) PREPAYMENT OF EXPENSES. The Corporation shall pay the expenses
(including attorneys' fees) incurred in defending any proceeding in advance
of its final disposition, provided, however, that the payment of expenses
incurred by a director or officer in advance of the final disposition of
the proceeding shall be made only upon receipt of an undertaking by the
director or officer to repay all amounts advanced if it should be
ultimately determined that the director or officer is not entitled to be
indemnified under this paragraph or otherwise.
(c) CLAIMS. If a claim for indemnification or payment of expenses under
this paragraph is not paid in full within 60 days after a written claim
therefor has been received by the Corporation, the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or
in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden of proving
that the claimant was not entitled to the requested indemnification or
payment of expenses under applicable law.
(d) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by this
paragraph shall not be exclusive of any other rights which such person may
have or hereafter acquire under any statute, provision of this Certificate,
the Bylaws, agreement, vote of stockholders or disinterested directors or
otherwise.
(e) OTHER INDEMNIFICATION. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust, enterprise or nonprofit entity shall be reduced by any
amount such person may collect as indemnification from such other
corporation, partnership, joint venture, trust, enterprise or nonprofit
entity.
3. Amendment or Repeal.
Any repeal or modification of the foregoing provisions of this Section E
shall not adversely affect any right or protection hereunder of any person
in respect of any act or omission occurring prior to the time of such
repeal or modification."
II-3
<PAGE>
Article II, Section 2.9 of the Parent's Bylaws also contains an indemnity
provision, requiring the Parent to indemnify members of the Board of Directors
and officers of the Parent and their respective heirs, personal
representatives and successors in interest for or on account of any action
performed on behalf of the Parent, to the fullest extent provided by the laws
of the State of Delaware and the Parent's Restated Certificate of
Incorporation, as then or thereafter in effect.
The Parent has also entered into indemnification agreements with each of its
directors (each director, an "indemnitee"). The indemnification agreements
provide (i) for the prompt indemnification to the fullest extent permitted by
law against any and all expenses, including attorneys' fees and all other
costs, expenses and obligations paid or incurred in connection with
investigating, defending, being a witness or participating in (including on
appeal), or in preparing for ("Expenses"), any threatened, pending or
completed action, suit or proceeding, or any inquiry or investigation
("Claim"), related to the fact that such indemnitee is or was a director,
officer, employee, agent or fiduciary of the Parent or is or was serving at
the Parent's request as a director, officer, employee, trustee, agent or
fiduciary of another corporation, partnership, joint venture, employee benefit
plan, trust or other enterprise, or by reason of anything done or not done by
a director or officer in any such capacity, and against any and all judgments,
fines, penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection therewith) of any
Claim, unless the Reviewing Party (one or more members of the Board of
Directors or other person appointed by the Board of Directors, who is not a
party to the particular claim, or independent legal counsel) determines that
such indemnification is not permitted under applicable law and (ii) for the
prompt advancement of Expenses, and for reimbursement to the Parent if the
Reviewing Party determines that such indemnitee is not entitled to such
indemnification under applicable law. In addition, the indemnification
agreements provide (i) a mechanism through which an indemnitee may seek court
relief in the event the Reviewing Party determines that the indemnitee would
not be permitted to be indemnified under applicable law (and therefore is not
entitled to indemnification or expense advancement under the indemnification
agreement) and (ii) indemnification against all expenses (including attorneys'
fees), and advancement thereof if requested, incurred by the indemnitee in
seeking to collect an indemnity claim or advancement of expenses from the
Parent or incurred in seeking to recover under a directors' and officers'
liability insurance policy, regardless of whether successful or not.
Furthermore, the indemnification agreements provide that after there has been
a "change in control" in the Parent (as defined in the indemnification
agreements), other than a change in control approved by a majority of
directors who were directors prior to such change, then, with respect to all
determinations regarding a right to indemnity and the right to advancement of
Expenses, the Parent will seek legal advice only from independent legal
counsel selected by the indemnitee and approved by the Parent.
The indemnification agreements impose upon the Parent the burden of proving
that an indemnitee is not entitled to indemnification in any particular case
and negate certain presumptions that may otherwise be drawn against an
indemnitee seeking indemnification in connection with the termination of
actions in certain circumstances. Indemnitees' rights under the
indemnification agreements are not exclusive of any other rights they may have
under Delaware law, the Parent's Bylaws or otherwise. Although not requiring
the maintenance of directors' and officers' liability insurance, the
indemnification agreements require that an indemnitee be provided with the
maximum coverage available for any director or officer of the Parent if there
is such a policy.
The Parent may purchase liability insurance policies covering its directors
and officers.
In addition, pursuant to Section 6 of the form of Equity Underwriting
Agreement, the Underwriters will agree to indemnify and hold harmless the
Parent and its directors and officers and each person, if any, who controls
the Parent within the meaning of either the Securities Act or the Exchange
Act, against certain liabilities, including civil liabilities under the
Securities Act or the Exchange Act.
II-4
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<C> <S>
1.1 Form of Underwriting Agreement for Equity Securities.
1.2 Form of Underwriting Agreement for Debt Securities.
1.3 Form of Distribution Agreement.*
4.1 Indenture, dated as of January , 1998, between TCI Communications,
Inc. and The Bank of New York, Trustee, with respect to Debt
Securities (the "Senior Indenture").
4.2 Form of Indenture with respect to Senior Subordinated Debt Securities
(the "Senior Subordinated Indenture").
4.3 Form of Indenture with respect to Subordinated Debt Securities (the
"Subordinated Indenture").
4.4 Restated Certificate of Incorporation of the Parent dated August 4,
1994, as amended on August 4, 1994, August 16, 1994, October 11,
1994, October 21, 1994, January 26, 1995, August 3, 1995, August 3,
1995, January 25, 1996, January 25, 1996, April 7, 1997, August 28,
1997, December 31, 1997 and December 31, 1997.
4.5 Bylaws of the Parent as adopted June 16, 1994 (Incorporated herein by
reference to Exhibit 3.2 of the Parent's Annual Report on Form 10-K
for the year ended December 31, 1994, as amended by Form 10-K/A
(Commission File No. 0-20421)).
4.6 Restated Certificate of Incorporation of the Company dated as of
January 11, 1996, as amended on January 11, 1996 and February 6,
1996. (Incorporated herein by reference to Exhibit 3.1 of the
Company's Annual Report on Form 10-K for the year ended December 31,
1995 (Commission File No. 0-5550)).
4.7 Bylaws of the Company as adopted August 4, 1994 (Incorporated herein
by reference to Exhibit 3.4 of the Company's Annual Report on Form
10-K for the year ended December 31, 1994, as amended by Form 10-K/A
(Commission File No. 0-5550)).
4.8 Specimen Stock Certificate for the Tele-Communications, Inc. Series A
TCI Group Common Stock, par value $1.00 per share (Incorporated
herein by reference to Exhibit 4.3 of the initial filing of Parent's
registration statement on Form 8-A, which was subsequently amended
by Form 8-A/A (Amendments Nos. 1, 2 and 3) (Commission File No. 0-
20421)).
4.9 Form of Deposit Agreement.*
4.10 Form of Depositary Receipt for Depositary Shares (included in Exhibit
4.9).*
5 Opinion of Stephen M. Brett, Esq.*
8 Opinion of Baker & Botts, L.L.P. regarding certain tax matters.*
12.1 Calculation of Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends of the Company.
12.2 Calculation of Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends of the Parent.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of KPMG Peat Marwick LLP.
23.4 Consent of KPMG Peat Marwick LLP.
23.5 Consent of KPMG Audit Plc.
23.6 Consent of Deloitte & Touche LLP.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<S> <C>
23.7 Consent of Price Waterhouse LLP.
23.8 Consent of Price Waterhouse LLP.
23.9 Consent of Stephen M. Brett, Esq. (included in Exhibit 5).*
23.10 Consent of Baker & Botts, L.L.P. (included in Exhibit 8).*
24 Powers of Attorney (included on Page II-9 and II-10).
25.1 Statement of Eligibility of The Bank of New York as Trustee under the Senior Indenture, on Form T-1.
25.2 Statement of Eligibility of the Trustee under the Senior Subordinated Indenture, on Form T-1.+
25.3 Statement of Eligibility of the Trustee under the Subordinated Indenture, on Form T-1.+
</TABLE>
- --------
+ To be filed separately pursuant to Section 305(b)(2) of the Trust Indenture
Act of 1939, as amended, and the rules and regulations prescribed by the
Commission thereunder.
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
Each undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of the prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to section 13(a)
or section 15(d) of the Exchange Act that is incorporated by reference in
II-6
<PAGE>
the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) To file an application for the purpose of determining the eligibility of
the trustee to act under subsection (a) of Section 310 of the Trust Indenture
Act ("TIA") in accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the TIA.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions described under Item 15 above, or
otherwise, each Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by such
Registrant of expenses incurred or paid by a director, officer or controlling
person of such Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, such Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Greenwood Village, State of Colorado, on January
22, 1998.
TCI Communications, Inc.
By: /s/ Stephen M. Brett
---------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Greenwood Village, State of Colorado, on January
22, 1998.
Tele-Communications, Inc.
By: /s/ Stephen M. Brett
---------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
II-8
<PAGE>
POWER OF ATTORNEY
Know All Men By These Presents, that each person whose signature appears
below constitutes and appoints Stephen M. Brett, Esq. and Elizabeth M.
Markowski, Esq., and each of them, his true and lawful attorneys-in-fact and
agents with full power of substitution and re-substitution for him and in his
name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this Registration
Statement and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Commission, granting unto said attorneys-in-
fact and agents and each of them full power and authority, to do and perform
each and every act and thing requisite or necessary to be done in and about
the premises, to all intents and purposes and as fully as they might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitutes may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-3 has been signed with respect to TCI Communications, Inc.
by the following persons (which persons constitute a majority of the Board of
Directors) in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Chairman of the
- ------------------------------------- Board and Director
(JOHN C. MALONE)
/s/ Leo J. Hindery, Jr. President and Chief January 22, 1998
- ------------------------------------- Executive Officer
(LEO J. HINDERY, JR.) and Director
(Principal
Executive Officer)
/s/ Donne F. Fisher Director January 22, 1998
- -------------------------------------
(DONNE F. FISHER)
/s/ John W. Gallivan Director January 22, 1998
- -------------------------------------
(JOHN W. GALLIVAN)
/s/ Marvin Jones Director January 22, 1998
- -------------------------------------
(MARVIN JONES)
/s/ Bernard W. Schotters Executive Vice January 22, 1998
- ------------------------------------- President and
(BERNARD W. SCHOTTERS) Treasurer
(Principal
Financial Officer)
/s/ Gary K. Bracken Executive Vice January 22, 1998
- ------------------------------------- President and
(GARY K. BRACKEN) Controller
(Principal
Accounting Officer)
</TABLE>
II-9
<PAGE>
POWER OF ATTORNEY
Know All Men By These Presents, that each person whose signature appears
below constitutes and appoints Stephen M. Brett, Esq. and Elizabeth M.
Markowski, Esq., and each of them, his true and lawful attorneys-in-fact and
agents with full power of substitution and re-substitution for him and in his
name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this Registration
Statement and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Commission, granting unto said attorneys-in-
fact and agents and each of them full power and authority, to do and perform
each and every act and thing requisite or necessary to be done in and about
the premises, to all intents and purposes and as fully as they might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitutes may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement on Form S-3 has been signed with respect to Tele-Communications,
Inc. by the following persons (which persons constitute a majority of the
Board of Directors) in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John C. Malone Chairman of the January 22, 1998
- ------------------------------------- Board, Chief
(JOHN C. MALONE) Executive Officer
and Director
(Principal
Executive Officer)
/s/ Leo J. Hindery, Jr. President, Chief January 22, 1998
- ------------------------------------- Operating Officer
(LEO J. HINDERY, JR.) and Director
/s/ Donne F. Fisher Director January 22, 1998
- -------------------------------------
(DONNE F. FISHER)
Director
- -------------------------------------
(KIM MAGNESS)
/s/ John W. Gallivan Director January 22, 1998
- -------------------------------------
(JOHN W. GALLIVAN)
/s/ Robert A. Naify Director January 22, 1998
- -------------------------------------
(ROBERT A. NAIFY)
/s/ Jerome H. Kern Director January 22, 1998
- -------------------------------------
(JEROME H. KERN)
Director
- -------------------------------------
(J.C. SPARKMAN)
/s/ Paul A. Gould Director January 22, 1998
- -------------------------------------
(PAUL A. GOULD)
/s/ Bernard W. Schotters Senior Vice January 22, 1998
- ------------------------------------- President and
(BERNARD W. SCHOTTERS) Treasurer
(Principal
Financial Officer)
/s/ Gary K. Bracken Executive Vice January 22, 1998
- ------------------------------------- President and
(GARY K. BRACKEN) Controller of TCI
Communications,
Inc. (Principal
Accounting Officer)
</TABLE>
II-10
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<C> <S>
1.1 Form of Underwriting Agreement for Equity Securities.
1.2 Form of Underwriting Agreement for Debt Securities.
1.3 Form of Distribution Agreement.*
4.1 Indenture, dated as of January , 1998, between TCI Communications,
Inc. and The Bank of New York, Trustee, with respect to Debt
Securities (the "Senior Indenture").
4.2 Form of Indenture with respect to Senior Subordinated Debt Securities
(the "Senior Subordinated Indenture").
4.3 Form of Indenture with respect to Subordinated Debt Securities (the
"Subordinated Indenture").
4.4 Restated Certificate of Incorporation of the Parent dated August 4,
1994, as amended on August 4, 1994, August 16, 1994, October 11,
1994, October 21, 1994, January 26, 1995, August 3, 1995, August 3,
1995, January 25, 1996, January 25, 1996, April 7, 1997, August 28,
1997, December 31, 1997 and December 31, 1997.
4.5 Bylaws of the Parent as adopted June 16, 1994 (Incorporated herein by
reference to Exhibit 3.2 of the Parent's Annual Report on Form 10-K
for the year ended December 31, 1994, as amended by Form 10-K/A
(Commission File No. 0-20421)).
4.6 Restated Certificate of Incorporation of the Company dated as of
January 11, 1996, as amended on January 11, 1996 and February 6,
1996. (Incorporated herein by reference to Exhibit 3.1 of the
Company's Annual Report on Form 10-K for the year ended December 31,
1995 (Commission File No. 0-5550)).
4.7 Bylaws of the Company as adopted August 4, 1994 (Incorporated herein
by reference to Exhibit 3.4 of the Company's Annual Report on Form
10-K for the year ended December 31, 1994, as amended by Form 10-K/A
(Commission File No. 0-5550)).
4.8 Specimen Stock Certificate for the Tele-Communications, Inc. Series A
TCI Group Common Stock, par value $1.00 per share (Incorporated
herein by reference to Exhibit 4.3 of the initial filing of Parent's
registration statement on Form 8-A, which was subsequently amended
by Form 8-A/A (Amendments Nos. 1, 2 and 3) (Commission File No. 0-
20421)).
4.9 Form of Deposit Agreement.*
4.10 Form of Depositary Receipt for Depositary Shares (included in Exhibit
4.9).*
5 Opinion of Stephen M. Brett, Esq.*
8 Opinion of Baker & Botts, L.L.P. regarding certain tax matters.*
12.1 Calculation of Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends of the Company.
12.2 Calculation of Ratios of Earnings to Combined Fixed Charges and
Preferred Stock Dividends of the Parent.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of KPMG Peat Marwick LLP.
23.4 Consent of KPMG Peat Marwick LLP.
23.5 Consent of KPMG Audit Plc.
23.6 Consent of Deloitte & Touche LLP.
23.7 Consent of Price Waterhouse LLP.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
-------- -----------
<C> <S>
23.8 Consent of Price Waterhouse LLP.
23.9 Consent of Stephen M. Brett, Esq. (included in Exhibit 5).*
23.10 Consent of Baker & Botts, L.L.P. (included in Exhibit 8).*
24 Powers of Attorney (included on Page II-9 and II-10).
25.1 Statement of Eligibility of The Bank of New York as Trustee under the
Senior Indenture, on Form T-1.
25.2 Statement of Eligibility of the Trustee under the Senior Subordinated
Indenture, on Form T-1.+
25.3 Statement of Eligibility of the Trustee under the Subordinated
Indenture, on Form T-1.+
</TABLE>
- --------
+ To be filed separately pursuant to Section 305(b)(2) of the Trust Indenture
Act of 1939, as amended, and the rules and regulations prescribed by the
Commission thereunder.
* To be filed by amendment.
<PAGE>
EXHIBIT 1.1
TELE-COMMUNICATIONS, INC.
UNDERWRITING AGREEMENT
FOR EQUITY SECURITIES
__________ __, 19__
To the Representatives of the
several Underwriters named in
the respective Pricing Agreement
hereinafter described
Dear Sirs:
From time to time Tele-Communications, Inc., a Delaware corporation (the
"Company"), proposes to enter into one or more Pricing Agreements (each, a
"Pricing Agreement") in the form of Annex I, with such additions and deletions
as the parties may determine, and, subject to the terms and conditions stated
herein and therein, to issue and sell to the firms named in Exhibit A to the
applicable Pricing Agreement (such firms constituting the "Underwriters" with
respect to such Pricing Agreement and the securities specified therein) shares
of its Series A TCI Group Common Stock, $1.00 par value per share (the "Common
Stock"), and/or shares of its Series Preferred Stock, par value $.01 per share
(the "Preferred Stock"), (which may be represented by depositary shares
representing shares of Preferred Stock (the "Depositary Shares")). (The Common
Stock, the Preferred Stock and the Depositary Shares specified in Exhibit B to
the applicable Pricing Agreement are collectively called the "Offered
Securities.") Each of the Offered Securities shall have the terms set forth in
Exhibit B to the applicable Pricing Agreement. The term "Underwriters" as used
herein will mean and refer collectively to one or more of the several
Underwriters named in Exhibit A to the applicable Pricing Agreement (and any
substitute Underwriter pursuant to Section 9 hereof), the term "Underwriter"
will refer to any of the several Underwriters named in Exhibit A to the
applicable Pricing Agreement (and any substitute underwriter pursuant to Section
9 hereof), and the term "Representatives" will refer to the Representatives
named in the applicable Pricing Agreement as the Representatives of the several
Underwriters. Any reference to you in this Agreement or in the applicable
Pricing Agreement shall be solely in your capacity as Representatives. The
Company confirms as follows its agreement with you and the Underwriters.
1. Registration Statement and Prospectus: The Company and its subsidiary
TCI Communications, Inc., a Delaware corporation ("TCIC"), have filed with the
Securities and Exchange Commission (the "Commission"), in accordance with the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder (collectively
<PAGE>
called the "Act"), a shelf registration statement on Form S-3 (File
No. 333- ), including a prospectus, relating to, among other securities,
Common Stock, Preferred Stock (which may be represented by Depositary Shares)
and shares of Common Stock which may be issuable from time to time upon
conversion of convertible Preferred Stock , which has become effective under the
Act, and will promptly file with the Commission a prospectus supplement
specifically relating to the Offered Securities pursuant to Rule 424 under the
Act. As used in this Agreement, the term "Registration Statement" means such
shelf registration statement, including exhibits and financial statements and
schedules and documents incorporated by reference therein, as amended or
supplemented to the date hereof and, in the case of any reference to the
Registration Statement as of a date subsequent to the date hereof, as amended or
supplemented as of such date. The term "Basic Prospectus" means the prospectus,
dated , as filed with the Commission pursuant to Rule 424 under the
Act and forming part of the Registration Statement. The term "Prospectus" means
the Basic Prospectus together with the prospectus supplement specifically
relating to the Offered Securities as filed with the Commission pursuant to Rule
424 under the Act and any information deemed to be a part thereof pursuant to
Rule 434 under the Act. The term "preliminary prospectus" means any preliminary
prospectus supplement specifically relating to the Offered Securities together
with the Basic Prospectus. Any reference herein to any preliminary prospectus or
to the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act,
as of the date of such preliminary prospectus or the Prospectus, as the case may
be, and any reference herein to any amendment or supplement to any preliminary
prospectus or the Prospectus, except the reference in Section 4(c), shall be
deemed to refer to and include any documents filed after such date under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and so
incorporated by reference.
2. Agreements to Sell and Purchase. The Company agrees to sell to the
Underwriters, and upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to the terms and
conditions of this Agreement and the applicable Pricing Agreement the
Underwriters agree to purchase from the Company, severally and not jointly, the
number of Offered Securities set forth opposite each Underwriter's respective
name in Exhibit A to such Pricing Agreement, at a purchase price specified
therein.
If any Offered Securities consist of shares of Preferred Stock and the
Prospectus so provides, such shares of Preferred Stock will be deposited by the
Company against delivery of receipts ("Depositary Receipts") to be issued by a
depositary to be named by the Company (the "Depositary") under a deposit
agreement (a "Deposit Agreement") between the Company, the Depositary and the
holders from time to time of the Depositary Receipts issued thereunder and
evidencing Depositary Shares. Each Depositary Share will represent the number
of deposited shares of Preferred Stock specified in the applicable prospectus
supplement and in Exhibit B to the applicable Pricing Agreement
-2-
<PAGE>
The terms and rights of any particular issuance and sale of Offered
Securities shall be as specified in the applicable Pricing Agreement and, if the
Offered Securities include Preferred Stock, in or pursuant to a resolution or
resolutions of the Board of Directors of the Company or a duly authorized
committee thereof and set forth in a certificate of designations (the
"Certificate of Designations") to be filed with the Secretary of State of the
State of Delaware pursuant to Section 151 of the General Corporation Law of the
State of Delaware (the "General Corporation Law").
Common Stock, Preferred Stock and Depositary Shares may be offered and sold
separately or as units, as specified in the applicable prospectus supplement and
in Exhibit B to the Pricing Agreement.
The particular sales of certain Offered Securities may be made from time to
time to the Underwriters specified in the applicable Pricing Agreement, for whom
you may act as Representatives. (The term "Representatives" also refers to a
single firm acting as sole representative of the Underwriters and to
Underwriters who act without any firm being designated as their representative.)
The obligation of the Company to issue and sell, and the obligation of you or
any of the Underwriters to purchase, shall be evidenced by the applicable
Pricing Agreement with respect to the Offered Securities specified therein, and,
prior to the execution of such Pricing Agreement, this Agreement shall not be
construed as an obligation of the Company to sell any Offered Securities or as
an obligation of the Underwriters to purchase any Offered Securities. A Pricing
Agreement in the form of Annex I shall be in the form of an executed writing
(which may be in counterparts), and may be evidenced by an exchange of
telegraphic communications or any other rapid transmission device designed to
produce a written record of communications transmitted. The obligations of the
Underwriters under this Agreement and the applicable Pricing Agreement shall be
several and not joint.
Each Pricing Agreement shall specify the aggregate number of Offered
Securities that the Company proposes to issue and sell (the "Firm Securities")
and, with respect to any grant by the Company to the Underwriters of the option
described in Section 3 hereof, the maximum number of Offered Securities that the
Company proposes to issue and sell to cover over-allotments (the "Optional
Securities"), the initial public offering price of such Firm Securities and
Optional Securities or the manner of determining such price, the purchase price
to the Underwriters of such Firm Securities and Optional Securities, the names
of the Underwriters, the names of the Representatives of such Underwriters, the
number of such Firm Securities and Optional Securities, if any, to be purchased
by each Underwriter and the commission, if any, payable to the Underwriters with
respect thereto. The Pricing Agreement shall also specify (to the extent not
set forth in the Registration Statement and Prospectus with respect thereto)
the terms of such Firm Securities and Optional Securities.
Upon the execution of the Pricing Agreement applicable to any Offered
Securities and authorization by the Representatives of the release of the Firm
Securities, the Company understands
-3-
<PAGE>
that the Underwriters propose to offer the Firm Securities for sale upon the
terms and conditions set forth in the Prospectus, as amended or supplemented.
With respect to any Offered Securities purchased by an Underwriter that
such Underwriter continues to own or hold at any time on or after the 90th day
following the applicable Closing Date (as defined in Section 3), such
Underwriter agrees that upon receipt of written notice by the Representatives
from the Company of the Company's intention to bid for or purchase any Offered
Security or any security of the same class and series as the Offered Securities
or to take any other action, directly or indirectly, the taking of which would
be proscribed by Regulation M promulgated by the Commission under the Exchange
Act (or any successor or equivalent rule or regulation) during the distribution
of the Offered Securities, such Underwriter will, and will cause its "affiliated
purchasers" (as defined in Rule 100 of said Regulation) to, cease distributing
any Offered Securities for such period of time as the Company may deem necessary
so that the action or actions proposed to be taken by it directly or indirectly
may be taken in full compliance with such Regulation (or any successor or
equivalent rule or regulation).
3. Delivery and Payment: Delivery of and payment for the Firm Securities
shall be made on the date and at the time agreed to in the applicable Pricing
Agreement (such time and date are referred to herein as a "Closing Date"), at
the offices of Baker & Botts, L.L.P., 599 Lexington Avenue, New York, New York.
The Closing Date and the place of delivery of and payment for the Firm
Securities may be varied by agreement between you and the Company.
Delivery of Firm Securities (in definitive form and registered in such
names as you shall request at least 48 hours prior to a Closing Date by written
notice of the Company) shall be made to you for the account of the respective
Underwriters against payment by you on behalf of the respective Underwriters of
the purchase price therefor by cashier or official bank check or checks payable
to the order of the Company in or by wire transfer to an account specified by
the Company of same day federal funds. The Company agrees to make the Firm
Securities (or Depository Receipts representing any Firm Securities) available
to you for inspection at least 24 hours prior to the Closing Date or such
shorter period of time as you may agree to.
If the applicable Pricing Agreement grants to the Underwriters the right
(an "Over-Allotment Option") to purchase at their election up to the number of
Optional Securities allocated to each of the several Underwriters in the
applicable Pricing Agreement, upon the terms and conditions specified herein and
therein, for the sole purpose of covering over-allotments in the sale of the
Firm Securities, such election to purchase Optional Securities may be exercised
by written notice from the Representatives within the period specified in the
applicable Pricing Agreement setting forth the aggregate number of Optional
Securities to be purchased, the number of Optional Securities to be purchased by
each of the Underwriters, and the date on which such Optional Securities are to
be delivered, as determined by the Representatives but in no event earlier than
the Closing Date, or, unless the Representatives and the Company otherwise agree
in writing, later than the time specified in the applicable Pricing Agreement.
-4-
<PAGE>
4. Agreements of the Company. The Company agrees with you as follows:
(a) The Company will notify you promptly, and (if requested by you in
writing) will confirm such advice in writing, during the period of the
distribution of the Offered Securities (1) of the effectiveness of any
amendment to the Registration Statement and of the filing of any supplement
to the Prospectus, (2) of any comments of the Commission regarding the
Registration Statement or the Prospectus (or any of the documents
incorporated by reference therein) or of any request by the Commission for
amendments or supplements to the Registration Statement or the Prospectus
or for additional information, (3) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
the initiation or threatening of any proceedings for that purpose, (4) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Offered Securities for offer or sale
in any jurisdiction or the initiation or threatening of any proceedings for
such purpose and (5) of the happening of any event during the period
mentioned in paragraph (d) below which makes any statement of a material
fact made in the Registration Statement or the Prospectus (as theretofore
amended or supplemented) untrue or which requires the making of any changes
in the Registration Statement or the Prospectus (as theretofore amended or
supplemented) in order to make the statements therein, in light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading. The Company will use its reasonable best efforts to prevent
the issuance of any order suspending the effectiveness of the Registration
Statement or suspending the qualification of the Offered Securities for
offer or sale in any jurisdiction, and if any such order is issued, the
Company will make every reasonable effort to obtain the withdrawal of such
order at the earliest possible time.
(b) The Company will furnish to each of you, without charge, one
conformed copy of the Registration Statement and any post-effective
amendment thereto filed in connection with the offering of the Offered
Securities, including all financial statements and schedules, exhibits and
documents incorporated therein by reference (including exhibits
incorporated therein by reference to the extent not previously furnished to
you).
(c) The Company will give you advance notice of its intention to file
any amendment or supplement to the Registration Statement or the Prospectus
with respect to the Offered Securities, and will not file any such
amendment or supplement to which you shall reasonably object in writing.
(d) During the period of time that the Prospectus is required by law
to be delivered, the Company will deliver to you for delivery to each
Underwriter, without charge, as many copies of the Prospectus or any
amendment or supplement thereto as such Underwriter may reasonably
request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Underwriters and by all dealers to
whom the Offered Securities may be sold, both in connection with the
offering or sale of the Offered
-5-
<PAGE>
Securities and for such period of time thereafter as the Prospectus is
required by law to be delivered in connection therewith. If during such
period of time any event shall occur which in the judgment of the Company
should be set forth (or incorporated by reference) in the Prospectus in
order to make the statements therein, in light of the circumstances when
the Prospectus is delivered to a purchaser, not misleading, or if it is
necessary to supplement or amend the Prospectus to comply with law, the
Company will forthwith prepare and duly file with the Commission an
appropriate supplement or amendment thereto, and forthwith file all reports
and any definitive proxy statement or information statement required to be
filed by the Company with the Commission pursuant to Section 13 or 14 of
the Exchange Act subsequent to the date of the Prospectus and during such
period, and will deliver to each Underwriter, without charge, such number
of copies thereof as such Underwriter may reasonably request. If during
such period of time any event shall occur which in your judgment should be
so set forth (or incorporated by reference) in the Prospectus, or which in
your judgment makes it necessary to so supplement or amend the Prospectus,
the Company will consult with you concerning the necessity of filing with
the Commission a supplement or an amendment to the Prospectus or a report
pursuant to Section 13 or 14 of the Exchange Act.
(e) Prior to any public offering of any Offered Securities by the
Underwriters, the Company will cooperate with you and counsel retained by
you on behalf of the Underwriters in connection with the registration or
qualification of Offered Securities (and any Common Stock issuable upon
conversion of any Offered Securities) for offer and sale under the
securities or Blue Sky laws of, and the determination of the eligibility of
Offered Securities for investment under the laws of, such jurisdictions as
you request; provided, that in no event shall the Company be obligated to
qualify to do business as a foreign corporation or as a securities dealer
in any jurisdiction where it is not now so qualified, to conform its
capitalization or the composition of its assets to the securities or Blue
Sky laws of any jurisdiction or to take any action which would subject it
to taxation or general service of process in any jurisdiction where it is
not now so subject. The Company will pay all reasonable fees and expenses
(including reasonable counsel fees and expenses) relating to registration
or qualification of Offered Securities (and any Common Stock issuable upon
conversion of any Offered Securities) under such securities or Blue Sky
laws and in connection with the determination of the eligibility of Offered
Securities for investment under the laws of such jurisdictions as you may
designate.
(f) The Company will make generally available to its security holders
and to you consolidated earnings statements (which need not be audited)
that satisfy the provisions of Section 11(a) of the Act and Rule 158
thereunder.
(g) The Company will pay all expenses in connection with: (1) the
preparation, printing and filing of the Registration Statement, any
preliminary prospectus, the Prospectus, any legal investment memorandum and
Blue Sky memorandum as contemplated by Section
-6-
<PAGE>
4(e); (2) any fees charged by securities rating agencies for rating any of
the Offered Securities; (3) the preparation, issuance and delivery of the
Offered Securities (including Depositary Receipts evidencing Depositary
Shares) (other than transfer taxes); (4) the preparation, execution and
delivery of any Deposit Agreement and, to the extent set forth therein, the
fees and expenses of the Depositary; (5) the printing of any dealer
agreement; and (6) furnishing such copies of the Registration Statement,
the Prospectus and any preliminary prospectus, and all amendments and
supplements thereto, as may be requested for use in connection with the
offering and sale of Offered Securities by dealers to whom Offered
Securities may be sold.
(h) If this Agreement is terminated by you because any condition to
the obligations of you and the Underwriters set forth in Section 7 hereof
is not satisfied or because of any failure or refusal on the part of the
Company to comply with the terms of this Agreement or the applicable
Pricing Agreement, or if for any reason the Company shall be unable to
perform its obligations herein or therein, the Company will reimburse you
on behalf of the Underwriters for all out-of-pocket expenses (including the
fees and expenses of counsel retained by you on behalf of the Underwriters)
reasonably incurred by you in connection herewith. The Company will not in
any event be liable to you or any of the Underwriters for damages on
account of loss of anticipated profits.
(i) From the date hereof to and including the applicable Closing Date,
the Company will not offer or sell, or contract to sell, Offered Securities
pursuant to a public offering without your prior written consent.
5. Representations and Warranties of the Company. The Company represents
and warrants to each Underwriter that:
(a) the documents incorporated by reference in the Registration
Statement and the Prospectus, when they were filed (or, if any amendment
with respect to any such document was filed, when such amendment was filed)
with the Commission, conformed in all material respects to the requirements
of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and any further documents so filed and incorporated
by reference during the period of the distribution of the Offered
Securities will, when they are filed with the Commission, conform in all
material respects to the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder; none of such
documents, when it was filed (or, if an amendment with respect to any such
document was filed, when such amendment was filed), contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; and no
such further document, when it is filed, will contain an untrue statement
of a material fact or will omit to state a material fact required to be
stated
-7-
<PAGE>
therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading;
(b) the Registration Statement, when declared effective by the
Commission, complied in all material respects with the requirements of the
Act; each preliminary prospectus, if any, relating to the Offered
Securities, filed pursuant to Rule 424 or Rule 434 under the Act, will
comply when so filed in all material respects with the Act; and when the
Prospectus is first filed with the Commission pursuant to Rule 424 or Rule
434 and as of the applicable Closing Date, the Registration Statement and
the Prospectus (as amended or supplemented, if applicable) will comply in
all material respects with the requirements of the Act. When it was
declared effective by the Commission, the Registration Statement did not,
and as of the date the Prospectus is first filed with the Commission
pursuant to Rule 424 or Rule 434 and as of the applicable Closing Date the
Registration Statement (as amended or supplemented, if applicable) will
not, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. When the Prospectus is first filed with
the Commission pursuant to Rule 424 or Rule 434 and as of the applicable
Closing Date, the Prospectus (as amended or supplemented, if applicable)
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing, this representation
and warranty does not apply to statements or omissions in the Registration
Statement or the Prospectus or any preliminary prospectus made in reliance
upon information furnished to the Company in writing by any Underwriter
through the Representatives expressly for use therein;
(c) the Offered Securities have been duly authorized by the Company
and conform to the descriptions thereof in the Prospectus and in the
related Pricing Agreement;
(d) if any of the Offered Securities is Common Stock, such Common
Stock has been duly and validly authorized and, when such Common Stock is
issued and delivered pursuant to this Agreement and the Pricing Agreement
and paid for by the Underwriters in accordance therewith, such Common Stock
will be duly and validly issued and fully paid and non-assessable;
(e) if any of the Offered Securities is Preferred Stock, such
Preferred Stock has been duly and validly authorized and, upon the filing
of a Certificate of Designations for such Preferred Stock with the Delaware
Secretary of State and the issuance and delivery of such Preferred Stock
against payment therefor by the Underwriters in accordance with this
Agreement and the Pricing Agreement, such Preferred Stock will be duly and
validly issued and fully paid and non-assessable; if such Preferred Stock
is convertible into Common Stock, the Common Stock initially issuable upon
conversion of such Preferred Stock has been reserved for issuance upon such
conversion and, when issued in accordance with the terms
-8-
<PAGE>
of the Certificate of Designations upon conversion of such Preferred Stock,
such Common Stock will be duly authorized, validly issued, fully paid and
non-assessable;
(f) if the Offered Securities include Preferred Stock and Depositary
Shares, the Deposit Agreement has been duly authorized and, when executed
and delivered by the Company at the Closing Date and, assuming due
authorization, execution and delivery by the Depositary, at such Closing
Date will constitute a valid and legally binding agreement of the Company
enforceable in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles (regardless of whether the issue of
enforceability is considered in a proceeding at law or in equity); when
such Preferred Stock is issued and delivered to the Depositary against
receipt of Depositary Receipts evidencing such Depositary Shares and
payment therefor by the Underwriters in accordance with this Agreement and
the Pricing Agreement, such Depositary Shares will be duly and validly
issued and the persons in whose names the Depositary Receipts are
registered shall be entitled to the rights specified therein and in the
Deposit Agreement;
(g) the issuance and sale of the Offered Securities and the
fulfillment of the terms of this Agreement and the related Pricing
Agreement will not result in a breach of any of the terms or provisions of,
or constitute a default under, the Company's charter or by-laws or any
indenture, mortgage, deed of trust or other material agreement or
instrument to which the Company or any of its significant subsidiaries (as
such term is defined in Rule 1-02(w) of Regulation S-X) is now a party or
by which it is bound, or any order of any court or governmental agency or
authority entered in any proceeding to which the Company or any of its
significant subsidiaries was or is now a party or by which it is bound;
(h) KPMG Peat Marwick LLP, the Company's auditors, are independent
accountants as required by the Act;
(i) so long as may be required for the distribution of the Offered
Securities by any Underwriter or by any dealers that participate in the
distribution thereof, the Company will comply with all requirements under
the Exchange Act relating to the timely filing with the Commission of its
reports pursuant to Section 13 of the Exchange Act and of its proxy
statements pursuant to Section 14 of the Exchange Act; and
(j) except to the extent set forth in the Prospectus, the Company has
not received any notice of, nor does it have any actual knowledge of, any
failure by it or any of its significant subsidiaries to be in substantial
compliance with all existing statutes and regulations applicable to it or
such subsidiaries, which failure would materially and adversely affect the
conduct of the business of the Company and its subsidiaries, considered as
a whole.
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<PAGE>
6. Indemnification: The Company agrees to indemnify and hold harmless
each Underwriter, and each person, if any, who controls each Underwriter within
the meaning of either Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission to state therein
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except insofar as such omission or allegation thereof is based
upon information furnished in writing to the Company by an Underwriter through
the Representatives expressly for use therein; provided, however, that the
Company shall not indemnify an Underwriter or any person who controls such
Underwriter for any such losses, claims, damages or liabilities alleged by any
person who purchased Offered Securities from such Underwriter if the untrue
statement, omission or allegation thereof upon which such losses, claims,
damages or liabilities are based was made in: (i) any preliminary prospectus, if
a copy of the Prospectus (as then amended or supplemented) was not sent or given
by or on behalf of such Underwriter to such person at or prior to the written
confirmation of the sale of the Offered Securities to such person, and if the
Prospectus (as so amended or supplemented) corrected the untrue statement or
omission giving rise to such loss, claim, damage or liability; (ii) any
Prospectus used by such Underwriter or any person who controls such Underwriter,
after such time as the Company advised the Representatives that the filing of a
post-effective amendment or supplement thereto was required, except the
Prospectus as so amended or supplemented; or (iii) any Prospectus used after
such time as the obligation of the Company to keep the same current and
effective has expired. This indemnity will be in addition to any liability
which the Company may otherwise have.
If any action or proceeding (including any governmental investigation)
shall be brought or asserted against an Underwriter or any person controlling an
Underwriter in respect of which indemnity may be sought from the Company, such
Underwriter or such controlling person shall promptly notify the Company, in
writing, and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to you and the payment of all
expenses. Any omission to so notify the Company shall not, however, relieve the
Company from any liability which it may have to any indemnified party otherwise
than under this Section 6. An Underwriter or any person controlling an
Underwriter shall have the right to employ separate counsel in any such action
or proceeding and to participate in the defense thereof, but the fees and
expenses of such separate counsel shall be at such Underwriter's expense or the
expense of such controlling person unless (a) the Company has agreed to pay such
fees and expenses or (b) the Company shall have failed to assume the defense of
such action or proceeding and employ counsel reasonably satisfactory to you in
any such action or proceeding or (c) the named parties to any such action or
proceeding (including any impleaded parties) include both such Underwriter or
such controlling person and the Company, and you shall have been advised by your
counsel that there may be a conflict of interest between such Underwriter or
controlling person and the Company in the conduct of the defense of
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<PAGE>
such action (in which case, if such Underwriter or such controlling person
notifies the Company in writing that it elects to employ separate counsel at the
expense of the Company, the Company shall not have the right to assume the
defense of such action or proceeding on behalf of such Underwriter or such
controlling person), it being understood, however, that the Company shall not,
in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (unless the members of such
firm are not admitted to practice in a jurisdiction where an action is pending,
in which case the Company shall pay the reasonable fees and expenses of one
additional firm of attorneys to act as local counsel in such jurisdiction,
provided the services of such counsel are substantially limited to that of
appearing as attorneys of record) at any time for all indemnified parties, which
firm shall be designated by you. The Company shall not be liable for any
settlement of any such action or proceeding effected without its written
consent, but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the Company agrees
to indemnify and hold harmless each Underwriter and any such controlling person
from and against any loss or liability by reason of such settlement or judgment.
Each Underwriter severally agrees to indemnify and hold harmless the
Company, its directors and each of its officers, and each person, if any, who
controls the Company within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act, to the same extent as the foregoing indemnity
from the Company to each Underwriter, but only with respect to information
furnished in writing by such Underwriter through the Representatives expressly
for use in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any preliminary prospectus. In case any action or
proceeding shall be brought against the Company or its directors or officers or
any such controlling person, in respect of which indemnity may be sought against
one or more of the several Underwriters, such Underwriters acting through the
Representatives shall have the rights and duties given to the Company, and the
Company or its directors or officers or such controlling person shall have the
rights and duties given to you and the several Underwriters, by the preceding
paragraph.
If the indemnification provided for in this Section 6 is unavailable to an
indemnified party under the first or third paragraph hereof in respect of any
losses, claims, damages or liabilities referred to therein (other than by reason
of such indemnified party's failure to comply with the first sentence of the
second paragraph of this Section 6), then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages
or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Offered Securities or (ii) if the allocation
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provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other in connection
with the offering of the Offered Securities shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Offered Securities
received by the Company bear to the total underwriting discounts received by the
Underwriters in respects thereof. The relative fault of the Company on the one
hand and of the Underwriters on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact related to
information supplied by the Company or by the Underwriters through the
Representatives and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, and liabilities referred to above shall be deemed to include, subject
to the limitations set forth in the second paragraph of this Section 6, any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim.
The Company and each Underwriter agrees that it would not be just and
equitable if contribution pursuant to this Section 6 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6, the Underwriters shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Offered Securities were offered to the public exceeds the
amount of any damages which the Underwriters have otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution or indemnification from any person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 6 and
the representations and warranties of the Company contained in this Agreement
shall remain operative and in full force and effect regardless of (a) any
investigation made by or on behalf of any Underwriter, by or on behalf of any
person controlling any Underwriter or by or behalf of the Company, (b)
acceptance of any of the Offered Securities and payment therefor or (c) any
termination of this Agreement or the applicable Pricing Agreement.
7. Conditions of the Obligations of You and the Underwriters: The
obligations of you and the Underwriters hereunder and under the applicable
Pricing Agreement are subject to the following conditions:
(a) at the applicable Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall
-12-
<PAGE>
be pending or threatened by the Commission; and the Representatives shall
have received a certificate, dated the applicable Closing Date and signed
by the Chairman of the Board, the President, an Executive Vice President or
a Senior Vice President of the Company (who may, as to threatened
proceedings, rely upon the best of his information and belief), to that
effect and to the effect set forth in clause (f) of this Section 7;
(b) the Representatives shall have received opinions, dated the
applicable Closing Date and reasonably satisfactory to counsel retained by
the Representatives on behalf of the Underwriters, (A) from Messrs. Cole,
Raywid & Braverman or such other special communications counsel for the
Company as may be reasonably satisfactory to the Representatives, (B) from
the General Counsel of the Company to the following effect and covering
such additional matters as the Representatives may reasonably request:
(i) the Company and each of its significant subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the
corporate power and authority to carry on its business as described in
the Prospectus (as amended or supplemented, if applicable) and the
Company has the corporate power and authority to execute and deliver
and perform its obligations under this Agreement and the Pricing
Agreement, and to issue and sell the Offered Securities as
contemplated by this Agreement and the Pricing Agreement.
(ii) the Company and each of its significant subsidiaries is
duly qualified as a foreign corporation and is in good standing in
each jurisdiction in which the failure to so qualify would, in the
aggregate, have a material adverse effect upon the financial
condition, results of operations, business or properties of the
Company and its subsidiaries taken as a whole;
(iii) all corporate proceedings legally required in connection
with the authorization and issuance of the Offered Securities and the
sale of the Offered Securities by the Company in accordance with the
terms of this Agreement and the Pricing Agreement have been taken;
(iv) to the best knowledge of such counsel, there is no legal
or governmental proceeding pending or threatened against the Company
or any of its subsidiaries which is required to be disclosed in the
Prospectus (as amended or supplemented, if applicable) and is not so
disclosed and correctly summarized therein;
(v) to the best knowledge of such counsel, there is no
contract or other document known to such counsel of a character
required to be described in the Prospectus (as amended or
supplemented, if applicable) or to be filed as an exhibit
-13-
<PAGE>
to the Registration Statement (or to a document incorporated by
reference therein) that is not described or filed as required;
(vi) the execution and delivery of this Agreement and of the
Pricing Agreement, the issuance of the Offered Securities and the
fulfillment of the terms herein and therein contained do not conflict
with, or result in a breach of, or constitute a default under, the
charter or by-laws of the Company or, to the best knowledge of such
counsel, conflict in any material respect with, or result in a
material breach of or constitute a material default under any material
agreement, indenture or other instrument known to such counsel to
which the Company or any of its significant subsidiaries is a party or
by which it is bound, or result in a violation of any law,
administrative regulation or court or governmental decree known to
such counsel applicable to the Company or any of its subsidiaries,
except that such counsel need not express any opinion with respect to
(i) matters opined upon by special communications counsel and Messrs.
Sherman & Howard or (ii) the Blue Sky or securities laws of any
jurisdiction; and
(vii) to the best knowledge of such counsel, neither the
Registration Statement nor the Prospectus, as amended or supplemented,
if applicable (except as to the financial statements and schedules and
any other financial and statistical data contained or incorporated by
reference in the Registration Statement or Prospectus, as to which no
opinion need be expressed), contained, as of the date the Prospectus
was first filed with the Commission pursuant to Rule 424, or contains,
as of the applicable Closing Date, any untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein (in the case of the
Prospectus as amended or supplemented, if applicable, in light of the
circumstances under which they were made,) not misleading.
(C) from Messrs. Sherman & Howard, or from such other special counsel
for the Company as may be reasonably satisfactory to the Representatives,
to the following effect and covering such additional matters as the
Representatives may reasonably request:
(i) the execution and delivery of this Agreement and of the
Pricing Agreement, the issuance of the Offered Securities and the
fulfillment of the terms herein and therein contained do not, to the
best knowledge of such counsel, result in a material breach of or
constitute a material default under any material agreement for
borrowed money known to such counsel to which the Company or any of
its significant subsidiaries is a party or by which it is bound; and
(ii) the Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, and is not
subject to regulation under such Act.
-14-
<PAGE>
and
(D) from Baker & Botts, L.L.P., special counsel to the Company, or
such other counsel to the Company as may be reasonably satisfactory to the
Representatives, to the following effect and covering such additional
matters as the Representatives may reasonably request:
(i) this Agreement and the applicable Pricing Agreement have
been duly authorized, executed and delivered by the Company;
(ii) if any of the Offered Securities is Common Stock, such
Common Stock has been duly and validly authorized and, when such
Common Stock is issued, signed by the transfer agent and delivered
pursuant to this Agreement and the Pricing Agreement and paid for by
the Underwriters in accordance therewith, such Common Stock will be
duly and validly issued and fully paid and non-assessable;
(iii) if any of the Offered Securities is Preferred Stock, such
Preferred Stock has been duly and validly authorized and, upon the
filing of a Certificate of Designations for such Preferred Stock with
the Delaware Secretary of State and the issuance, the execution by the
transfer agent and delivery of such Preferred Stock against payment
therefor by the Underwriters in accordance with this Agreement and the
Pricing Agreement, such Preferred Stock will be duly and validly
issued and fully paid and non-assessable; if such Preferred Stock is
convertible into Common Stock, the Common Stock initially issuable
upon conversion of such Preferred Stock has been reserved for issuance
upon such conversion and, when issued in accordance with the terms of
the Certificate of Designations upon conversion of such Preferred
Stock, such Common Stock will be duly authorized, validly issued,
fully paid and non-assessable;
(iv) if the Offered Securities include Preferred Stock and
Depositary Shares, the Deposit Agreement has been duly authorized,
executed and delivered by the Company and, assuming due authorization,
execution and delivery by the Depositary, constitutes a valid and
legally binding agreement of the Company enforceable in accordance
with its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles (regardless of whether the issue of enforceability is
considered in a proceeding at law or in equity); and the Deposit
Agreement conforms to the description thereof in the Prospectus, as
amended or supplemented;
(v) the Registration Statement is effective under the Act and,
to the best knowledge of such counsel, no stop order suspending the
effectiveness of the
-15-
<PAGE>
Registration Statement has been issued and no proceeding for that
purpose is pending or threatened by the Commission; and
(vi) the Offered Securities conform in all material respects as
to legal matters to the descriptions thereof in the Prospectus, as
amended or supplemented.
In addition, such counsel shall state that "The Registration Statement and
the Prospectus, as amended or supplemented, if applicable (except as to (x) the
financial statements and schedules and any other financial and statistical data
contained or incorporated by reference therein and (y) the documents
incorporated or deemed to be incorporated by reference therein, as to which no
opinion is expressed), complied, as of the date the Prospectus was first filed
with the Commission pursuant to Rule 424, and comply, as of the date hereof, as
to form in all material respects with the requirements of the Act and the rules
and regulations of the Commission under the Act (the "Rules"). In passing upon
the form of such documents, we have necessarily assumed the correctness and
completeness of the statements made or included therein by the Company and take
no responsibility for the accuracy, completeness or fairness of the statements
contained therein except insofar as such statements relate to the description of
the Offered Securities or relate to us. However, in connection with the
preparation of the Registration Statement and the Prospectus, we had conferences
with certain officers and other representatives of the Company, and our
examination of the Registration Statement and the Prospectus and our discussions
in such conferences did not disclose to us any information (relying as to the
materiality of any such information primarily upon officers and other
representatives of the Company) which gave us reason to believe that either the
Registration Statement or the Prospectus, as amended or supplemented, if
applicable (except as to (x) the financial statements and schedules and any
other financial and statistical data contained or incorporated by reference
therein and (y) the documents incorporated therein or deemed to be incorporated
by reference therein, as to which no belief is expressed), contained, as of the
date the Prospectus was first filed with the Commission pursuant to Rule 424, or
contains, as of the date hereof, any untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statement therein (in the cases of the Prospectus, as
amended, or supplemented, if applicable, in light of the circumstances under
which they were made) not misleading."
In giving the opinions required under this Section 7(b), subparagraphs (A),
(B), (C) and (D), each such counsel may rely (x) as to matters of fact, to the
extent they deem proper, upon certificates of officers of the Company, public
officials and others, and (y) as to matters of law if other than the law of the
United States or Colorado (in the case of Messrs. Sherman & Howard and General
Counsel of the Company) or New York (in the case of Baker & Botts, L.L.P.), on
the opinions of local counsel retained by them or the Company, provided that
such counsel are satisfactory to the Representatives and counsel retained by the
Representatives on behalf of the Underwriters;
-16-
<PAGE>
(c) if the Offered Securities include Preferred Stock and Depositary
Shares, the Representatives shall have received on the applicable Closing
Date from counsel to the Depositary an opinion, dated such Closing Date, to
the following effect;
(i) the Depositary has full power, authority and legal right to
execute, deliver and carry out the terms of the Deposit Agreement;
(ii) the Deposit Agreement has been duly authorized, executed and
delivered by the Depositary and, assuming due authorization, execution
and delivery by the Company, constitutes a valid and legally binding
agreement of the Depositary enforceable in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles
(regardless of whether the issue of enforceability is considered in a
proceeding at law or in equity); and
(iii) upon due issuance by the Depositary of Depositary Shares
evidenced by Depositary Receipts in accordance with the terms of the
Deposit Agreement against deposit in accordance with the Deposit
Agreement of validly issued, fully paid and non-assessable shares of
Preferred Stock, such Depositary Shares will be duly and validly
issued and the persons in whose names the Depositary Receipts are
registered shall be entitled to the rights specified therein and in
the Deposit Agreement.
(d) the Representatives shall have received on the applicable Closing
Date from counsel retained by the Representatives on behalf of the
Underwriters an opinion with respect to the Offered Securities, the
Registration Statement and the Prospectus in the form customarily given by
such firm, including an opinion to the effect that the Registration
Statement and the Prospectus, as amended or supplemented, if applicable
(except as to (x) the financial statements and schedules and any other
financial and statistical data contained or incorporated by reference
therein, and (y) the documents incorporated or deemed to be incorporated by
reference therein, as to which no opinion need be expressed) comply as to
form in all material respects with the Act;
(e) on the applicable Closing Date the Representatives shall have
received a letter addressed to the Representatives from KPMG Peat Marwick
LLP, independent auditors for the Company, reasonably satisfactory to the
Representatives;
(f) the representations and warranties of the Company in this
Agreement shall be true and correct on and as of the applicable Closing
Date; the Company shall have complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
applicable Closing Date; and except as reflected in or contemplated
-17-
<PAGE>
by the Registration Statement and the Prospectus, since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, there shall not have been, at the applicable Closing Date,
any material adverse change in the condition (financial or otherwise),
business, prospects or results of operations of the Company and its
subsidiaries, considered as a whole; and
(g) subsequent to the date of the applicable Pricing Agreement, there
shall not have occurred any change, or any development involving a
prospective change, in or affecting particularly the business, prospects or
financial affairs of the Company and its subsidiaries, considered as a
whole which, in the reasonable judgment of the Representatives, is so
material and adverse that it would be impracticable to proceed with the
public offering or delivery of the Offered Securities on the terms and in
the manner contemplated by the Prospectus.
8. Termination of Pricing Agreement. The obligation of the Underwriters
to purchase the Offered Securities may be terminated at any time prior to the
applicable Closing Date by notice to the Company from the Representatives,
without liability on the part of the Underwriters to the Company, if, on or
prior to such date (i) additional material governmental restrictions, not in
force and effect on the date of the applicable Pricing Agreement, shall have
been imposed upon trading in securities generally, or minimum or maximum prices
shall have been generally established on the New York Stock Exchange or on the
American Stock Exchange, or trading in securities generally shall have been
suspended on either such Exchange or trading in the Common Stock or securities
of the Company of the same class as the Offered Securities in the over-the-
counter market shall have been suspended or a general banking moratorium shall
have been established by Federal or New York authorities, or (ii) a war
involving the United States of America or other national calamity shall have
occurred or shall have accelerated to such an extent as to affect adversely the
marketability of the Offered Securities.
9. Default by One or More of the Underwriters. If one or more of the
Underwriters shall fail on the applicable Closing Date to purchase the Firm
Securities or Optional Securities, as the case may be, that it or they are
obligated to purchase hereunder (the "Defaulted Securities"), the
Representatives shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any
substitute underwriters, to purchase all, but not less than all, of the
Defaulted Securities in such amounts as may be approved by the Representatives
and upon the terms herein set forth; provided, however, that if the
Representatives have not completed such arrangements within such 24-hour period,
then:
(a) if the amount of Defaulted Securities does not exceed 10% of the
aggregate amount of the Firm Securities or the Optional Securities, as the
case may be, the non-defaulting Underwriters shall be obligated to purchase
the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of
all non-defaulting Underwriters, or
-18-
<PAGE>
(b) if the amount of Defaulted Securities exceeds 10% of the aggregate
amount of Firm Securities or Optional Securities, as the case may be, the
Company shall be entitled to an additional 24-hour period to find one or
more substitute underwriters satisfactory to the Representatives in their
reasonable discretion to purchase such Defaulted Securities.
In the event of any such default either the Representatives or the Company
shall have the right to postpone the applicable Closing Date for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements relating to
the purchase of the Offered Securities.
If the amount of Defaulted Securities exceeds 10% of the aggregate amount
of the Firm Securities or the Optional Securities, and neither the
Representatives nor the Company make arrangements pursuant to this Section 9
within the period stated for the purchase of the Defaulted Securities, the
applicable Pricing Agreement shall terminate with respect to such Firm
Securities or Optional Securities, as the case may be, without liability on the
part of any non-defaulting Underwriter to the Company except as provided in
Section 6.
No action taken pursuant to this Section 9 shall relieve any defaulting
Underwriter from liability in respect of its default.
A substitute underwriter hereunder shall be an Underwriter for all purposes
of this Agreement and the applicable Pricing Agreement.
10. Miscellaneous: Notice given pursuant to any of the provisions of this
Agreement or the applicable Pricing Agreement shall be in writing and shall be
mailed or delivered (a) to the Company at its principal executive office located
at Terrace Tower II, 5619 DTC Parkway, Englewood, Colorado 80111-3000,
attention: Chief Financial Officer, or (b) to you at the address specified in
the applicable Pricing Agreement. Any notice under Section 8 hereof may be
telex or telephone, but if so made shall be subsequently confirmed in writing.
This Agreement and the applicable Pricing Agreement have been and are made
solely for the benefit of the Underwriters and the Company and of the
controlling persons, directors and officers referred to in Section 6 hereof, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement or the applicable Pricing
Agreement. The term "successors and assigns" as used in this Agreement shall not
include a purchaser, as such purchaser, of Offered Securities from any
Underwriter.
This Agreement and the applicable Pricing Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York.
-19-
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Underwriters.
Very truly yours,
TELE-COMMUNICATIONS, INC.
By:
------------------------------
Name:
Title:
Confirmed as of the date
first above mentioned
By:
-----------------------------
Name:
Title:
-20-
<PAGE>
Annex I
TELE-COMMUNICATIONS, INC.
PRICING AGREEMENT
, 19
---------- -- --
Dear Sirs:
Tele-Communications, Inc., a Delaware corporation (the "Company"),
proposes, subject to terms and conditions stated herein and in the Underwriting
Agreement dated ___________, 19__ (the "Underwriting Agreement"), to issue
and sell to each Underwriter named in Exhibit A hereto (each an "Underwriter")
certain securities (the "Offered Securities") described in Exhibit B hereto.
Each of the provisions of the Underwriting Agreement is incorporated herein
by reference in its entirety, and shall be deemed to a part of this Pricing
Agreement to the same extent as if such provisions had been set forth in full
herein. Each of the representations and warranties set forth in the
Underwriting Agreement shall be deemed to have been made at and as of the date
of this Pricing Agreement, except that each representation and warranty with
respect to the Prospectus shall be deemed to be a representation and warranty as
of the date of the Underwriting Agreement in relation to the Prospectus (as
therein defined), and also a representation and warranty as of the date of this
Pricing Agreement in relation to the Prospectus as amended or supplemented
relating to the Offered Securities which are the subject of this Pricing
Agreement. Each reference to the Representatives herein and in the provisions
of the Underwriting Agreement so incorporated by reference shall be deemed to
refer to you. Terms not otherwise defined herein shall have the meanings
ascribed to them in the Underwriting Agreement.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Offered Securities, in the form
heretofore delivered to you is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and the Underwriting
Agreement incorporated herein by reference, the Company agrees to sell to each
Underwriter, and each Underwriter agrees to purchase from the Company, at a
purchase price to each Underwriter set forth in Exhibit A hereto, the number of
Firm Securities set forth opposite the name of such Underwriter
<PAGE>
in Exhibit A hereto. If and to the extent that the Representatives exercise the
election to purchase Optional Securities as provided below, the Company agrees
to sell to each Underwriter, and each Underwriter agrees to purchase from the
Company at the purchase price to each Underwriter set forth in Exhibit A hereto,
that portion of the number of Optional Securities as to which such election has
been exercised.
The Company hereby grants to each Underwriter, subject to the terms set
forth herein and in the Underwriting Agreement, the right to purchase at its
election up to the number of Optional Securities set forth opposite the name of
such Underwriter in Exhibit A hereto on the terms referred to in the paragraph
above for the sole purpose of covering over-allotments in the sale of the Firm
Securities.
[Each Underwriter (i) has not offered or sold, and will not offer or sell,
in the United Kingdom, by means of any document, any Offered Securities other
than to persons whose ordinary business is to buy or sell shares or debentures,
whether as principal or agent (except under circumstances which do not
constitute an offer to the public within the meaning of the Companies Act 1985);
(ii) has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in relation to
the Offered Securities in, from or otherwise involving the United Kingdom; and
(iii) has only issued or passed on, and will only issue and pass on to any
person in the United Kingdom, any document received by it in conjunction with
the issue of the Offered Securities if that person is of a kind described in
Article 9(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1988 or is a person to whom the document may otherwise
lawfully be issued or passed on.]
Delivery and payment for the Firm Securities shall be made at 10:00 a.m.
New York time on , (the "Closing Date") at the
offices of Baker & Botts, L.L.P., 599 Lexington Avenue, New York, New York
10022. The Closing Date and the place of delivery of and payment for the Firm
Securities may be varied by agreement between the Representatives and the
Company.
Any election to purchase Optional Securities may be exercised by written
notice from the Representatives to the Company given within a period of 30 days
after the date of this Agreement, setting forth an aggregate number of Optional
Securities to be purchased, the number of Optional Securities to be purchased by
each Underwriter, and the date on which such Optional Securities are to be
delivered as determined by the Representatives, but in no event earlier than the
Closing Date.
- 2 -
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us counterparts hereof, and upon acceptance hereof by you, this
Pricing Agreement, including the provisions of the Underwriting Agreement
incorporated herein by reference, shall constitute a binding agreement between
the Underwriter and the Company.
Very truly yours,
Tele-Communications, Inc.
By:
----------------------------
Name:
Title:
Confirmed as of the date
first above mentioned
By:
------------------------
Name:
Title:
- 3 -
<PAGE>
Exhibit A
[Names of Underwriters, Number of Offered Securities and Purchase Price]
<PAGE>
Exhibit B
[Terms of Offered Securities]
<PAGE>
EXHIBIT 1.2
TCI COMMUNICATIONS, INC.
UNDERWRITING AGREEMENT
FOR DEBT SECURITIES
__________ ___, 19__
[To the Underwriter(s) or the Representative(s) of the Underwriters]
Dear Sirs:
TCI Communications, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell [ ] principal amount of its [ ] (the "Offered
Securities") pursuant to an indenture dated as of , ([as amended and]
as the same may be [further] amended or supplemented, the "Indenture"), with
, as trustee (the "Trustee"). Each Offered Security will be issuable in the
denominations and shall have the terms set forth in Exhibit A. [The term
"Underwriters" as used herein will mean and refer collectively to one or more
several Underwriters named in Exhibit B (and any substitute underwriter pursuant
to Section 9 hereof), the term "Underwriter" will refer to any of the several
Underwriters named in Exhibit B (and any substitute underwriter pursuant to
Section 9 hereof), and the term "Representatives" will refer to you in your
capacity as the Representatives of the several Underwriters or, in the event no
Representatives shall have been appointed, in your capacity as Underwriters.
Any reference to you in this Agreement shall be solely in your capacity as
Representatives.] The Company confirms as follows its agreement with you and
the Underwriter[s].
1. Registration Statement and Prospectus: The Company and Tele-
Communications, Inc., a Delaware corporation (the "Parent"), have filed with the
Securities and Exchange Commission (the "Commission"), in accordance with the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder (collectively called the "Act"), a shelf
registration statement on Form S-3 (File No. 333- ), including a prospectus,
relating to, among other securities, debt securities of the Company ("Debt
Securities") issuable from time to time in one or more series, [including the
Offered Securities], guarantees ["Guarantees"] of the Parent that may be issued
in respect of Offered Securities, [including Guarantees relating to the Offering
Securities,] and shares of Series A TCI Group Common Stock, par value $1.00 per
share, of the Parent ("Common Stock") issuable from time to time upon conversion
of convertible Debt Securities, [including the shares (the "Common Shares")
issuable upon conversion of the Offered Securities,] which has become effective
under the Act, and will promptly file with the Commission a prospectus
supplement specifically relating to the Offered Securities pursuant to Rule 424
under the Act. As used in this Agreement, the term "Registration Statement"
means such shelf registration statement, including exhibits and financial
statements and schedules and documents incorporated by reference
<PAGE>
therein, as amended or supplemented to the date hereof and, in the case of
references to the Registration Statement as of a date subsequent to the date
hereof, as amended or supplemented as of such date. The term "Basic Prospectus"
means the prospectus, dated ____________, _____, as filed with the Commission
pursuant to Rule 424 under the Act and forming part of the Registration
Statement. The term "Prospectus" means the Basic Prospectus together with the
prospectus supplement specifically relating to the Offered Securities as filed
with the Commission pursuant to Rule 424 under the Act and any information
deemed to be a part thereof pursuant to Rule 434 under the Act. The term
"preliminary prospectus" means any preliminary prospectus supplement
specifically relating to the Offered Securities together with the Basic
Prospectus. Any reference herein to any preliminary prospectus or the Prospectus
shall be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of such
preliminary prospectus or the Prospectus, as the case may be, and any reference
herein to any amendment or supplement to any preliminary prospectus or the
Prospectus, except the reference in Section 4(c), shall be deemed to refer to
and include any documents filed after such date under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and so incorporated by reference.
2. Agreements to Sell and Purchase: The Company agrees to sell to the
Underwriters, and upon the basis of the representations, warranties and
agreements of the Company herein contained and subject to the terms and
conditions of this Agreement each of the Underwriters agrees to purchase from
the Company, severally and not jointly, the principal amount of Offered
Securities set forth opposite each Underwriter's respective name in Exhibit B,
at a purchase price per Offered Security of $ , plus accrued
[interest][original issued discount] from [ ].
With respect to any of the Offered Securities purchased by you hereunder
that you continue to own or hold at any time on or after the 90th day following
the Closing Date (as defined in Section 3), you agree that upon receipt of
written notice from the Company of its intention to bid for or purchase any
Offered Security or any security of the same class and series as the Offered
Securities or to take any other action, directly or indirectly, the taking of
which would be proscribed by Regulations M promulgated by the Commission under
the Exchange Act (or any successor or equivalent rule or regulation) during the
distribution of the Offered Securities, you will, and will cause your
"affiliated purchasers" (as defined in Rule 100 of said Regulation) to, cease
distributing the Offered Securities for such period of time as the Company may
deem necessary so that the action or actions proposed to be taken, directly or
indirectly, by it may be taken in full compliance with such Regulation (or any
successor or equivalent rule or regulation).
3. Delivery and Payment: Delivery of and payment for the Offered
Securities shall be made at 10:00 a.m., New York time, on ______________, 19__
(such time and date are referred to herein as the "Closing Date"), at the
offices of Baker & Botts, L.L.P., 599 Lexington Avenue, New York, New York. The
Closing Date and the place of delivery of and payment for the Offered Securities
may be varied by agreement between you and the Company.
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Delivery of the Offered Securities (in definitive form and registered in
such names and in such authorized denominations as you shall request at least 48
hours prior to the Closing Date by written notice to the Company) shall be made
to you against payment by you of the purchase price therefor by cashier or
official bank check or checks payable to the order of the Company in or by wire
transfer to an account specified by the Company of same day federal funds. For
the purpose of expediting the checking and packaging of the Offered Securities,
the Company agrees to make the Offered Securities available to you for
inspection at least 24 hours prior to the Closing Date or such shorter period of
time as you may agree to.
4. Agreements of the Company: The Company agrees with you as follows:
(a) The Company will notify you promptly, and (if requested by you in
writing) will confirm such advice in writing, during the period of the
distribution of the Offered Securities (1) of the effectiveness of any
amendment to the Registration Statement and of the filing of any supplement
to the Prospectus, (2) of any comments of the Commission regarding the
Registration Statement or the Prospectus (or any of the documents
incorporated by reference therein) or of any request by the Commission for
amendments or supplements to the Registration Statement or the Prospectus
or for additional information, (3) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
the initiation or threatening of any proceedings for that purpose, (4) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Offered Securities [or the Common
Shares] [or the Guarantees] for offer or sale in any jurisdiction or the
initiation or threatening of any proceedings for such purpose and (5) of
the happening of any event during the period mentioned in paragraph (d)
below which makes any statement of a material fact made in the Registration
Statement or the Prospectus (as theretofore amended or supplemented) untrue
or which requires the making of any changes in the Registration Statement
or the Prospectus (as theretofore amended or supplemented) in order to make
the statements therein, in light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading. The Company will use its
reasonable best efforts to prevent the issuance of any order suspending the
effectiveness of the Registration Statement or suspending the qualification
of the Offered Securities [or the Common Shares] [or the Guarantees] for
offer or sale in any jurisdiction, and if any such order is issued, the
Company will make every reasonable effort to obtain the withdrawal of such
order at the earliest possible moment.
(b) The Company will furnish to each of you, without charge, one
conformed copy of the Registration Statement and any post-effective
amendment thereto filed in connection with the offering of the Offered
Securities, including all financial statements and schedules, exhibits and
documents incorporated therein by reference (including exhibits
incorporated therein by reference to the extent not previously furnished to
you).
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(c) The Company will give you advance notice of its intention to file
any amendment or supplement to the Registration Statement or the Prospectus
with respect to the Offered Securities, and will not file any such
amendment or supplement to which you shall reasonably object in writing.
(d) During the period of time that the Prospectus is required by law
to be delivered, the Company will deliver to each Underwriter, without
charge, as many copies of the Prospectus or any amendment or supplement
thereto as such Underwriter may reasonably request. The Company consents
to the use of the Prospectus or any amendment or supplement thereto by the
Underwriters and by all dealers to whom the Offered Securities may be sold,
both in connection with the offering or sale of the Offered Securities and
for such period of time thereafter as the Prospectus is required by law to
be delivered in connection therewith. If during such period of time any
event shall occur which in the judgment of the Company should be set forth
(or incorporated by reference) in the Prospectus in order to make the
statements therein, in light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to
supplement or amend the Prospectus to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate
supplement or amendment thereto, and forthwith file all reports and any
definitive proxy statement or information statement required to be filed by
the Company with the Commission pursuant to Section 13 or 14 of the
Exchange Act subsequent to the date of the Prospectus and during such
period, and will deliver to each Underwriter, without charge, such number
of copies thereof as such Underwriter may reasonably request. If during
such period of time any event shall occur which in your judgment should be
so set forth (or incorporated by reference) in the Prospectus, or which in
your judgment makes it necessary to so supplement or amend the Prospectus,
the Company will consult with you concerning the necessity of filing with
the Commission a supplement or an amendment to the Prospectus or a report
pursuant to Section 13 or 14 of the Exchange Act.
(e) Prior to any public offering of the Offered Securities by the
Underwriters, the Company will cooperate with you and your counsel in
connection with the registration or qualification of the Offered Securities
[and the Common Shares] [and the Guarantees] for offer and sale under the
securities or Blue Sky laws of, and the determination of the eligibility of
the Offered Securities for investment under the laws of, such jurisdictions
as you request; provided, that in no event shall the Company be obligated
to qualify to do business as a foreign corporation or as a securities
dealer in any jurisdiction where it is not now so qualified, to conform its
capitalization or the composition of its assets to the securities or Blue
Sky laws of any jurisdiction or to take any action which would subject it
to taxation or general service of process in any jurisdiction where it is
not now so subject. The Company will pay all reasonable fees and expenses
(including reasonable counsel fees and expenses) relating to qualification
of the Offered Securities [and the Common Shares] [and the Guarantees]
under such securities or Blue Sky laws and in connection with the
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determination of the eligibility of the Offered Securities for investment
under the laws of such jurisdictions as you may designate.
(f) The Company will make generally available to its security holders
and to you consolidated earnings statements (which need not be audited)
that satisfy the provisions of Section 11(a) of the Act and Rule 158
thereunder.
(g) The Company will pay all expenses in connection with (1) the
preparation, printing and filing of the Registration Statement, any
preliminary prospectus, the Prospectus, any legal investment memorandum and
Blue Sky memorandum as contemplated by Section 4(e), (2) the preparation,
issuance and delivery of the Offered Securities (other than transfer taxes)
and the execution and delivery of the Indenture, (3) the printing of any
dealer agreement, (4) furnishing such copies of the Registration Statement,
the Prospectus and any preliminary prospectus, and all amendments and
supplements thereto, including any term sheets delivered by the Company
pursuant to Rule 434 under the Act, as may be requested for use in
connection with the offering and sale of the Offered Securities by dealers
to whom Offered Securities may be sold, and (5) any fees paid to rating
agencies, if any, selected by the Company in connection with the rating of
the Offered Securities.
(h) If this Agreement is terminated by you because any condition to
the obligations of the Underwriters set forth in Section 7 hereof is not
satisfied or because of any failure or refusal on the part of the Company
to comply with the terms hereof or if for any reason the Company shall be
unable to perform its obligations hereunder, the Company will reimburse the
Underwriter[s] for all out-of-pocket expenses (including the fees and
expenses of your counsel) reasonably incurred by the Underwriter[s] in
connection herewith. The Company will not in any event be liable to you
[or any of the Underwriters] for damages on account of loss of anticipated
profits.
(i) From the date hereof to and including the Closing Date, the
Company will not offer or sell, or contract to sell, any Debt Securities of
the Company with a maturity of more than one year, including additional
Offered Securities, pursuant to a public offering without your prior
written consent.
5. Representations and Warranties of the Company: The Company represents
and warrants to each Underwriter that:
(a) the documents incorporated by reference in the Registration
Statement and the Prospectus, when they were filed (or, if an amendment
with respect to any such document was filed, when such amendment was filed)
with the Commission, conformed in all material respects to the requirements
of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and any further documents so filed and incorporated
by reference during the period of the distribution of the Offered
Securities will, when they
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are filed with the Commission, conform in all material respects to the
requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, none of such documents, when it was
filed (or, if an amendment with respect to any such document was filed,
when such amendment was filed), contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and no such further document,
when it is filed, will contain an untrue statement of a material fact or
will omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they are made, not misleading;
(b) the Registration Statement, when declared effective by the
Commission, complied in all material respects with the requirements of the
Act; each preliminary prospectus, if any, relating to the Offered
Securities, filed pursuant to Rule 424 or Rule 434 under the Act, will
comply when so filed in all material respects with the Act; and when the
Prospectus or any term sheet is first filed with the Commission pursuant to
Rule 424 or Rule 434 and as of the Closing Date, the Registration Statement
and the Prospectus (as amended or supplemented, if applicable) will comply
in all material respects with the requirements of the Act and the Indenture
will comply in all material respects with the requirements of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). When it was
declared effective by the Commission, the Registration Statement did not,
and as of the date the Prospectus is first filed with the Commission
pursuant to Rule 424 or Rule 434 and as of the Closing Date the
Registration Statement (as amended or supplemented, if applicable) will
not, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. When the Prospectus is first filed with
the Commission pursuant to Rule 424 or Rule 434 and as of the Closing Date,
the Prospectus (as amended or supplemented, if applicable) will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, this representation and warranty does not
apply to statements or omissions in the Registration Statement or the
Prospectus or any preliminary prospectus made in reliance upon information
furnished to the Company in writing by any Underwriter [through you]
expressly for use therein or to that part of the Registration Statement
which consists of the Statements of Eligibility on Form T-1 under the Trust
Indenture Act of the trustees for the Debt Securities;
(c) the Offered Securities and the Indenture have been duly authorized
by the Company [and the Common Shares have been duly authorized by the
Parent] and each will conform to the descriptions thereof in the
Prospectus;
(d) the issuance and sale of the Offered Securities [the delivery of
the Common Shares] and the fulfillment of the terms of this Agreement will
not result in a breach of any
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of the terms or provisions of, or constitute a default under, the Company's
charter or by-laws or any indenture, mortgage, deed of trust or other
material agreement or instrument to which the Company or any of its
significant subsidiaries (as such term is defined in Rule 1.02(w) of
Regulation S-X) is now a party or by which it is bound, or any order of any
court or governmental agency or authority entered in any proceeding to
which the Company or any of its significant subsidiaries was or is now a
party or by which it is bound;
(e) KPMG Peat Marwick LLP, the Company's auditors, are independent
accountants as required by the Act;
(f) so long as may be required for the distribution of the Offered
Securities by the Underwriters or by any dealers that participate in the
distribution thereof, the Company will comply with all requirements under
the Exchange Act relating to the timely filing with the Commission of its
reports pursuant to Section 13 of the Exchange Act and of its proxy
statements pursuant to Section 14 of the Exchange Act; [and]
(g) except to the extent set forth in the Prospectus, the Company has
not received any notice of, nor does it have any actual knowledge of, any
failure by it or any of its significant subsidiaries to be in substantial
compliance with all existing statutes and regulations applicable to it or
such subsidiaries, which failure would materially and adversely affect the
conduct of the business of the Company and its subsidiaries, considered as
a whole[; and]
[(h) the Parent has reserved a sufficient number of Common Shares to
cover the conversion of all the Offered Securities at the initial
conversion [price][rate] (prior to any adjustment of such [price][rate]
pursuant to the Offered Securities and the Indenture); the Common Shares
when issued or delivered upon conversion of the Offered Securities will be
duly and validly authorized, issued, fully paid and non-assessable; and the
Common Shares are free of preemptive rights].
6. Indemnification: The Company agrees to indemnify and hold harmless
each Underwriter, and each person, if any, who controls each Underwriter within
the meaning of either Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any such untrue statement or omission or allegation thereof based upon
information furnished in writing to the Company by any Underwriter [through you]
expressly for use therein; provided, however, the Company shall not
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indemnify any Underwriter or any person who controls such Underwriter from any
such losses, claims, damages or liabilities alleged by any person who purchased
Offered Securities from such Underwriter if the untrue statement, omission or
allegation thereof upon which such losses, claims, damages or liabilities are
based was made in: (i) any preliminary prospectus, if a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person at or prior to the written confirmation of the sale
of Offered Securities to such person, and if the Prospectus (as so amended or
supplemented) corrected the untrue statement or omission giving rise to such
loss, claim, damage or liability; (ii any Prospectus used by such Underwriter or
any person who controls such Underwriter, after such time as the Company advised
you that the filing of a post-effective amendment or supplement thereto was
required, except the Prospectus as so amended or supplemented; or (ii any
Prospectus used after such time as the obligation of the Company to keep the
same current and effective has expired. This indemnity will be in addition to
any liability which the Company may otherwise have.
If any action or proceeding (including any governmental investigation)
shall be brought or asserted against any Underwriter or any person controlling
an Underwriter in respect of which indemnity may be sought from the Company,
such Underwriter or such controlling person shall promptly notify the Company in
writing, and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to you and the payment of all
expenses. Any omission so to notify the Company shall not, however, relieve the
Company from any liability which it may have to any indemnified party otherwise
than under this Section 6. Any such Underwriter or any such person controlling
an Underwriter shall have the right to employ separate counsel in any such
action or proceeding and to participate in the defense thereof, but the fees and
expenses of such separate counsel shall be such Underwriter's expense or the
expense of such controlling person unless (a) the Company has agreed to pay such
fees and expenses or (b) the Company shall have failed to assume the defense of
such action or proceeding and employ counsel reasonably satisfactory to you in
any such action or proceeding or (c) the named parties to any such action or
proceeding (including any impleaded parties) include both such Underwriter or
such controlling person and the Company, and you shall have been advised by your
counsel that there may be a conflict of interest between such Underwriter or
controlling person and the Company in the conduct of the defense of such action
(in which case, if such Underwriter or such controlling person notifies the
Company in writing that it elects to employ separate counsel at the expense of
the Company, the Company shall not have the right to assume the defense of such
action or proceeding on behalf of such Underwriter or such controlling person),
it being understood, however, that the Company shall not, in connection with any
one such action or proceeding or separate but substantially similar or related
actions or proceedings arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (unless the members of such firm are not admitted to
practice in a jurisdiction where an action is pending, in which case the Company
shall pay the reasonable fees and expenses of one additional firm of attorneys
to act as local counsel in such jurisdiction, provided the services of such
counsel are substantially limited to that of appearing as attorneys of record)
at any time for all
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indemnified parties, which firm shall be designated in writing by you. The
Company shall not be liable for any settlement of any such action or proceeding
effected without its written consent, but if settled with its written consent,
or if there be a final judgment for the plaintiff in any such action or
proceeding, the Company agrees to indemnify and hold harmless each Underwriter
and any such controlling person from and against any loss or liability by reason
of such settlement or judgment.
Each Underwriter severally agrees to indemnify and hold harmless the
Company, its directors and each of its officers, and each person, if any, who
controls the Company within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act, to the same extent as the foregoing indemnity
from the Company to each Underwriter, but only with respect to information
furnished in writing by such Underwriter expressly for use in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
preliminary prospectus. In case any action or proceeding shall be brought
against the Company or its directors or officers or any such controlling person,
in respect of which indemnity may be sought against one or more of the several
Underwriters, such Underwriters acting through the Representatives shall have
the rights and duties given to the Company, and the Company or its directors or
officers or such controlling person shall have the rights and duties given to
you and the several Underwriters, by the preceding paragraph.
If the indemnification provided for in this Section 6 is unavailable to an
indemnified party under the first or third paragraph hereof in respect of any
losses, claims, damages or liabilities referred to therein (other than by reason
of such indemnified party's failure to comply with the first sentence of the
second paragraph of this Section 6), then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims, damages
or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Offered Securities or (ii if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other in connection
with the Offering of the Offered Securities shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Offered Securities
received by the Company bear to the total underwriting discounts received by the
Underwriters in respect thereof. The relative fault of the Company on the one
hand and of the Underwriters on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters through you and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages and liabilities referred to
above shall be deemed to include, subject to the limitations set forth in the
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second paragraph of this Section 6, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim.
The Company and each Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 6 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6, the Underwriters shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Offered Securities were offered to the public exceeds the
amount of any damages which the Underwriters have otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section 6 and
the representations and warranties of the Company contained in this Agreement
shall remain operative and in full force and effect regardless of (a) any
investigation made by or on behalf of the Underwriters, by or on behalf of any
person controlling any Underwriter or by or on behalf of the Company, (b)
acceptance of any of the Offered Securities and payment therefor or (c) any
termination of this Agreement.
7. Conditions of the Underwriters' Obligations: The Underwriters'
obligations hereunder are subject to the following conditions:
(a) at the Closing Date, [(i)] no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall be pending or threatened by the
Commission; and you shall have received a certificate, dated the Closing
Date and signed by the Chairman of the Board, the President, an Executive
Vice President or a Senior Vice President of the Company (who may, as to
threatened proceedings, rely upon the best of his information and belief),
to that effect and to the effect set forth in clause (e) of this Section 7
[(with respect to Senior Debt Securities only), and (ii the rating assigned
by a nationally recognized securities rating agency in the United States to
the senior debt securities of the Company as of the date of this Agreement
shall not have been lowered since that date];
(b) you shall have received opinions, dated the Closing Date and
reasonably satisfactory to counsel retained for the Underwriters, (A) from
Messrs. Cole, Raywid & Braverman, L.L.P. or such other special
communications counsel for the Company as may be reasonably satisfactory to
you, (B) from the General Counsel of the Company to the following effect
and covering such additional matters as the Representatives may reasonably
request:
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(i) the Company and each of its significant subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the
corporate power and authority to carry on its business as described in
the Prospectus (as amended or supplemented, if applicable) and the
Company has the corporate power and authority to execute and deliver
and perform its obligations under this Agreement and to issue and sell
the Offered Securities as contemplated by this Agreement;
(ii) the Company and each of its significant subsidiaries is
duly qualified as a foreign corporation and is in good standing in
each jurisdiction in which the failure to so qualify would, in the
aggregate, have a material adverse effect upon the financial
condition, results of operations, business or properties of the
Company and its subsidiaries taken as a whole;
(iii) all corporate proceedings legally required in connection
with the authorization and issuance of the Offered Securities and the
sale of the Offered Securities by the Company in accordance with the
terms of this Agreement have been taken;
(iv) to the best knowledge of such counsel, there is no legal
or governmental proceeding pending or threatened against the Company
or any of its subsidiaries which is required to be disclosed in the
Prospectus (as amended or supplemented, if applicable) and is not so
disclosed and correctly summarized therein;
(v) to the best knowledge of such counsel, there is no
contract or other document known to such counsel of a character
required to be described in the Prospectus (as amended or
supplemented, if applicable) or to be filed as an exhibit to the
Registration Statement (or to a document incorporated by reference
therein) that is not described or filed as required;
(vi) the execution and delivery of this Agreement and the
Indenture, the issuance of the Offered Securities and the fulfillment
of the terms herein and therein contained do not conflict with, or
result in a breach of, or constitute a default under, the charter or
by-laws of the Company or, to the best knowledge of such counsel,
conflict in any material respect with, or result in a material breach
of or constitute a material default under any material agreement,
indenture or other instrument known to such counsel to which the
Company or any of its significant subsidiaries is a party or by which
it is bound, or result in a violation of any law, administrative
regulation or court or governmental decree known to such counsel
applicable to the Company or any of its subsidiaries, except that such
counsel need not express any opinion with respect to (i) matters
opined upon by special communications counsel and Messrs.
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Sherman & Howard LLC or (ii) the federal securities laws, the Blue Sky
or securities laws of any jurisdiction; [and]
(vii) to the best knowledge of such counsel, neither the
Registration Statement nor the Prospectus, as amended or supplemented,
if applicable (except as to the financial statements and schedules and
any other financial and statistical data contained and incorporated by
reference in the Registration Statement or Prospectus, as to which no
opinion need be expressed), contained, as of the date the Prospectus
was first filed with the Commission pursuant to Rule 424, or contains,
as of the Closing Date, any untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein (in the case of the
Prospectus (as amended or supplemented, if applicable), in light of
the circumstances under which they were made,) not misleading[; and
(viii) The Parent has reserved a sufficient number of the Common
Shares to cover the conversion of all the Offered Securities at the
initial conversion [price] [rate] (prior to any adjustment of such
[price] [rate] pursuant to the Offered Securities and the Indenture),
and such Common Shares, when so delivered upon such conversion in
accordance with the terms and provisions of the Offered Securities and
the Indenture, assuming no change in the applicable law or pertinent
facts, will be duly and validly authorized, issued, fully paid and
non-assessable].
(C) from Messrs. Sherman & Howard LLC, special counsel to the
Company, to the following effect and covering such additional matters as
you may reasonably request:
(i) the execution and delivery of this Agreement and the
Indenture, the issuance of the Offered Securities and the fulfillment
of the terms herein and therein contained do not, to the best
knowledge of such counsel, result in a material breach of or
constitute a material default under any material agreement for
borrowed money known to such counsel to which the Company or any of
its significant subsidiaries is a party or by which it is bound; and
(ii) the Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, and is not
subject to regulation under such Act.
and (D) from Baker & Botts, L.L.P., special counsel to the Company, or
such other counsel to the Company as may be reasonably satisfactory to you,
to the following effect and covering such additional matters as you may
reasonably request:
(i) this Agreement and the Indenture have been duly
authorized, executed and delivered by the Company; and the Indenture
is a legal, valid and binding
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agreement of the Company enforceable in accordance with its terms,
except (A) as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and
other laws affecting creditors' rights generally, and (B) that the
remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought;
(ii) the Indenture has been duly qualified under, and complies
in all material respects with the requirements of, the Trust Indenture
Act;
(iii) the Offered Securities, when executed and authenticated in
accordance with the terms of the Indenture and delivered to and paid
for by the Underwriters in accordance with this Agreement, will be
legal, valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable in accordance with their
terms, except (A) as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and
other laws affecting creditors' rights generally, and (B) that the
remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought;
(iv) the Registration Statement is effective under the Act and,
to the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose is pending or threatened by the
Commission; and
(v) the Offered Securities[, the Common Stock] [, the
Guarantees] and the Indenture conform in all material respects as to
legal matters to the descriptions thereof in the Prospectus.
In addition, such counsel shall state that: "The Registration
Statement and the Prospectus, as amended or supplemented, if
applicable (except as to (x) the financial statements and schedules
and any other financial and statistical data contained or incorporated
by reference therein and (y) the documents incorporated or deemed to
be incorporated by reference therein, as to which no opinion is
expressed), complied, as of the date the Prospectus was first filed
with the Commission pursuant to Rule 424, and comply, as of the date
hereof, as to form in all material respects with the requirements of
the Act and the rules and regulations of the Commission under the Act
(the "Rules"). In passing upon the form of such documents, we have
necessarily assumed the correctness and completeness of the statements
made or included therein by the Company and take no responsibility for
the accuracy, completeness or fairness of the statements contained
therein except insofar as such statements relate to the
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description of the Offered Securities [, the Common Stock] and the
Indenture or relate to us. However, in connection with the preparation
of the Registration Statement and the Prospectus, we had conferences
with certain officers and other representatives of the Company, and
our examination of the Registration Statement and the Prospectus and
our discussions in such conferences did not disclose to us any
information (relying as to the materiality of any such information
primarily upon officers and other representatives of the Company)
which gave us reason to believe that either the Registration Statement
or the Prospectus, as amended or supplemented, if applicable (except
as to (x) the financial statements and schedules and any other
financial and statistical data contained or incorporated by reference
in the Registration Statement or the Prospectus and (y) the documents
incorporated or deemed to be incorporated by reference therein, as to
which no opinion is expressed), contained, as of the date the
Prospectus was first filed with the Commission pursuant to Rule 424,
or contains, as of the date hereof, any untrue statement of a material
fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein (in the
case of the Prospectus, as amended or supplemented, if applicable, in
light of the circumstances under which they were made,) not
misleading."
In giving such opinions, such counsel may rely (x) as to matters
of fact, to the extent they deem proper, upon certificates of officers
of the Company, public officials and others, and (y) as to matters of
law if other than the United States or Colorado (in the case of
Messrs. Sherman & Howard LLC and General Counsel of the Company) or
New York (in the case of Baker & Botts, L.L.P.), on the opinions of
local counsel retained by them or the Company, provided that such
counsel are satisfactory to you and counsel for the Underwriters;
(c) you shall have received on the Closing Date from counsel retained
by you on behalf of the Underwriters an opinion to the effect set forth in
clauses (b)(D)(i) and (iii) and to the effect that the Registration
Statement and the Prospectus, as amended or supplemented, if applicable,
(except as to (x) the financial statements and schedules and any other
financial and statistical data contained or incorporated by reference
therein, and (y) the documents incorporated or deemed to be incorporated by
reference therein, as to which no opinion need be expressed) comply as to
form in all material respects with the Act. In addition, you shall have
received on the Closing Date from such counsel an opinion with respect to
the Registration Statement and the Prospectus in the form customarily given
by such firm;
(d) on the Closing Date you shall have received a letter addressed to
the Representatives from KPMG Peat Marwick LLP, independent auditors for
the Company, reasonably satisfactory to you;
14
<PAGE>
(e) the representations and warranties of the Company in this
Agreement shall be true and correct on and as of the Closing Date; the
Company shall have complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Date; and except as reflected in or contemplated by the
Registration Statement and the Prospectus, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there shall not have been, at the Closing Date, any material
adverse changes in the condition (financial or otherwise), business,
prospects or results of operations of the Company and its subsidiaries,
considered as a whole; and
(f) subsequent to the date of this Agreement, there shall not have
occurred any change, or any development involving a prospective change, in
or affecting particularly the business, prospects or financial affairs of
the Company and its subsidiaries, considered as a whole which, in your
reasonable judgment, is so material and adverse that it would be
impracticable to proceed with the public offering or delivery of the
Offered Securities on the terms and in the manner contemplated by the
Prospectus.
8. Termination of Agreement: The obligation of the Underwriters to
purchase the Offered Securities may be terminated at any time prior to the
Closing Date by notice to the Company from you, without liability on the part of
the Underwriters to the Company, if, on or prior to such date, (i) additional
material governmental restrictions, not in force and effect on the date of this
Agreement, shall have been imposed upon trading in securities generally or
minimum or maximum prices shall have been generally established on the New York
Stock Exchange or on the American Stock Exchange, or trading in securities
generally shall have been suspended on either such Exchange or trading in the
common stock or debt securities of the Company in the over-the-counter market
shall have been suspended or a general banking moratorium shall have been
established by Federal or New York authorities, or (ii a war involving the
United States of America or other national calamity shall have occurred or shall
have accelerated to such an extent as to affect adversely the marketability of
the Offered Securities.
[9. Default by One or More of the Underwriters: If one or more of the
Underwriters shall fail on the Closing Date to purchase the Offered Securities
that it or they are obligated to purchase hereunder (the "Defaulted
Securities"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any substitute underwriter, to purchase all, but not less than
all, of the Defaulted Securities in such amounts as may be approved by you and
upon the terms herein set forth; if however, you have not completed such
arrangements within such 24-hour period, then:
(a) if the principal amount of Defaulted Securities does not exceed
10% of the aggregate principal amount of Offered Securities, the non-
defaulting Underwriters shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
15
<PAGE>
(b) if the principal amount of Defaulted Securities exceeds 10% of
the aggregate principal amount of Offered Securities, the Company shall be
entitled for an additional 24-hour period to find one or more substitute
underwriters satisfactory to the Representatives in their reasonable
discretion to purchase such Defaulted Securities.
In the event of any such default either the Representatives or the Company
shall have the right to postpone the Closing Date for a period not exceeding
seven days in order to effect any required changes in the Registration Statement
or Prospectus or in any other documents or arrangements relating to the purchase
of the Offered Securities.
If the principal amount of Defaulted Securities exceeds 10% of the
aggregate principal amount of Offered Securities, and neither the
Representatives nor the Company make arrangements pursuant to this Section 9
within the period stated for the purchase of the Defaulted Securities, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter to the Company except as provided in Section 6.
No action taken pursuant to this Section 9 shall relieve any defaulting
Underwriter from liability in respect of its default.
A substitute underwriter hereunder shall be an Underwriter for all purposes
of this Agreement.]
[9.][10.]Miscellaneous: Notice given pursuant to any of the provisions of
this Agreement shall be in writing and shall be mailed or delivered (a) to the
Company at its principal executive offices, located at Terrace Tower II, 5619
DTC Parkway, Englewood, Colorado 80111-3000, Attention: Chief Financial Officer,
or (b) to you at ____________-, attention of: . Any notice under Section
8 hereof may be made by facsimile transmission or telephone, but if so made
shall be subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and of the controlling persons, directors and
officers referred to in Section 6 hereof, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" as used in this Agreement
shall not include a purchaser, as such purchaser, of Offered Securities from any
Underwriter.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
16
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Underwriters.
Very truly yours,
TCI COMMUNICATIONS, INC.
By:
------------------------------
Name:
Title:
Confirmed and Accepted,
as of the date first above written:
[Underwriter[s]]
By:
------------------------------
Name:
Title:
17
<PAGE>
EXHIBIT A
DEBT SECURITIES
Designation:
Issue Date:
Maturity [and provisions for extension, if any]:
Authorized Denominations:
[Interest rate (or method of computation), Interest Payment Dates and Record
Dates or, if Original Discount Securities, issue price and yield to maturity:]
[Sinking Fund:]
[Optional Redemption:]
[Provisions for purchase or exchange at option of the Holder or the Company:]
[Conversion price or conversion rate and conversion period:]
[Other specific terms:]
18
<PAGE>
EXHIBIT B
Principal Amount
Underwriters of Offered Securities
- ------------ ---------------------
19
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TCI COMMUNICATIONS, INC.
AND
THE BANK OF NEW YORK,
TRUSTEE
----------------
INDENTURE
DATED AS OF JANUARY , 1998
----------------
DEBT SECURITIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
<C> <S> <C>
310 (a)(1).............................................. 7.10
(a)(2).............................................. 7.10
(a)(3).............................................. N.A.
(a)(4).............................................. N.A.
(a)(5).............................................. 7.10
(b)................................................. 7.08; 7.10; 11.02
(c)................................................. N.A.
311 (a)................................................. 7.11
(b)................................................. 7.11
(c)................................................. N.A.
312 (a)................................................. 2.07
(b)................................................. 11.03
(c)................................................. 11.03
313 (a)................................................. 7.06
(b)(1).............................................. N.A.
(b)(2).............................................. 7.06
(c)................................................. 11.02
(d)................................................. 7.06
314 (a)................................................. 4.05; 4.06; 11.02
(b)................................................. N.A.
(c)(1).............................................. 11.04
(c)(2).............................................. 11.04
(c)(3).............................................. N.A.
(d)................................................. N.A.
(e)................................................. 11.05
(f)................................................. N.A.
315 (a)................................................. 7.01(b)
(b)................................................. 7.05; 11.02
(c)................................................. 7.01(a)
(d)................................................. 7.01(c)
(e)................................................. 6.11
316 (a)(last sentence).................................. 11.06
(a)(1)(A)........................................... 6.05
(a)(1)(B)........................................... 6.04
(a)(2).............................................. N.A.
(b)................................................. 6.07
317 (a)(1).............................................. 6.08
(a)(2).............................................. 6.09
(b)................................................. 2.06
318 (a)................................................. 11.01
</TABLE>
- --------
N.A. means Not Applicable.
2
<PAGE>
TABLE OF CONTENTS
----------------
<TABLE>
<CAPTION>
Section Heading Page
<C> <S> <C>
ARTICLE ONE
Definitions and Incorporation by Reference
1.01. Definitions.................................................... 6
1.02. Other Definitions.............................................. 12
1.03. Incorporation by Reference of Trust Indenture Act.............. 12
1.04. Rules of Construction.......................................... 12
ARTICLE TWO
The Securities
2.01. Forms Generally................................................ 13
2.02. Amount Unlimited; Issuable in Series........................... 13
2.03. Denominations.................................................. 16
2.04. Execution, Authentication, Delivery and Dating................. 16
2.05. Registrar, Paying Agent, Conversion Agent and Authenticating
Agent.......................................................... 18
2.06. Paying Agent to Hold Money and Securities in Trust............. 20
2.07. Securityholder Lists........................................... 20
2.08. Transfer and Exchange.......................................... 20
2.09. Replacement Securities......................................... 23
2.10. Securities in Global Form...................................... 24
2.11. Temporary Securities........................................... 25
2.12. Cancellation................................................... 25
2.13. Payment of Interest; Defaulted Interest........................ 25
2.14. Persons Deemed Owners.......................................... 26
ARTICLE THREE
Redemption
3.01. Applicability of Article....................................... 27
3.02. Notices to Trustee............................................. 27
3.03. Selection of Securities to be Redeemed......................... 28
3.04. Notice of Redemption........................................... 28
3.05. Effect of Notice of Redemption................................. 29
3.06. Deposit of Redemption Price.................................... 29
3.07. Securities Redeemed in Part.................................... 30
3.08. Conversion Arrangement on Call for Redemption.................. 30
ARTICLE FOUR
Covenants
4.01. Payment of Securities; Maintenance of Office or Agency......... 30
4.02. Limitation on Restricted Subsidiary Funded Debt................ 32
4.03. Designation of Restricted Subsidiaries......................... 32
4.04. Limitation on Liens............................................ 33
4.05. SEC Reports.................................................... 34
4.06. Compliance Certificate......................................... 34
4.07. Corporate Existence............................................ 34
4.08. Waiver of Certain Covenants.................................... 34
4.09. No Lien Created................................................ 35
4.10. Calculation of Original Issue Discount......................... 35
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Section Heading Page
<C> <S> <C>
ARTICLE FIVE
Successor Corporation
5.01. When Company May Merge, etc...................................... 35
ARTICLE SIX
Defaults and Remedies
6.01. Events of Default................................................ 35
6.02. Acceleration..................................................... 36
6.03. Other Remedies................................................... 37
6.04. Waiver of Existing Defaults...................................... 37
6.05. Control by Majority.............................................. 37
6.06. Limitation on Suits.............................................. 38
6.07. Rights of Holders to Receive Payment and to Convert.............. 38
6.08. Collection Suit by Trustee....................................... 38
6.09. Trustee May File Proofs of Claim................................. 38
6.10. Priorities....................................................... 38
6.11. Undertaking for Costs............................................ 39
ARTICLE SEVEN
Trustee
7.01. Duties of Trustee................................................ 39
7.02. Rights of Trustee................................................ 40
7.03. Individual Rights of Trustee..................................... 40
7.04. Trustee's and Authenticating Agent's Disclaimer.................. 40
7.05. Notice of Defaults............................................... 40
7.06. Reports by Trustee to Holders.................................... 40
7.07. Compensation and Indemnity....................................... 41
7.08. Replacement of Trustee........................................... 41
7.09. Successor Trustee by Merger, etc................................. 42
7.10. Eligibility; Disqualification.................................... 42
7.11. Preferential Collection of Claims Against Company................ 42
ARTICLE EIGHT
Discharge of Indenture
8.01. Termination of Company's Obligations............................. 42
8.02. Application of Trust Fund........................................ 43
8.03. Repayment to Company............................................. 43
ARTICLE NINE
Amendments, Supplements and Waivers
9.01. Without Consent of Holders....................................... 43
9.02. With Consent of Holders.......................................... 44
9.03. Compliance with Trust Indenture Act.............................. 45
9.04. Effect of Amendments and Supplements............................. 45
9.05. Notation on or Exchange of Securities............................ 45
9.06. Trustee to Sign Amendments, etc.................................. 45
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Section Heading Page
<C> <S> <C>
ARTICLE TEN
Conversion
10.01. Applicability of Article....................................... 46
10.02. Conversion Privilege........................................... 46
10.03. Conversion Procedure........................................... 46
10.04. Fractional Shares.............................................. 47
10.05. Taxes on Conversion............................................ 47
10.06. Reservation of Parent Stock, Etc. ............................. 47
10.07. Adjustment for Change in Parent Capital Stock.................. 47
10.08. Adjustment for Rights Issue.................................... 48
10.09. Adjustments for Other Distributions............................ 49
10.10. Voluntary Adjustment........................................... 50
10.11. Certain Definitions............................................ 50
10.12. When Adjustment May Be Deferred................................ 51
10.13. When Adjustment Is Not Required................................ 51
10.14. Notice of Adjustment........................................... 52
10.15. Notice of Certain Transactions................................. 52
10.16. Consolidation, Merger or Sale of the Parent.................... 52
10.17. Company Determination Final.................................... 52
10.18. Trustee's and Conversion Agent's Disclaimer.................... 52
10.19. Simultaneous Adjustments....................................... 53
ARTICLE ELEVEN
Miscellaneous
11.01. Trust Indenture Act Controls................................... 53
11.02. Notices........................................................ 53
11.03. Communication by Holders with Other Holders.................... 54
11.04. Certificate and Opinion as to Conditions Precedent............. 54
11.05. Statements Required in Certificate or Opinion.................. 54
11.06. When Treasury Securities Disregarded........................... 55
11.07. Rules by Trustee and Agents.................................... 55
11.08. Legal Holidays................................................. 55
11.09. Governing Law.................................................. 55
11.10. No Adverse Interpretation of Other Agreements.................. 55
11.11. No Recourse Against Others..................................... 55
11.12. Successors..................................................... 55
11.13. Duplicate Originals............................................ 55
11.14. Table of Contents, Headings, Etc............................... 56
11.15. Acts of Holders................................................ 56
ARTICLE TWELVE
Meetings of Holders of Securities
12.01. Purposes for which Meetings May be Called...................... 57
12.02. Call, Notice and Place of Meetings............................. 57
12.03. Persons Entitled to Vote at Meetings........................... 57
12.04. Quorum; Action................................................. 58
12.05. Determination of Voting Rights; Conduct and Adjournment of
Meetings....................................................... 58
12.06. Counting Votes and Recording Action of Meetings................ 59
Signatures.............................................................. 60
</TABLE>
5
<PAGE>
INDENTURE dated as of January , 1998 between TCI COMMUNICATIONS, INC., a
Delaware corporation ("Company"), and THE BANK OF NEW YORK, a New York banking
corporation ("Trustee").
The Company has duly authorized the execution and delivery of this Indenture
to provide for the issuance from time to time of its unsecured debentures,
notes, bonds or other evidences of indebtedness ("Securities"), to be issued
in one or more series as provided in this Indenture.
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the respective Holders from time to time of the
Securities or of series thereof:
ARTICLE ONE
Definitions and Incorporation by Reference
Section 1.01. Definitions.
Additional Amounts means any additional amounts which are required hereby or
by any Security, under circumstances specified herein or therein, to be paid
by the Company in respect of certain taxes imposed on Holders specified
therein and which are owing to such Holders.
Affiliate of any person means any other person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such person.
Agent means any Registrar, Paying Agent, co-Registrar or Conversion Agent.
See Section 2.05.
Authenticating Agent means any person authorized by the Trustee pursuant
hereto to act on behalf of the Trustee to authenticate Securities of one or
more series.
Authorized Newspaper means a newspaper, in the English language or in an
official language of the place of publication, customarily published on each
day that is a Business Day in the place of publication, whether or not
published on days that are Legal Holidays in the place of publication, and of
general circulation in each place in connection with which the term is used or
in the financial community of each such place. Where successive publications
are required to be made in Authorized Newspapers, the successive publications
may be made in the same or in different newspapers in the same city meeting
the foregoing requirements in and each case on any day that is a Business Day
in the place of publication.
Bearer Security means any Security which is established pursuant to this
Indenture which is payable to bearer.
Board of Directors means the Board of Directors of the Company or any
authorized committee thereof.
Business Day, except as may otherwise be provided in the form of Securities
of any particular series, means, with respect to any place of payment or other
location, each Monday, Tuesday, Wednesday, Thursday and Friday that is not a
Legal Holiday in such place of payment or other location.
Capitalized Lease Obligation of any Person means any obligation of such
person to pay rent or other amounts under a lease with respect to any property
(whether real, personal or mixed) acquired or leased by such person and used
in its business that is required to be accounted for as a liability on the
balance sheet of such person in accordance with generally accepted accounting
principles and the amount of such Capitalized Lease Obligation shall be the
amount so required to be accounted for as a liability.
Company means TCI Communications, Inc., a Delaware corporation, until a
successor replaces it pursuant to the applicable provisions of this Indenture
and thereafter means the successor.
6
<PAGE>
Convertible Securities means any or all options, warrants, securities and
rights, except the Series B Stock and the Securities, which are convertible
into or exercisable or exchangeable for Parent Stock or which otherwise
entitle the holder thereof to subscribe for, purchase or otherwise acquire
Parent Stock.
coupon means any interest coupon appertaining to a Bearer Security.
Debt means, with respect to any person: (1) any indebtedness of such person
(i) for borrowed money or (ii) evidenced by a note, debenture or similar
instrument (including a purchase money obligation) given in connection with
the acquisition of any property or assets, including securities; (2) any
guarantee by such person of any indebtedness of others described in the
preceding clause (1); and (3) any amendment, renewal, extension or refunding
of any such indebtedness or guarantee.
Default means any event which is, or after notice or passage of time would
be, an Event of Default.
Dollar or $ or U.S. Dollar means a dollar or other equivalent unit in such
coin or currency of the United States of America as at the time shall be legal
tender for the payment of public and private debts.
Funded Debt of any person means, as of the date as of which the amount
thereof is to be determined, without duplication, all indebtedness of such
person for borrowed money or for the deferred purchase price of property or
assets in respect of which such person is liable and all guaranties by such
person of any indebtedness of others for borrowed money, and all Capitalized
Lease Obligations of such person, which by the terms thereof have a final
maturity, duration or payment date more than one year from the date of
determination thereof (including, without limitation, any balance of such
indebtedness or obligation which was Funded Debt at the time of its creation
maturing within one year from such date of determination) or which has a final
maturity, duration or payment date within one year from such date of
determination but which by its terms may be renewed or extended at the option
of such person for more than one year from such date of determination, whether
or not theretofore renewed or extended. The term "Funded Debt" excludes (A)
for purposes of the covenant contained in Section 4.04 (Limitation on Liens),
(1) any indebtedness of the Company or any Subsidiary to the Company or
another Subsidiary, (2) any guarantee by the Company or any Subsidiary of
indebtedness of the Company or another Subsidiary, provided that such
guarantee is not secured by a Lien on any Property, and (3) any guarantee by
the Company or any Subsidiary of the indebtedness of any person (including,
without limitation, a business trust), if the obligation of the Company or
such Subsidiary under such guarantee is limited in amount to the amount of
funds held by or on behalf of such person that are available for the payment
of such indebtedness, and (B) for purposes of each of the covenants contained
in Sections 4.02 (Limitation on Restricted Subsidiary Funded Debt) and 4.03
(Designation of Restricted Subsidiaries), (1) any indebtedness of the Company
or any Restricted Subsidiary to the Company or another Restricted Subsidiary,
(2) any guarantee by the Company or any Restricted Subsidiary of indebtedness
of the Company or another Restricted Subsidiary, provided that such guarantee
is not secured by a Lien on Restricted Property, (3) any guarantee by the
Company or any Restricted Subsidiary of the indebtedness of any person
(including, without limitation, a business trust), if the obligation of the
Company or such Restricted Subsidiary under such guarantee is limited in
amount to the amount of funds held by or on behalf of such person that are
available for the payment of such indebtedness and (4) any indebtedness of the
Company or any Restricted Subsidiary to any Unrestricted Subsidiary which
indebtedness is subordinated in right of payment to the prior payment in full
of the outstanding Securities of such series on terms no less favorable to the
holders of such Securities than those contained in Article Ten of that certain
Indenture, dated as of April 1, 1991, between the Company and Chemical Bank,
as Trustee, pursuant to which the Company's subordinated debt securities are
subordinated to all Senior Debt of the Company (as defined therein), without
giving effect to any amendment, modification or supplement to, or discharge
of, such Indenture after the date hereof, and which indebtedness is not
secured by a Lien on Restricted Property. For purposes of determining the
outstanding principal amount of Funded Debt at any date, the amount of
indebtedness issued at a price less than the principal amount thereof shall be
equal to the amount of the liability in respect thereof at such date
determined in accordance with generally accepted accounting principles.
7
<PAGE>
Government Obligations, with respect to any Security, means (i) direct
obligations of the government or governments which issued the currency in
which the principal of or any interest on such Security or any Additional
Amounts in respect thereof shall be payable, in each case where the payment or
payments thereunder are supported by the full faith and credit of such
government or governments or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of such government or
governments, in each case where the payment or payments thereunder are
unconditionally guaranteed as a full faith and credit obligation by such
government or governments, and which, in the case of (i) or (ii), are not
callable or redeemable at the option of the issuer or issuers thereof, and
shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of or other amount with respect to any such
Government Obligation held by such custodian for the account of the holder of
a depository receipt, provided that (except as required by law) such custodian
is not authorized to make any deduction from the amount payable to the holder
of such depository receipt from any amount received by the custodian in
respect of the Government Obligation or the specific payment of interest on or
principal of or other amount with respect to the Government Obligation
evidenced by such depository receipt.
Holder or Securityholder means, when used with respect to any Security, in
the case of a Registered Security the person in whose name the Security is
registered in the security register and in the case of a Bearer Security the
bearer thereof and, when used with respect to any coupon, means the bearer
thereof.
Indenture means this Indenture as amended or supplemented from time to time
and, unless the context indicates otherwise, shall include the form and terms
of a particular series of Securities established as contemplated hereunder.
interest, when used with respect to an Original Issue Discount Security
which by its terms bears interest only after maturity or upon default in any
other payment due on such Security, means interest payable after maturity or
upon such a default, as the case may be.
Interest Payment Date means the date, if any, specified in the Securities of
any series or a coupon representing an installment of interest as the fixed
date on which an installment of interest on the Securities of that series or
such coupon is due and payable.
Leverage Ratio with respect to the Restricted Group means, as of the date of
and after giving effect to any designation of an Unrestricted Subsidiary as a
Restricted Subsidiary and/or any designation of a Restricted Subsidiary as an
Unrestricted Subsidiary, in each case in accordance with Section 4.03, the
ratio of (1) the aggregate outstanding principal amount of all Funded Debt of
the Restricted Group as of such date to (2) the product of four times the
Restricted Group Cash Flow for the most recent full fiscal quarter for which
financial information is available on such date.
Lien means any mortgage, pledge, lien, security interest, or other similar
encumbrance.
Maximum Funded Debt Amount means, as of any date of determination thereof,
that amount which is equal to the product of (i) eight and (ii) the product of
(x) the Restricted Group Cash Flow for the most recent full fiscal quarter for
which financial information is available on such date and (y) four.
Officer means the Chairman of the Board, the President, any Vice President,
the Treasurer or the Secretary of the Company.
Officers' Certificate means a certificate signed by two Officers or by an
Officer and an Assistant Treasurer or an Assistant Secretary of the Company
and delivered to the Trustee. See Sections 11.04 and 11.05.
Opinion of Counsel means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee. See Sections 11.04 and 11.05.
8
<PAGE>
original issue discount of any debt security, including any Original Issue
Discount Security, means the difference between the principal amount of such
debt security and the initial issue price of such debt security (as set forth,
in the case of an Original Issue Discount Security, on the face of such
Security).
Original Issue Discount Security means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon
acceleration of the maturity thereof pursuant to Section 6.02.
outstanding, when used with respect to Securities of any series, means as of
the date of determination, all such Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment, redemption or purchase the Trustee or
any Paying Agent (other than the Company) holds in trust or the Company
(acting as its own Paying Agent) has set aside and segregated in trust on a
maturity date, redemption date or, if so specified with respect to the
Securities of any series pursuant to Section 2.02 on a date (or, if so
specified, on the Business Day following a date) on which Securities of
such series are to be purchased by the Company pursuant to any provision
thereof providing for such purchase at the option of the Holder or the
Company, money (or securities if permitted by the terms of such Securities)
sufficient to pay Securities and any coupons appertaining thereto payable
on that date;
(iii) Securities with respect to which the Company has terminated its
obligations pursuant to Section 8.01 hereof; provided, however, that such
Securities shall continue to be outstanding for all purposes related to
those obligations that survive such termination as provided in Section 8.01
unless and until they cease to be outstanding in accordance with clauses
(i) or (ii) above or clause (iv) below; and
(iv) Securities which have been paid pursuant to Section 2.09 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a bona fide purchaser
in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver or taken any other action
hereunder or whether a quorum is present at a meeting of Holders, and for the
purpose of making the calculations required by TIA (S) 313, (x) the principal
amount of an Original Issue Discount Security that shall be deemed to be
outstanding for such purposes shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon a
declaration of acceleration of the maturity thereof pursuant to Section 6.02,
and (y) the principal amount of a Security denominated in a foreign currency
or currencies or composite currency shall be the U.S. Dollar equivalent,
determined as of the date of original issuance of such Security, of the
principal amount of such Security (or, in the case of an Original Issue
Discount Security, the U.S. Dollar equivalent as of such date of original
issuance of such Security of the amount determined as provided in clause (x)
above). Subject to the provisions of Section 11.06, a Security does not cease
to be outstanding because the Company or one of its Affiliates holds the
Security.
Parent means Tele-Communications, Inc., a Delaware corporation, and any
successor thereof.
Parent Stock means the Tele-Communications, Inc. Series A TCI Group Common
Stock, $1.00 par value, of the Parent as it exists on the date of this
Indenture and any other capital stock into which such Series A TCI Group
Common Stock may thereafter have been changed.
place of payment means, when used with respect to any Security, the place or
places where, subject to the provisions of Section 4.01, the principal of, or
interest on, or any Additional Amounts with respect to such Security are
payable as specified as contemplated by Section 2.02.
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Predecessor Securities means, with respect to any Security, every previous
Security evidencing all or a portion of the same debt as that evidenced by
such particular Security, and, for the purpose of this definition, any
Security authenticated and delivered under Section 2.09 in exchange for or in
lieu of a mutilated, lost, destroyed or wrongfully-taken Security or a
Security to which a mutilated, lost, destroyed or wrongfully-taken coupon
appertains shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or wrongfully-taken Security or the Security to which the mutilated,
lost, destroyed or wrongfully-taken coupon appertains, as the case may be.
principal of a debt security, including any Security, means the amount
(including, without limitation, if and to the extent applicable, any premium
and, in the case of an Original Issue Discount Security, any accrued original
issue discount, but excluding interest) that is payable with respect to such
debt security as of any date and for any purpose (including, without
limitation, in connection with any sinking fund, upon any redemption at the
option of the Company, upon any purchase or exchange at the option of the
Company or the holder of such debt security and upon any acceleration of the
maturity of such debt security).
principal amount of a debt security, including any Security, means (except
as otherwise provided in the last sentence of the definition of "Funded Debt"
in this Section 1.01) the principal amount as set forth on the face of such
debt security.
Principal Property means, as of any date of determination, any property or
assets owned by any Restricted Subsidiary other than (l) any such property
which, in the good faith opinion of the Board of Directors, is not of material
importance to the business conducted by the Company and its Restricted
Subsidiaries taken as a whole and (2) any shares of any class of stock or any
other security of any Unrestricted Subsidiary.
Property means all assets and properties of the Company and its Subsidiaries
(real, personal, tangible, intangible or mixed), including any shares of
capital stock or indebtedness of, or other interests (including partnership
interests) in, a Subsidiary owned by the Company or a Subsidiary.
Registered Security means any Security issued pursuant to this Indenture
which is registered in the security register.
Regular Record Date means the date, if any, specified in the Registered
Securities of any series as the record date for the determination of
Securityholders to whom interest is payable on the next succeeding Interest
Payment Date.
Restricted Group means, as of any date of determination, the Company and the
Restricted Subsidiaries as of such date after giving effect to any
designations being made on such date in accordance with Section 4.03.
Restricted Group Cash Flow for any period means the Restricted Group Net
Income (as defined below) for such period, plus (A) the sum (without
duplication) of the aggregate of each of the following items of the Company
and the Restricted Subsidiaries for such period to the extent taken into
account as charges to Restricted Group Net Income for such period: (i)
interest expense, (ii) income tax expense, (iii) depreciation and amortization
expense and other noncash charges, (iv) extraordinary or non-recurring items
and (v) after-tax losses on sales of assets outside of the ordinary course of
business not otherwise included in extraordinary items in accordance with
generally accepted accounting principles, minus (B) the sum (without
duplication) of the aggregate of each of the following items of the Company
and the Restricted Subsidiaries for such period to the extent taken into
account as credits to Restricted Group Net Income for such period: (i) noncash
credits, (ii) extraordinary or non-recurring items, and (iii) after-tax gains
on sales of assets outside of the ordinary course of business not otherwise
included in extraordinary items in accordance with generally accepted
accounting principles.
For purposes of this definition, (1) "Restricted Group Net Income" for any
period means the aggregate of the net income (loss) for such period of the
Company and the Restricted Subsidiaries, determined on a consolidated basis in
accordance with generally accepted accounting principles; provided, however,
that (i) the
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net income (loss) of any person accounted for by the equity method of
accounting and the net income (loss) of any Unrestricted Subsidiary shall be
excluded, except that the net income of any such person or Unrestricted
Subsidiary shall be included to the extent of the amount of dividends or
distributions paid by such person or Unrestricted Subsidiary to the Company or
a Restricted Subsidiary during such period, and (ii) except as otherwise
provided in clause (2) below, the net income (loss) of any other person
acquired by the Company or any Restricted Subsidiary in a transaction
accounted for as a pooling of interests for any period prior to the date of
such acquisition shall be excluded; and (2) if the Company or any Restricted
Subsidiary consummated any acquisition or disposition of assets during the
period for which Restricted Group Cash Flow is being calculated, or
consummated any acquisition or disposition of assets subsequent to such period
and on or prior to the date as of which the Leverage Ratio or Maximum Funded
Debt Amount, as applicable, is to be determined, then, in each such case, the
Restricted Group Cash Flow for such period shall be calculated on a pro forma
basis as if such acquisition or disposition had occurred at the beginning of
such period.
Restricted Property means, as of any date of determination, any Principal
Property and any shares of stock of a Restricted Subsidiary owned by the
Company or a Restricted Subsidiary.
Restricted Subsidiary means, as of any date of determination, a corporation
a majority of whose voting stock is owned by the Company and/or one or more
Restricted Subsidiaries, which corporation has been, or is then being,
designated a Restricted Subsidiary in accordance with Section 4.03, unless and
until designated an Unrestricted Subsidiary in accordance with Section 4.03.
SEC means the Securities and Exchange Commission.
Securities means the Securities that are issued from time to time in one or
more series under this Indenture as such Securities are amended or
supplemented from time to time.
Series B Stock means the Tele-Communications, Inc. Series B TCI Group Common
Stock, $1.00 par value, of the Parent as it exists on the date of this
Indenture and stock of any other class into which such Series B TCI Group
Common Stock may thereafter have been changed.
Subsidiary means any corporation, association, partnership or other business
entity of which a majority of the total voting power of the capital stock or
other interests (including partnership interests) entitled (without regard to
the occurrence of a contingency) to vote in the election of directors,
managers, or trustees thereof is at the time owned or controlled, directly or
indirectly, by (i) the Company, (ii) the Company and one or more of its
Subsidiaries or (iii) one or more Subsidiaries of the Company.
TIA means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)77aaa-77bbbb)
as in effect on the date of this Indenture, except as provided in Section
9.03.
Total Consolidated Assets means the total assets (real, personal, tangible,
intangible and mixed) that would be shown on a balance sheet of the Company
and its Subsidiaries prepared in accordance with generally accepted accounting
principles consistently applied, as of any date selected by the Company not
more than 45 days prior to the taking of the action for the purpose of which
Total Consolidated Assets is to be determined.
Trustee means the party named as such in this Indenture until a successor
replaces it and thereafter means the successor and if at any time there is
more than one such party, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
Trust Officer means any officer or assistant officer in the corporate trust
department of the Trustee assigned by the Trustee to administer its corporate
trust matters.
United States, except as otherwise provided in or pursuant to this
Indenture, means the United States of America (including the States and the
District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction.
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United States Alien, except as otherwise provided in or pursuant to this
Indenture, means any person who, for United States Federal income tax
purposes, is a foreign corporation, a non-resident alien individual, a non-
resident fiduciary of a foreign estate or trust, or a foreign partnership.
Unrestricted Subsidiary means, as of any date of determination, any
Subsidiary of the Company that is not a Restricted Subsidiary.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
TERM DEFINED IN SECTION
<S> <C>
Act...................................................... 11.15
Average Market Price..................................... 10.11
Bankruptcy Law........................................... 6.01
Code..................................................... 9.01
Conversion Agent......................................... 2.05
current market price..................................... 10.11
Custodian................................................ 6.01
Determination Date....................................... 10.11
Event of Default......................................... 6.01
Ex-Dividend Date......................................... 10.11
Legal Holiday............................................ 11.08
Paying Agent............................................. 2.05
Permitted Liens.......................................... 4.04(b)
Registrar................................................ 2.05
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
Commission means the SEC.
indenture securities means the Securities.
indenture security holder means a Securityholder.
indenture to be qualified means this Indenture.
indenture trustee or institutional trustee means the Trustee.
obligor on the indenture securities means the Company and any other
obligor thereon.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles in effect on
the date of this Indenture;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in the plural include
the singular.
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ARTICLE TWO
The Securities
Section 2.01. Forms Generally.
The Securities of each series may be issued as Registered Securities without
coupons attached, or Bearer Securities with or without coupons attached, or
both, and may be issued in whole or in part in the form of one or more global
Securities as shall be specified as contemplated by Section 2.02. In the
absence of any contrary provisions with respect to the Securities of any
series, the Securities shall be issued as Registered Securities and shall not
be issuable upon the exercise of warrants. Bearer Securities shall be issued
with coupons attached unless otherwise provided with respect to the Securities
of any series as contemplated by Section 2.02.
The Securities of each series (including any temporary global Securities)
and related coupons, if any, shall be in one of the forms established from
time to time by or pursuant to a resolution of the Board of Directors or in or
pursuant to one or more indentures supplemental hereto, which shall set forth
the information required by Section 2.02. The Securities and coupons, if any,
shall have such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture or by a resolution
of the Board of Directors and may have such notations, legends or endorsements
as the Company may deem appropriate and as are not inconsistent with the
provisions of this Indenture, or as may be required by law, stock exchange
rule or usage. The Company shall approve the form or forms of Securities and
any coupons appertaining thereto and any notation, legend or endorsement on
them. If the form or forms of Securities of any series or coupons are
established by action taken pursuant to a resolution of the Board of Directors
or indenture supplemental hereto, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
written order of the Company contemplated by Section 2.04 for the
authentication and delivery of such Securities or coupons.
Subject to Section 2.05, the form of the Trustee's certificate of
authentication to be borne by the Securities shall be substantially as
follows:
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
Section 2.02. Amount Unlimited; Issuable in Series
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a resolution of the Board of Directors or
established in or pursuant to one or more indentures supplemental hereto,
prior to the issuance of Securities of any series:
(1) the title of Securities of the series (which shall distinguish
Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of Securities of the
series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon
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registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Sections 2.08, 2.09, 2.11, 3.07 or
9.05 and except for any Securities which pursuant to Section 2.04 are
deemed not to have been authenticated and delivered hereunder);
(3) (A) whether Securities of the series are issuable as Registered
Securities, as Bearer Securities or alternatively as Bearer Securities and
Registered Securities, and whether the Bearer Securities are to be issuable
with coupons, without coupons or both; (B) any restrictions applicable to
the offer, sale or delivery of Bearer Securities and the terms upon which
Bearer Securities of the series may be exchanged for Registered Securities
of the series and vice versa (if permitted by applicable laws and
regulations); (C) whether any of the Securities of the series are to be
issuable in global form and, if so, (i) the identity of the depositary with
respect to any such global Security and (ii) whether beneficial owners of
interests in any such global Security may exchange such interests for
Securities of the same series and of like tenor and of any authorized form
and denomination, and, if so, the circumstances under which and the manner
in which any such exchanges may occur, if other than as specified in
Section 2.08; (D) if any of the Securities of the series are to be issuable
as Bearer Securities or in global form, the date as of which any such
Bearer Security or global Security shall be dated (if other than the date
of original issuance of the first of such Securities to be issued); and (E)
if Securities of the series are to be issuable in definitive form (whether
upon original issue, upon exchange of a temporary Security of such series,
or in exchange for a beneficial ownership interest in a permanent global
Security) only upon receipt of certain certificates or other documents or
satisfaction of other conditions, or if Securities of the series are
initially issuable in temporary global form and if owners of beneficial
interests therein may exchange such interest for an interest in a permanent
global Security only upon receipt of certain certificates or other
documents or satisfaction of other conditions, then the form and/or terms
of such certificates, documents or conditions;
(4) (A) the person to whom any interest on any Registered Security of the
series shall be payable, if other than the person in whose name that
Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest; (B) the manner in
which, or the person to whom, any interest on any Bearer Security of the
series shall be payable, if otherwise than upon presentation and surrender
of the coupons appertaining thereto as they severally mature; and (C) if
any Securities of the series are to be issuable as Bearer Securities, the
extent to which, or the manner in which, and the terms and conditions
(including certification requirements) upon which, any interest in respect
of any portion of a temporary Bearer Security in global form payable in
respect of an Interest Payment Date prior to the exchange of such temporary
global Security for a permanent global Security or for definitive
Securities of the series will be paid to any clearing organization with
respect to the portion of such temporary global Security held for its
account and, in such event, the terms and conditions (including
certification requirements) upon which any such interest payment received
by a clearing organization will be credited to the persons entitled to
interest payable on such Interest Payment Date, and any other requirements
in addition to or in lieu of those provided herein relating to the payment
of interest on or any Additional Amounts in respect of Bearer Securities;
(5) the date or dates (and whether fixed or extendible) on which the
principal of Securities of the series is payable;
(6) the rate or rates at which Securities of the series shall bear
interest, or the method of determining the same, if any, the date or dates
from which such interest shall accrue, or the method of determining the
same, if any, the Interest Payment Dates on which any such interest shall
be payable and the Regular Record Date for any interest payable on any
Registered Securities on any Interest Payment Date, whether and under what
circumstances Additional Amounts on Securities of the series or any of them
shall be payable, and the basis upon which interest will be calculated if
other than that of a 360-day year of twelve 30-day months;
(7) the place or places where, subject to Section 4.01, the principal of,
any interest on or any Additional Amounts payable in respect of Securities
of the series shall be payable, any Registered Securities of the series may
be surrendered for registration of transfer, any Securities of the series
may be surrendered for exchange and notices and demands to or upon the
Company in respect of the Securities of the series and this Indenture may
be served;
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<PAGE>
(8) any provisions relating to the issuance of Securities of such series
at an original issue discount (including, without limitation, the issue
price thereof, the rate or rates at which such original issue discount
shall accrue, if any, and the date or dates from or to which or period or
periods during which such original issue discount shall accrue at such rate
or rates);
(9) the price or prices at which, the period or periods within which and
the terms and conditions upon which Securities of the series may be
redeemed or otherwise purchased, in whole or in part, at the option of the
Company, pursuant to any sinking fund or otherwise (including, without
limitation, the form or method of payment thereof if other than in cash);
(10) the obligation, if any, of the Company to redeem, purchase or repay
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Securityholder thereof and the price or
prices at which and the period or periods within which and the terms and
conditions upon which Securities of the series shall be redeemed, purchased
or repaid, in whole or in part, pursuant to such obligation (including,
without limitation, the form or method of payment thereof if other than in
cash);
(11) the currency or currencies, including composite currencies, in which
payment of the principal of, any interest on and any Additional Amounts
payable in respect of the Securities of the series shall be payable, or in
which the Securities of the series shall be denominated, if other than
Dollars;
(12) if the principal of, any interest on or any Additional Amounts
payable in respect of the Securities of the series is to be payable, at the
election of the Company or a Securityholder, in a currency or currencies,
including composite currencies, other than that in which the Securities of
such series are denominated or stated to be payable, the terms and
conditions upon which such election may be made and the method for
determining amounts payable;
(13) if the amount of payments of principal of or interest on the
Securities of the series may be determined with reference to an index,
formula or other method or methods (which index, formula, method or methods
may be based, without limitation, on one or more currencies, commodities,
equity indices or other indices), the terms and conditions upon which and
the manner in which such amounts shall be determined and paid or payable;
(14) the denominations in which any Registered Securities of the series
shall be issuable, if other than denominations of $1,000 and any integral
multiple thereof, and the denominations in which Bearer Securities of the
series shall be issuable if other than denomination of $5,000;
(15) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
acceleration of the maturity thereof pursuant to Section 6.02 or provable
in bankruptcy pursuant to Section 6.09, or, if applicable, which is
convertible in accordance with Article Ten;
(16) any Events of Default with respect to the Securities of a particular
series in lieu of or in addition to those set forth herein and the remedies
therefor;
(17) the obligation, if any, of the Company to permit the conversion of
Securities of such series into Parent Stock and the terms and conditions
upon which such conversion shall be effected (including, without
limitation, the initial conversion price or rate, the conversion period and
any other provision in addition to or in lieu of those set forth in this
Indenture relative to such obligation);
(18) if any Securities of the series are to be issuable upon the exercise
of warrants, this shall be so established and (if established by resolution
of the Board of Directors) so set forth, as well as the time, manner and
place for such Securities to be authenticated and delivered;
(19) if there is more than one Trustee, the identity of the Trustee and,
if not the Trustee, the identity of each Registrar, Paying Agent or
Conversion Agent with respect to the Securities of the series; and
(20) any other terms of a particular series (including, without
limitation, if applicable, any designation of Restricted Subsidiaries
pursuant to Section 4.03), including any terms which may be required by or
advisable under United States or applicable foreign laws or regulations or
advisable in connection with the marketing or remarketing of Securities of
that series, and any other provisions expressing or referring to the
15
<PAGE>
terms and conditions upon which the Securities of that series are to be
issued under this Indenture, which terms and provisions are not in conflict
with the provisions of this Indenture; provided, however, that the addition
to or subtraction from or variation of Articles Four, Five, Six, Eight and
Ten (and Sections 1.01 and 1.02, insofar as they relate to the definition
of certain terms as used in such Articles) with regard to the Securities of
a particular series shall not be deemed to constitute a conflict with the
provisions of those Articles.
All Securities of any one series and the coupons appertaining to any Bearer
Securities of such series shall be substantially identical except, in the case
of Registered Securities, as to denomination and except as may otherwise be
provided in or pursuant to such resolution of the Board of Directors or in any
such indenture supplemental hereto. Not all Securities of any one series need
be issued at the same time, and, unless otherwise so provided, a series may be
reopened for issuances of additional Securities of such series.
If any of the terms of the Securities of a series are established by action
taken pursuant to a resolution of the Board of Directors or indenture
supplemental hereto, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee with an Officers' Certificate setting forth the terms
or the manner of determining the terms of the Securities of such series. With
respect to Securities of a series which are not to be issued at one time, such
resolution of the Board of Directors or action may provide general terms or
parameters for Securities of such series and provide either that the specific
terms of particular Securities of such series shall be specified in a written
order of the Company or that such terms shall be determined by the Company or
its agents in accordance with a written order of the Company as contemplated
by the last sentence of the fourth paragraph of Section 2.04.
Section 2.03. Denominations.
Unless otherwise provided as contemplated by Section 2.02 with respect to
any series of Securities and except as provided in Section 2.10, any
Registered Securities of a series denominated in Dollars shall be issuable in
denominations of $1,000 and any integral multiple thereof and any Bearer
Securities of a series denominated in Dollars shall be issuable in the
denomination of $5,000.
Section 2.04. Execution, Authentication, Delivery and Dating.
Two Officers shall sign the Securities for the Company. The Company's seal
shall be reproduced on the Securities. An Officer shall sign the coupons
attached to any Bearer Security for the Company. The signature of any Officer
on the Securities or any coupons appertaining thereto may be manual or
facsimile.
If an Officer whose signature is on a Security or a coupon no longer holds
that office at the time the Trustee authenticates such Security, the Security
and coupon shall be valid nevertheless.
A Security or coupon shall not be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose until the certificate of
authentication on the Security is manually signed by the Trustee or on its
behalf by an Authenticating Agent. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture. Notwithstanding
the foregoing, if any Security shall have been duly authenticated and
delivered hereunder but never issued and sold by the Company, and the Company
shall deliver such Security to the Trustee for cancellation as provided in
Section 2.12 together with a written statement (which need not comply with
Sections 11.04 and 11.05 and need not be accompanied by an Opinion of Counsel)
stating that such Security has not been issued and sold by the Company, for
all purposes of this Indenture such Security shall be deemed not to have been
authenticated and delivered hereunder and shall not be entitled to the
benefits of this Indenture.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series together with any
coupon appertaining thereto executed by the Company to the Trustee for
authentication, and the Trustee shall, subject to the provisions hereof and of
such Securities,
16
<PAGE>
authenticate said Securities and deliver said Securities and any coupons
appertaining thereto to or upon the written order of the Company, signed by
two Officers or by an Officer and an Assistant Treasurer of the Company,
without any further action by the Company. Unless otherwise specified as
contemplated by Section 2.02, no Bearer Security shall be mailed or otherwise
delivered to any location in the United States. Further, a Bearer Security
(including a permanent global Bearer Security) may be delivered only if all
applicable certification and other requirements specified as contemplated by
Section 2.02 with respect to the Securities of or within such series have been
satisfied with respect to such Bearer Security (or, if applicable, a
Predecessor Security). Except as permitted by Section 2.09, the Trustee shall
not authenticate and deliver any Bearer Security unless all appurtenant
coupons for interest then matured have been detached and cancelled. If not all
the Securities of a series are to be issued at one time and if the resolution
of the Board of Directors or indenture supplemental hereto establishing such
series as contemplated by Sections 2.01 and 2.02 shall so permit, the written
order of the Company may set forth procedures acceptable to the Trustee for
the issuance of such Securities and for determining the form of terms of
particular Securities of such series including, but not limited to, interest
rate, maturity date, date of issuance and date from which interest shall
accrue.
If the form or forms or terms of Securities of the series and any related
coupons have been established in or pursuant to one or more resolutions of the
Board of Directors or indentures supplemental hereto as permitted by Sections
2.01 and 2.02, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form or forms of such Securities and any coupons have been
established by or pursuant to a resolution of the Board of Directors or
indenture supplemental hereto, that such form or forms have been
established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities and any coupons have been established
by or pursuant to a resolution of the Board of Directors or indenture
supplemental hereto, that such terms have been established in conformity
with the provisions of this Indenture; and
(3) that such Securities together with any coupons appertaining thereto,
when authenticated and delivered by the Trustee and issued by the Company
in the manner and subject to any conditions specified in such Opinion of
Counsel, will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization and other laws of general
applicability relating to or affecting the enforcement of creditors'
rights, to general equitable principles and to such other qualifications as
such counsel shall conclude do not materially affect the rights of Holders
of such Securities and any coupons;
provided, however, that, with respect to Securities of a series which are not
to be issued at one time, the Trustee shall be entitled to receive such
Opinion of Counsel only once at or prior to the time of the first
authentication of Securities of such series and that the opinions described in
clauses (2) and (3) above may state, respectively,
(a) that, when the terms of such Securities and any coupons shall have
been established pursuant to a written order of the Company or pursuant to
such procedures as may be specified from time to time by a written order of
the Company, all as contemplated by and in accordance with a resolution of
the Board of Directors or an Officers' Certificate pursuant to a resolution
of the Board of Directors or indenture supplemental hereto, as the case may
be, such terms will have been established in conformity with the provisions
of this Indenture; and
(b) that such Securities and any coupons appertaining thereto, when (i)
executed by the Company, (ii) completed, authenticated and delivered by the
Trustee in accordance with this Indenture, (iii) issued and delivered by
the Company and (iv) paid for, all as contemplated by and in accordance
with the aforesaid written order of the Company or specified procedures, as
the case may be, and in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance, reorganization
and other laws of general applicability relating to or affecting the
enforcement of creditors' rights, to general equitable principles and to
such other qualifications as such counsel shall conclude do not materially
affect the rights of Holders of such Securities and any coupons.
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Notwithstanding the provisions of Sections 2.01, 2.02, 11.04 and this
Section, if all the Securities of a series are not to be originally issued at
one time, the resolution of the Board of Directors or indenture supplemental
hereto, the certified copy of the record of action taken pursuant to such
resolution or supplemental indenture, the Officers' Certificate, the written
order of the Company and any other documents otherwise required pursuant to
such Sections need not be delivered at or prior to the time of authentication
of each Security of such series if such documents are delivered at or prior to
the authentication upon original issuance of the first Security of such series
to be issued, provided, however, that any subsequent request by the Company to
the Trustee to authenticate Securities of such series shall constitute a
representation and warranty by the Company that as of the date of such
request, the statements made in the Officers' Certificate delivered pursuant
to Section 11.04 at or prior to authentication of the first such Security
shall be true and correct on the date thereof as if made on and as of the date
thereof.
The Trustee shall have the right to decline to authenticate and make
available for delivery any Securities together with any coupons appertaining
thereto under this Section if the issuance of such Securities pursuant to this
Indenture will alter the Trustee's own rights, duties or immunities under the
Securities and this Indenture or otherwise in a manner which is not reasonably
acceptable to the Trustee.
With respect to Securities of a series which are not all issued at one time,
the Trustee may conclusively rely, as to the authorization by the Company of
any of such Securities and any coupons, the form and terms thereof and the
legality, validity, binding effect and enforceability thereof, upon the
Opinion of Counsel, Officers' Certificate and other documents delivered
pursuant to Sections 2.01, 2.02, 11.04 and this Section, as applicable, at or
prior to the time of the first authentication of Securities of such series
unless and until such opinion, certificate or other documents have been
superseded or revoked. In connection with the authentication and delivery of
Securities of a series and any coupons which are not all issued at one time,
the Trustee shall be entitled to assume that the Company's instructions to
authenticate and deliver such Securities do not violate any rules, regulations
or orders of any governmental agency or commission having jurisdiction over
the Company.
Each Registered Security shall be dated the date of its authentication and
each Bearer Security (including any temporary Bearer Security in global form)
shall be dated as of the date specified as contemplated by Section 2.02.
Section 2.05. Registrar, Paying Agent, Conversion Agent and Authenticating
Agent.
The Company shall maintain an office or agency where Registered Securities
of each series may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities of each series may be
presented for payment ("Paying Agent") and an office or agency where
Securities of each series that is convertible may be presented for conversion
("Conversion Agent") and (but without duplication) such offices or agencies in
such locations and for such purposes as may be required as contemplated by
Section 4.01. The Registrar shall keep a register of the Registered Securities
of each series issued hereunder and of their transfer and exchange. The
Company may have one or more co-Registrars (provided that there shall be only
one register, which shall be maintained by the principal Registrar), one or
more additional paying agents and one or more additional conversion agents
with respect to any series. The term "Paying Agent" includes any additional
paying agent and the term "Conversion Agent" includes any additional
conversion agent.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company shall promptly notify
the Trustee of the name and address of any such Agent. If the Company fails to
maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall act
as such.
The Company initially appoints the Trustee Registrar and Paying Agent for
each series and Conversion Agent for any series that is convertible.
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The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original
issue or upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 2.09 and Securities so authenticated shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall
be deemed to include authentication and delivery on behalf of the Trustee by
an Authenticating Agent and a certificate of authentication executed on behalf
of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized
and doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at
least annually pursuant to law or to the requirements of said supervising or
examining authority, then, for the purposes of this Section, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating
Agent shall be a party, or any corporation succeeding to all or substantially
all the corporate agency or corporate trust business of such Authenticating
Agent, shall continue to be an Authenticating Agent, provided such corporation
shall be otherwise eligible under this Section, without the execution or
filing of any paper or any further act on the part of the Trustee or such
Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in the case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give written notice
of such appointment to all Holders of Securities of the series with respect to
which such Authenticating Agent will serve in the manner and to the extent
provided in Section 11.02. Any successor Authenticating Agent upon acceptance
of its appointment hereunder shall become vested with all the rights, powers
and duties of its predecessor hereunder, with like effect as if originally
named as an Authenticating Agent. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.
If an appointment of an Authenticating Agent with respect to one or more
series is made pursuant to this Section, the Securities of such series may
have endorsed thereon, in addition to or in lieu of the Trustee's certificate
of authentication, an alternative certificate of authentication in the
following form:
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CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein and referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:
----------------------------------
As Authenticating Agent
By:
----------------------------------
Authorized Signatory
Section 2.06. Paying Agent to Hold Money and Securities in Trust.
Prior to each due date of a principal payment in respect of any Security,
the Company shall deposit with the Paying Agent a sum of money or securities
sufficient to make such payment when so becoming due. Each Paying Agent shall
hold in trust for the benefit of Securityholders of the relevant series or the
Trustee all money and securities held by the Paying Agent for the payment of
any amount in respect of the Securities of such series, and shall notify the
Trustee of any default by the Company in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate such money
and securities and hold them as a separate trust fund. The Company at any time
may require a Paying Agent to pay all money and securities held by it to the
Trustee and account for any funds or securities disbursed. Upon doing so, the
Paying Agent shall have no further liability for the money or securities.
Section 2.07. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably practicable
the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee on or before either (1) April 1 and October 1 in each
year in the case of Original Issue Discount Securities of any series which by
their terms do not bear interest prior to maturity (other than upon a default
in any payment upon such a Security) or (2) the Interest Payment Date for
Securities of any other series, but in no event less frequently than semi-
annually, and at such other times as the Trustee may request in writing a list
in such form and as of such date as the Trustee may reasonably require of the
names and addresses of Securityholders included in the security register.
Section 2.08. Transfer and Exchange.
Upon presentation for registration of transfer of a Registered Security of
any series at the office or agency of the Company maintained for such purposes
in a place of payment for such series, the Company shall execute and the
Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Registered Securities of the same
series of any authorized denominations and of a like aggregate principal
amount, bearing a number not contemporaneously outstanding and containing
identical terms and provisions. Notwithstanding any other provision of this
Section, unless and until it is exchanged in whole or in part for Securities
in definitive form, a global Security representing all or a portion of the
Securities of or within a series may not be transferred except as a whole by
the depositary for such series to a nominee of such depositary or by a nominee
of such depositary to such depositary or another nominee of such depositary or
by such depositary or any such nominee to a successor depositary for such
series or a nominee of such successor depositary.
At the option of the Holder, Registered Securities of any series (other than
a global Security, except as provided below or as otherwise specified as
contemplated by Section 2.02) may be exchanged for other Registered Securities
of the same series of any authorized denominations and of a like aggregate
principal
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amount and containing identical terms and provisions, upon surrender of the
Securities to be exchanged at any such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive. Unless otherwise specified with respect
to any series of Securities as contemplated by Section 2.02, Bearer Securities
may not be delivered by the Trustee in exchange for Registered Securities.
If so provided pursuant to Section 2.02 with respect to the Securities of
any series, at the option of the Holder, Bearer Securities of such series
(other than a global Security, except as provided below or as otherwise
specified as contemplated by Section 2.02) may be exchanged for Registered
Securities of such series containing identical terms of any authorized
denominations and of a like aggregate principal amount, upon surrender of the
Bearer Securities to be exchanged at any office or agency maintained by the
Company for such purpose in a place of payment for such series, with all
unmatured coupons and all matured coupons in default thereto appertaining. If
the Holder of a Bearer Security is unable to produce any unmatured coupon or
coupons or matured coupon or coupons in default, such exchange may be effected
if the Bearer Securities are accompanied by payment in funds acceptable to the
Company in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by
the Company and the Trustee if there is furnished to them such security or
indemnity as they may require to save each of them and any Paying Agent
harmless. If thereafter the Holder of such Security shall surrender to any
Paying Agent any such missing coupon in respect of which such a payment shall
have been made, such Holder shall be entitled to receive the amount of such
payment, provided, however, that, except as otherwise provided in Section
4.01, interest represented by coupons shall be payable only upon presentation
and surrender of those coupons at an office or agency located outside the
United States. Notwithstanding the foregoing, in case a Bearer Security of any
series is surrendered at any such office or agency for such series in exchange
for a Registered Security of the same series and like tenor after the close of
business at such office or agency (i) on any Regular Record Date and before
the opening of business at such office or agency on the relevant Interest
Payment Date, or (ii) on any special record date and before the opening of
business at such office or agency on the related date for payment of defaulted
interest, such Bearer Security shall be surrendered without the coupon
relating to such Interest Payment Date or proposed date of payment, as the
case may be, and interest or defaulted interest, as the case may be, will not
be payable on such Interest Payment Date or proposed date of payment, as the
case may be, in respect of the Registered Security issued in exchange for such
Bearer Security, but will be payable only to the Holder of such coupon in
accordance with the provisions of this Indenture.
Whenever any Securities are so surrendered for exchange pursuant to the
immediately preceding paragraph, the Company shall execute, and the Trustee
shall authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive.
Except as otherwise provided with respect to the Securities of any series as
contemplated by Section 2.02, a global Security may be exchanged only as
provided below in this Section.
If at any time the depositary with respect to a global Security representing
all or a portion of the Securities of or within a series notifies the Company
that it is unwilling, unable or ineligible to continue as such depositary, the
Company shall appoint a successor depositary with respect to such Securities.
Unless otherwise provided with respect to a series of Securities as
contemplated by Section 2.02, if a successor depositary is not so appointed by
the Company within 90 days after the Company receives such notice, the Company
will execute and the Trustee, upon receipt of a written order of the Company
as contemplated by Section 2.04 for the authentication and delivery of
definitive Securities of such series (or, if such written order has previously
been delivered, then upon receipt of written instructions from the person or
persons specified in such written order), will authenticate and deliver
Securities of such series in definitive form equal in aggregate principal
amount to the principal amount of the global Security or Securities
representing such series in exchange for such global Security or Securities.
The Company may at any time and in its sole discretion determine that the
Securities of any series issued in the form of one or more global Securities
shall no longer be represented by such global Security or Securities. In
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such event the Company will execute and the Trustee, upon receipt of a written
order of the Company as contemplated by Section 2.04 for the authentication
and delivery of definitive Securities of such series (or, if such written
order has previously been delivered, then upon receipt of written instructions
from the person or persons specified in such written order), will authenticate
and deliver Securities of such series in definitive form equal in aggregate
principal amount to the principal amount of the global Security or Securities
representing such series in exchange for such global Security or Securities.
If a global Security is otherwise exchangeable as specified by the Company
pursuant to Section 2.02(3) with respect to a series of Securities, the
depositary with respect to a global Security representing all or a portion of
the Securities of or within such series may surrender such global Security to
the Trustee, as the Company's agent for such purpose, to be exchanged in whole
or in part for Securities of such series in definitive form in the manner and
under the circumstances so specified and on such terms as are acceptable to
the Company and such depositary. In such event, the Company shall execute and
the Trustee shall authenticate and deliver or make available for delivery:
(i) to each person specified by such depositary a new Security or
Securities of the same series and of like tenor, of any authorized form and
denomination as requested by such person in aggregate principal amount
equal to and in exchange for such person's beneficial interest in the
global Security; and
(ii) unless endorsement of the surrendered global Security as
contemplated by Section 2.10 or another procedure is specified for the
Securities of such series as contemplated by Section 2.02, to such
depositary a new global Security in a denomination equal to the difference,
if any, between the principal amount of the surrendered global Security and
the aggregate principal amount of Securities delivered pursuant to clause
(i) above in exchange for beneficial interests in such surrendered global
Security.
In any exchange provided for in any of the preceding three paragraphs, the
Company will execute and the Trustee will authenticate and deliver Securities
(a) in definitive registered form in authorized denominations if the
Securities of such series are issuable as Registered Securities, (b) in
definitive bearer form in authorized denominations if the Securities of such
series are issuable as Bearer Securities or (c) as either Registered or Bearer
Securities, if the Securities of such series are issuable in either form;
provided, however, that no definitive Bearer Security shall be delivered in
exchange for a portion of a global Security except in compliance with the
conditions set forth in Section 2.04 or specified with respect to the
Securities of such series as contemplated by Section 2.02 (including
certification requirements and requirements with respect to delivery outside
the United States).
Upon the exchange of a global Security for Securities in definitive form,
such global Security shall be cancelled by the Trustee, unless endorsement of
the surrendered global Security as contemplated by Section 2.10 or another
procedure is specified for the Securities of such series as contemplated by
Section 2.02. Registered Securities issued in exchange for a global Security
pursuant to this Section shall be registered in such names and in such
authorized denominations as the depositary for such global Security, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Registered Securities to
the persons in whose names such Securities are so registered. Subject to the
proviso clause of the immediately preceding paragraph, the Trustee shall
deliver Bearer Securities issued in exchange for a global Security pursuant to
this Section to the persons, and in such authorized denominations, as the
depositary for such global Security, pursuant to instructions from its direct
or indirect participants or otherwise, shall instruct the Trustee.
If a Registered Security is issued in exchange for any portion of a global
Security after the close of business at the office or agency where such
exchange occurs (i) on any Regular Record Date and before the opening of
business at such office or agency on the relevant Interest Payment Date, or
(ii) on any special record date and before the opening of business at such
office or agency on the related date for payment of defaulted interest,
interest or defaulted interest, as the case may be, will not be payable on
such Interest Payment Date or proposed date for payment, as the case may be,
in respect of such Registered Security, but will be payable on such Interest
Payment Date or proposed date for payment, as the case may be, only to the
person to whom interest in respect of such portion of such global Security is
payable in accordance with the provisions of this Indenture.
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All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Registered Security presented or surrendered for registration of
transfer or for exchange shall be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made for any registration of transfer or exchange
of Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto.
The Company shall not be required to issue, register the transfer of or
exchange Securities of any series during a period beginning at the opening of
business 15 days before any selection of Securities of that series to be
redeemed and ending at the close of business on (A) if Securities of the
series are issuable only as Registered Securities, the date of the mailing of
the relevant notice of redemption and (B) if Securities of the series are
issuable as Bearer Securities, the date of the first publication of the
relevant notice of redemption or, if Securities of such series are also
issuable as Registered Securities and there is no publication, the date of the
mailing of the relevant notice of redemption. Further, the Company shall not
be required to register the transfer of or exchange any Security selected for
redemption or purchase (except, in the case of Securities to be redeemed or
purchased in part, the portion thereof not to be redeemed or purchased), and
the Company shall not be required to issue, register the transfer of or
exchange any Security in respect of which a notice requiring the purchase or
redemption thereof by the Company at the option of the Holder has been given
and not withdrawn by the Holder thereof in accordance with the terms of such
Securities (except, in the case of Securities to be so purchased or redeemed
in part, the portion thereof not to be so purchased or redeemed); provided,
however, that a Bearer Security so selected for redemption or purchase or in
respect of which a notice requiring the purchase or redemption thereof by the
Company at the option of the Holder has been given and not so withdrawn may,
if so provided with respect to the Securities of such series as contemplated
by Section 2.02, be exchanged for a Registered Security of that series and
like tenor, provided that such Registered Security shall simultaneously be
surrendered for redemption or purchase, as the case may be, with written
instructions for payment consistent with the provisions of this Indenture.
Section 2.09. Replacement Securities.
If (i) a mutilated Security or a Security with a mutilated coupon
appertaining to it is surrendered to the Trustee or (ii) the Company and the
Trustee receive evidence to their satisfaction that a Security or coupon
appertaining thereto has been lost, destroyed or wrongfully taken, and there
is delivered to the Company and the Trustee such security or indemnity as may
be required by them to save each of them and any Agent harmless, then, in the
absence of notice to the Company or the Trustee that such Security or coupon
has been acquired by a bona fide purchaser, and if the Trustee's requirements
are met, the Company shall execute and upon its written request the Trustee
shall authenticate and deliver, in exchange for any such mutilated Security or
Security with a mutilated coupon appertaining to it or to which a lost,
destroyed or wrongfully-taken coupon appertains (with all appurtenant coupons
not lost, destroyed or wrongfully taken) or in lieu of any such lost,
destroyed or wrongfully-taken Security, a new Security of the same series
containing identical terms and of like principal amount and bearing a number
not contemporaneously outstanding, with coupons corresponding to the coupons,
if any, appertaining to the surrendered Security or to the lost, destroyed or
wrongfully-taken Security or to the Security to which such lost, destroyed or
wrongfully-taken coupon appertains, as applicable, provided, however, that
delivery of a Bearer Security shall occur only outside the United States.
In case any such mutilated, lost, destroyed or wrongfully-taken Security or
coupon has become or is about to become due and payable, or is about to be
purchased by the Company pursuant to any provision of the Securities of such
series providing for the purchase thereof at the option of the Holder or the
Company, the Company in its discretion may, instead of issuing a new Security,
pay or purchase such Security or pay such coupon, as applicable;
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provided, however, that payment of principal of, any interest on or any
Additional Amounts with respect to any Bearer Securities shall, except as
otherwise provided in Section 4.01, be payable only at an office or agency for
Securities of such series located outside the United States and, unless
otherwise provided in or pursuant to this Indenture, any interest on Bearer
Securities and any Additional Amounts with respect to such interest shall be
payable only upon presentation and surrender of the coupons appertaining
thereto.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected therewith.
Every new Security, with any coupons appertaining thereto, issued pursuant
to this Section in lieu of any lost, destroyed or wrongfully-taken Security,
or in exchange for a Security to which a lost, destroyed or wrongfully-taken
coupon appertains, shall constitute a separate obligation of the Company,
whether or not the lost, destroyed or wrongfully-taken Security and coupons
appertaining thereto or the lost, destroyed or wrongfully-taken coupon shall
be at any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any and all other
Securities of such series and any coupons, if any, duly issued hereunder.
The provisions of this Section, as amended or supplemented pursuant to this
Indenture with respect to particular Securities or generally, shall be
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, lost,
destroyed or wrongfully-taken Securities or coupons.
Section 2.10. Securities in Global Form.
If the Company shall establish pursuant to Section 2.02 that the Securities
of or within a series are to be issued in whole or in part in global form,
then the Company shall execute, and the Trustee shall, in accordance with
Section 2.04 and the written order of the Company contemplated thereby,
authenticate and deliver one or more global Securities in temporary or
permanent form that (i) shall be registered, if in registered form, in the
name of the depositary for such global Security or Securities or the nominee
of such depositary, (ii) shall be delivered by the Trustee to such depositary
or pursuant to such depositary's instructions, and (iii) shall bear a legend
substantially to the following effect: "Unless and until it is exchanged in
whole or in part for Securities in definitive form, this Security may not be
transferred except 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 or by the depositary or any such nominee to a successor depositary
or a nominee of such successor depositary." Each depositary designated
pursuant to Section 2.02 for a global Security in registered form must be, to
the extent required by applicable law or regulation, a clearing agency
registered under the Securities Exchange Act of 1934, as amended, and any
other applicable statute or regulation, at the time of its designation and at
all times that it serves as depositary. Notwithstanding clause (14) of Section
2.02 and the provisions of Section 2.03, any such global Security shall
represent such of the outstanding Securities of such series as shall be
specified therein and may provide that it shall represent the aggregate amount
of outstanding Securities of such series from time to time endorsed thereon
and that the aggregate amount of outstanding Securities represented thereby
may from time to time be increased or decreased to reflect exchanges. Any
endorsement of a Security in global form to reflect the amount, or any
increase or decrease in the amount, or changes in the rights of Holders, of
outstanding Securities represented thereby shall be made in such manner and
upon instructions given by such person or persons as shall be specified
therein or in the written order of the Company to be delivered to the Trustee
pursuant to Section 2.04. Subject to the provisions of Section 2.04 and, if
applicable, Section 2.11, the Trustee shall deliver and redeliver any Security
in permanent global form in the manner and upon instructions given by the
person or persons specified therein or in the applicable written order of the
Company. If a written order of the Company pursuant to Section 2.04 has been,
or simultaneously is, delivered, any instructions with respect to a Security
in global form shall be in writing but need not comply with Sections 11.04 and
11.05 and need not be accompanied by an Opinion of Counsel.
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The provisions of the last sentence of the third paragraph of Section 2.04
shall apply to any Security represented by a Security in global form if such
Security was never issued and sold by the Company and the Company delivers to
the Trustee the Security in global form together with written instructions
(which need not comply with Sections 11.04 and 11.05 and need not be
accompanied by an Opinion of Counsel) with regard to the reduction in the
principal amount of Securities represented thereby, together with the written
statement contemplated by the last sentence of the third paragraph of Section
2.04.
Section 2.11. Temporary Securities.
Pending the preparation of a permanent global Security or definitive
Securities of any series, the Company may execute and the Trustee, upon the
written order of the Company pursuant to Section 2.04, shall authenticate and
deliver temporary Securities. Temporary Securities of any series shall be in
authorized denominations and substantially of the tenor of the definitive
Securities of that series in lieu of which they are issued, in registered form
or, if authorized, in bearer form with one or more coupons or without coupons,
but may have variations that the Company considers appropriate for temporary
Securities. In the case of Securities of any series, such temporary Securities
may be in global form. If temporary Securities of any series are issued, the
Company will cause definitive Securities of that series to be prepared without
unreasonable delay. Except as otherwise specified as contemplated by Section
2.02 with respect to Securities of a series issuable as Bearer Securities, (a)
after the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company maintained for such purpose in a place of
payment for such series, without charge to the Holder, and (b) upon surrender
for cancellation of any one or more temporary Securities of any series
(accompanied by any unmatured coupons appertaining thereto) the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like aggregate principal amount of definitive Securities of authorized
denominations of the same series and containing identical terms and
provisions; provided, however, that, unless otherwise specified as
contemplated by Section 2.02, no definitive Bearer Security shall be delivered
in exchange for a temporary Registered Security and provided, further, that
neither a beneficial interest in a permanent global Security in bearer form
nor a definitive Bearer Security shall be delivered in exchange for a
temporary Security except in compliance with all applicable conditions set
forth in Section 2.04 or specified as contemplated by Section 2.02 (including
certification requirements and requirements with respect to delivery outside
the United States). Until so exchanged, the temporary Securities of any series
shall, except as otherwise specified as contemplated by Section 2.02
(including with respect to the payment of interest on temporary Securities),
in all respects be entitled to the same benefits under this Indenture as
definitive Securities of the same series and of like tenor authenticated and
delivered hereunder.
Section 2.12. Cancellation.
The Company at any time may deliver Securities and all coupons, if any,
appertaining thereto to the Trustee (or to an other person for delivery to the
Trustee) for cancellation, including Securities authenticated which the
Company has not issued and sold. The Company and each Agent shall forward to
the Trustee for cancellation any Securities and coupons surrendered to them
for transfer, exchange, payment, redemption, purchase by the Company pursuant
to any provision thereof providing for such purchase at the option of the
Holder, or conversion. The Trustee and no one else shall cancel all Securities
and coupons surrendered for transfer, exchange, payment, redemption, purchase,
conversion or cancellation, and may dispose of cancelled Securities and
coupons as the Company directs, provided, however, that the Trustee shall not
be required to destroy such cancelled Securities. Except as otherwise provided
in the resolution of the Board of Directors or indenture supplemental hereto
establishing such series as contemplated by Section 2.02, the Company may not
issue new Securities of a series to replace Securities of the same series that
it has paid or that have been delivered to the Trustee for cancellation.
Section 2.13. Payment of Interest; Defaulted Interest.
Unless otherwise provided with respect to the Securities of any series as
contemplated by Section 2.02, interest (except defaulted interest) on any
Registered Security of any series which is payable on any Interest
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Payment Date shall be paid to the Holder in whose name that Security (or one
or more Predecessor Securities) is registered on the security register at the
close of business on the Regular Record Date for such interest payment. At the
option of the Company, payment of interest on any Registered Security may be
made (i) by check mailed to the address of the person entitled thereto as such
address appears in the security register, or (ii) if so specified with respect
to the Securities of such series as contemplated by Section 2.02, by wire
transfer to an account designated by such person.
Unless otherwise provided with respect to the Securities of any series as
contemplated by Section 2.02, if the Company defaults in a payment of interest
on the Registered Securities of any series on any Interest Payment Date, it
shall pay the defaulted interest to the persons who are Securityholders of
such series at the close of business on a subsequent special record date. The
Company shall fix the record date and payment date. At least 15 days before
the record date, the Company shall mail to each Securityholder of such series
a notice that states the record date, the payment date and the amount of
defaulted interest to be paid. The Company shall notify the Trustee in writing
of the amount of defaulted interest proposed to be paid on each Registered
Security of such series and the date of the proposed payment, and at the same
time the Company shall deposit with the Paying Agent an amount of money equal
to the aggregate amount proposed to be paid in respect of such defaulted
interest or shall make arrangements satisfactory to the Paying Agent for such
deposit prior to the date of the proposed payment. The Company may pay
defaulted interest in any other lawful manner.
Unless otherwise provided with respect to the Registered Securities of any
series as contemplated by Section 2.02, in the case of any Registered Security
of any series which is converted after any Regular Record Date and on or prior
to the next succeeding Interest Payment Date (other than any Registered
Security which is due and payable prior to such Interest Payment Date),
interest which is due and payable on such Interest Payment Date shall be
payable on such Interest Payment Date notwithstanding such conversion, and
such interest shall be paid to the Holder in whose name that Registered
Security is registered at the close of business on such Regular Record Date.
If any Bearer Security of a series is surrendered in exchange for a
Registered Security of such series at an office or agency maintained by the
Company for such purpose in a place of payment for such series after the close
of business at such office or agency (i) on any Regular Record Date and before
the opening of business at such office or agency on the relevant Interest
Payment Date or (ii) on any special record date and before the opening of
business at such office or agency on the related date for payment of defaulted
interest, such Bearer Security shall be surrendered without the coupon
relating to such Interest Payment Date or proposed date of payment, as the
case may be, and interest or defaulted interest, as the case may be, will not
be payable on such Interest Payment Date or proposed date of payment, as the
case may be, in respect of the Registered Security issued in exchange for such
Bearer Security, but will be payable only to the Holder of such coupon when
due in accordance with the provisions of this Indenture. Unless otherwise
specified with respect to the Securities of any series pursuant to Section
2.02, any interest due on any Bearer Security on or before the maturity
thereof, and any Additional Amounts payable with respect to such interest,
shall be payable only upon presentation of the coupons appertaining thereto
for such interest as they severally mature. Unless otherwise specified with
respect to the Securities of any series pursuant to Section 2.02, at the
option of the Company, payment of interest on any Bearer Security may be made
by check (provided the same is not mailed to an address inside the United
States) or by wire transfer to an account located outside the United States
maintained by the payee.
Section 2.14. Persons Deemed Owners.
Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name such Registered Security is registered as
the owner of such Registered Security for the purpose of receiving payment of
principal of, and (subject to Sections 2.08 and 2.13) interest on and any
Additional Amounts with respect to, such Registered Security and for all other
purposes whatsoever, whether or not any payment with respect to such
Registered Security shall be overdue, and neither the Company, nor the Trustee
or any agent of the Company or the Trustee shall be affected by notice to the
contrary.
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Title to any Bearer Security and any coupons appertaining thereto shall pass
by delivery. The Company, the Trustee and any agent of the Company or the
Trustee may treat the bearer of any Bearer Security or the bearer of any
coupon as the absolute owner of such Security or coupon for the purpose of
receiving payment thereof or on account thereof and all other purposes
whatsoever, whether or not any payment with respect to such Security or coupon
shall be overdue, and neither the Company, nor the Trustee or any agent of the
Company or the Trustee shall be affected by notice to the contrary.
No holder of any beneficial interest in any global Security held on its
behalf by a depositary shall have any rights under this Indenture with respect
to such global Security, and such depositary (or its nominee, if such global
Security is in registered form and is registered in the name of a nominee) may
be treated by the Company, the Trustee, and any agent of the Company or the
Trustee as the owner of such global Security for all purposes whatsoever;
provided, however, that, if so specified as contemplated by Section 2.02, the
Company, the Trustee and any agent of the Company or the Trustee shall, to the
extent so specified, treat the clearing organization or organizations for
whose account a portion of a permanent global Security in bearer form is held
by the depositary thereof as the owner of the applicable portion of such
global Security. None of the Company, the Trustee, any Paying Agent or the
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security, nothing
herein shall prevent the Company, the Trustee, or any agent of the Company or
the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by any depositary, as a Holder, with respect to such
global Security or impair, as between such depositary and owners of beneficial
interests in such global Security, the operation of customary practices
governing the exercise of the rights of such depositary (or its nominee) as
Holder of such global Security.
ARTICLE THREE
Redemption
Section 3.01. Applicability of Article.
Securities of any series which are redeemable before their stated maturity
at the election of the Company or through the operation of any sinking fund
for the retirement of Securities of such series shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 2.02 for Securities of any series) in accordance with this Article.
Section 3.02. Notices to Trustee.
If the Company elects to redeem all or less than all the Securities of any
series, it shall notify the Trustee of the redemption date, the principal
amount of Securities to be redeemed, the specific provision of the Securities
pursuant to which the Securities being called for redemption are being
redeemed and the redemption price. In the case of any redemption of Securities
prior to the expiration of any restriction on such redemption provided in the
terms of such Securities or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officers' Certificate evidencing compliance with
such restriction. If the Company wants to make any permitted optional sinking
fund payment, it shall notify the Trustee of the principal amount of the
Securities to be redeemed.
The Company (1) may deliver outstanding Securities of a series (other than
any previously called for redemption), together in the case of any Bearer
Securities of such series with all unmatured coupons appertaining thereto, and
(2) may apply as a credit Securities of a series which (i) have been redeemed
or otherwise purchased either at the election of the Company pursuant to the
terms of such Securities or through the application of permitted optional
sinking fund payments pursuant to the terms of such Securities or (ii) have
been converted
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pursuant to the terms of such Securities, in each case in satisfaction of all
or any part of any sinking fund payment required to be made pursuant to the
terms of the Securities of such series as provided for by the terms of such
series; provided that such Securities have not been previously so credited.
Such Securities shall be received and credited for such purpose by the Trustee
at the redemption price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment
shall be reduced accordingly. The Company shall notify the Trustee of its
intention to so reduce the amount of such sinking fund payment, the amount of
the reduction and the basis for it. The Company shall deliver to the Trustee
with such notice any Securities to be credited for such purpose that it has
not previously delivered to the Trustee for cancellation.
The Company shall give each notice and Officers' Certificate provided for in
this Section at least 60 days before the redemption date (unless a shorter
notice shall be satisfactory to the Trustee or is otherwise specified as
contemplated by Section 2.02 for Securities of any series).
Section 3.03. Selection of Securities to be Redeemed.
Except as otherwise specified as contemplated by Section 2.02 for Securities
of any series, if less than all the Securities of any series are to be
redeemed, the particular Securities to be redeemed shall be selected from
Securities of the same series outstanding not previously called for redemption
by lot or by such method as the Trustee considers fair and appropriate (and in
such manner as complies with applicable requirements of any stock exchange on
which Securities of such series are listed) and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof)
of the principal amount of Securities of such series that have denominations
larger than the minimum authorized denomination for Securities of that series.
Provisions of this Indenture that apply to Securities called for redemption
also apply to portions of Securities called for redemption. If any Security
selected for partial redemption is converted in part after such selection but
before the termination of the conversion right with respect to the portion of
the Security so selected, the converted portion of such Security shall be
deemed (so far as may be practicable) to be the portion selected for
redemption.
Section 3.04. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date (unless
a shorter notice is specified as contemplated by Section 2.02 for the
Securities of any series), the Company shall provide a notice of redemption in
the manner provided in Section 11.02 to the Holders of Securities.
The notice shall identify the Securities (including CUSIP number, if any,
and, in the case of partial redemption, the principal amount of the
Securities) to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price and method of payment, if other than in cash;
(3) if applicable, the then current conversion price or rate;
(4) the name and address of the Paying Agent and, if applicable, the
Conversion Agent;
(5) if applicable, that the right of the Holder to convert Securities
called for redemption shall terminate at the close of business on the
fifteenth day prior to the redemption date (or such other day as may be
specified as contemplated by Section 2.02 for Securities of any series);
(6) if applicable, that Holders who want to convert Securities called for
redemption must satisfy the requirements for conversion contained in such
Securities;
(7) that Securities called for redemption must be surrendered (together
in the case of Bearer Securities with all coupons appertaining thereto, if
any, maturing after the redemption date) to the Paying Agent to collect the
redemption price;
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(8) that interest, if any (or original issue discount, if Original Issue
Discount Securities) on Securities called for redemption ceases to accrue
on and after the redemption date, unless the Company defaults in making
such redemption payment; and
(9) that the redemption is for a sinking fund or at the election of the
Company, whichever is the case.
A notice of redemption published as contemplated by Section 11.02 need not
identify particularly Registered Securities to be redeemed.
At the Company's request, the Trustee shall give the notice of redemption in
the Company's name and at the Company's expense, provided that the Company
shall have furnished to the Trustee the Officers' Certificate and Opinion of
Counsel required pursuant to Section 11.04 at least 15 days prior to the date
that the Trustee is required to take any action in connection with a
redemption.
Section 3.05. Effect of Notice of Redemption.
Once notice of redemption is provided, Securities of the series called for
redemption become due and payable on the redemption date and at the redemption
price therein specified and on and after such date (unless the Company shall
default in the payment of the redemption price and accrued interest, if any)
such Securities shall cease to bear interest, if any (and original issue
discount, if such Securities are Original Issue Discount Securities, shall
cease to accrue) and the coupons for such interest appertaining to any Bearer
Securities so to be redeemed, except to the extent provided below, shall be
void. Upon surrender of any such Security for redemption in accordance with
said notice, together with all coupons, if any, appertaining thereto maturing
after the redemption date, such Security shall be paid by the Company at the
redemption price, together with the accrued interest to the redemption date,
provided, however, that installments of interest on Bearer Securities whose
stated maturity is on or prior to the redemption date shall be payable only at
an office or agency maintained by the Company in a place of payment located
outside the United States (except as otherwise provided in Section 4.01) and,
unless otherwise specified as contemplated by Section 2.02, only upon
presentation and surrender of the coupons for such interest, and, provided,
further, that unless otherwise specified as contemplated by Section 2.02,
installments of interest on Registered Securities whose stated maturity is on
or prior to the redemption date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Regular Record Date or special record date,
as the case may be, according to their terms and the provisions of Section
2.13.
If any Bearer Security surrendered for redemption shall not be accompanied
by all appurtenant coupons maturing after the redemption date, such Security
may be paid after deducting from the redemption price an amount equal to the
face amount of all such missing coupons, or the surrender of such missing
coupon or coupons may be waived by the Company and the Trustee if there be
furnished to them such security or indemnity as they may require to save each
of them and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the
redemption price, such Holder shall be entitled to receive the amount so
deducted; provided, however, that interest represented by coupons shall be
payable only at an office or agency located outside the United States (except
as otherwise provided in Section 4.01) and, unless otherwise specified as
contemplated by Section 2.02, only upon presentation and surrender of those
coupons.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from
the redemption date at the rate prescribed therefor in the Security.
Section 3.06. Deposit of Redemption Price.
Unless otherwise provided as contemplated by Section 2.02 with respect to
any series of Securities, on or before 10 a.m., New York time, on the
redemption date, the Company shall deposit with the Paying Agent money in
immediately available funds (or securities if permitted by the terms of such
Securities) sufficient to pay the redemption price of, and (except if the
redemption date is an Interest Payment Date) accrued interest, if any, on
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all Securities to be redeemed on that date other than Securities or portions
thereof called for redemption on that date which are delivered by the Company
to the Trustee for cancellation. The Paying Agent shall return to the Company
any money (or securities) not required for that purpose because of conversion
of Securities.
Section 3.07. Securities Redeemed in Part.
Any Registered Security that is to be redeemed only in part shall be
surrendered at a place of payment therefor (with, if the Company, the
Registrar or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company, the Registrar and
the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service
charge, a new Registered Security or Registered Securities of the same series,
containing identical terms and provisions, of any authorized denomination as
requested by such Holder in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal amount of the Security so
surrendered, and, otherwise specified as contemplated by Section 2.02, if a
global Security is so surrendered, the Company shall execute, and the Trustee
shall authenticate and deliver to the depositary for such global Security,
without service charge, a new global Security in a denomination equal to an in
exchange for the unredeemed portion of the principal amount of the global
Security so surrendered.
Section 3.08. Conversion Arrangement on Call for Redemption.
In connection with any redemption of Securities, the Company may arrange for
the purchase and conversion of any Securities called for redemption by an
agreement with one or more investment bankers or other purchasers to purchase
such Securities by paying to the Trustee in trust for the Securityholders, on
or before the close of business on the redemption date, an amount in cash not
less than the redemption price, together with interest, if any, accrued to the
redemption date, of such Securities. Notwithstanding anything to the contrary
contained in this Article Three, the obligation of the Company to pay the
redemption price of such Securities, including all accrued interest, if any,
shall be deemed to be satisfied and discharged to the extent such amount is so
paid by such purchasers. If such an agreement is entered into, any Securities
not duly surrendered for conversion by the Holders thereof may, at the option
of the Company, be deemed, to the fullest extent permitted by law, acquired by
such purchasers from such Holders and (notwithstanding anything to the
contrary contained in Article Ten) surrendered by such purchasers for
conversion, all as of immediately prior to the close of business on the last
day on which Securities of such series called for redemption may be converted
in accordance with this Indenture and the terms of such Securities, subject to
payment of the above amount as aforesaid. The Trustee shall hold and pay to
the Holders whose Securities are selected for redemption any such amount paid
to it in the same manner as it would moneys deposited with it by the Company
for the redemption of Securities. Without the Trustee's prior written consent,
no arrangement between the Company and such purchasers for the purchase and
conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture, and the Company agrees to indemnify the Trustee from, and hold
it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.
ARTICLE FOUR
Covenants
Section 4.01. Payment of Securities; Maintenance of Office or Agency.
The Company shall pay the principal of and any interest on the Securities of
each series in accordance with the terms of the Securities of such series, any
coupons appertaining thereto, and this Indenture.
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To the extent enforceable under applicable law, the Company shall pay
interest on overdue principal at the rate borne by the Securities of such
series (unless a different rate is specified as contemplated by Section 2.02
for Securities of such series).
If Securities of a series are issuable only as Registered Securities, the
Company will maintain in each place of payment for such series an office or
agency where Securities of that series may be presented or surrendered for
payment, where Securities of that series may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company
in respect of the Securities of that series and this Indenture may be served.
If Securities of a series are issuable as Bearer Securities, the Company will
maintain (A) in the Borough of Manhattan, The City of New York, an office or
agency where any Registered Securities of that series may be presented or
surrendered for payment, where any Registered Securities of that series may be
surrendered for registration of transfer, where Securities of that series may
be surrendered for exchange, where notices and demands to or upon the Company
in respect of the Securities of that series and this Indenture may be served
and where Bearer Securities of that series and related coupons may be
presented or surrendered for payment in the circumstances described in the
following paragraph (and not otherwise), (B) subject to any laws or
regulations applicable thereto, in a place of payment for that series which is
located outside the United States, an office or agency where Securities of
that series and related coupons may be presented and surrendered for payment
(including payment of any Additional Amounts payable on Securities of that
series); provided, however, that if the Securities of that series are listed
on The International Stock Exchange of the United Kingdom and the Republic of
Ireland, the Luxembourg Stock Exchange or any other stock exchange located
outside the United States and such stock exchange shall so require, the
Company will maintain a Paying Agent for the Securities of that series in
London, Luxembourg or any other required city located outside the United
States, as the case may be, so long as the Securities of that series are
listed on such exchange, and (C) subject to any laws or regulations applicable
thereto, in a place of payment for that series located outside the United
States an office or agency where any Registered Securities of that series may
be surrendered for registration of transfer, where Securities of that series
may be surrendered for exchange and where notices and demands to or upon the
Company in respect of the Securities of that series and this Indenture may be
served. The Company will give prompt written notice to the Trustee and the
Holders of the location, and any change in the location, of any such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency in respect of any series of Securities or shall fail to
furnish the Trustee with the address thereof, such presentations and
surrenders of Securities of that series may be made and notices and demands
may be made or served at the corporate trust office of the Trustee, except
that Bearer Securities of that series and the related coupons shall be
presented and surrendered for payment (including payment of any additional
amounts payable on Bearer Securities of that series) at The Bank of New York,
46 Berkeley Street, London W1X 6AA, England, and the Company hereby appoints
the same as its agency to receive such respective presentations, surrenders,
notices and demands.
No payment of principal of or interest on Bearer Securities shall be made at
any office or agency of the Company in the United States or by check mailed to
any address in the United States or by transfer to an account maintained with
a bank located in the United States, provided, however, that, if the
Securities of a series are denominated and payable in Dollars, payment of
principal of and interest on any Bearer Security (including any Additional
Amounts payable on Securities of such series) shall be made at the office of
the Company's Paying Agent in the Borough of Manhattan, The City of New York,
if (but only if) payment in Dollars of the full amount of such principal of or
interest on or additional amounts, as the case may be, at all offices or
agencies outside the United States maintained for that purpose by the Company
in accordance with this Indenture is illegal or effectively precluded by
exchange controls or other similar restrictions.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an
office or agency in accordance with the requirements set forth above for
Securities of any series for such purposes. The Company will give prompt
written notice to the Trustee and the Holders of any such designation or
rescission and of any change in the location of any such other office or
agency.
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If any Securities of a series provide for the payment of Additional Amounts,
the Company will pay to the Holder of any such Security of such series or any
coupon appertaining thereto Additional Amounts as provided therein. Whenever
in this Indenture there is mentioned, in any context, the payment of the
principal of or interest on or in respect of, any Security of any series or
payment of any related coupon or the net proceeds received on the sale or
exchange of any Security of any series, such mention shall be deemed to
include mention of the payment of Additional Amounts provided for in the terms
of such Securities and this Section to the extent that, in such context,
Additional Amounts are, were or would be payable in respect thereof pursuant
to such terms and this Section and express mention of the payment of
Additional Amounts (if applicable) in any provisions hereof shall not be
construed as excluding Additional Amounts in those provisions hereof where
such express mention is not made.
Except as otherwise provided with respect to the Securities of any series as
contemplated by Section 2.02, if the Securities of a series provide for the
payment of Additional Amounts, at least 10 days prior to the first Interest
Payment Date with respect to that series of Securities (or if the Securities
of that series will not bear interest prior to the maturity thereof, the first
day on which a payment of principal is made), and at least 10 days prior to
each date of payment of principal or interest if there has been any change
with respect to the matters set forth in the below-mentioned Officers'
Certificate, the Company will furnish the Trustee and the principal Paying
Agent or Paying Agents, if other than the Trustee, with an Officers'
Certificate instructing the Trustee and such Paying Agent or Paying Agents
whether such payment of principal or interest on the Securities of that series
shall be made to Holders of Securities of that series or any related coupons
who are United States Aliens without withholding for or on account of any tax,
assessment or other governmental charge described in the Securities of that
series. If any such withholding shall be required, then such Officers'
Certificate shall specify by country the amount, if any, required to be
withheld on such payments to such Holders of Securities or coupons and the
Company will pay to the Trustee or such Paying Agent the Additional Amounts
required by the terms of such Securities and this Section. The Company
covenants to indemnify the Trustee and any Paying Agent for, and to hold them
harmless against, any loss, liability or expense reasonably incurred without
negligence or bad faith on their part arising out of or in connection with
actions taken or omitted by any of them in reliance on any Officers'
Certificate furnished pursuant to this Section.
Section 4.02. Limitation on Restricted Subsidiary Funded Debt.
As long as any Securities of a series entitled to the benefit of this
covenant are outstanding the Company will not permit any Restricted Subsidiary
to incur or assume any Funded Debt if immediately after the incurrence or
assumption of such Funded Debt, the aggregate outstanding principal amount of
all Funded Debt of the Restricted Subsidiaries would exceed fifteen percent
(15%) of the Maximum Funded Debt Amount. Notwithstanding the foregoing, any
Restricted Subsidiary may incur Funded Debt to extend, refinance, renew or
replace Funded Debt of such Restricted Subsidiary, provided that the principal
of the Funded Debt so incurred does not exceed the principal of the Funded
Debt extended, refinanced, renewed or replaced thereby immediately prior to
such extension, refinancing, renewal or replacement, plus any premium, accrued
and unpaid interest or capitalized interest payable thereon, reasonable fees
incurred in connection therewith, and the amount of any prepayment premium
necessary to accomplish any refinancing.
Section 4.03. Designation of Restricted Subsidiaries.
As long as any Securities of a series entitled to the benefit of this
covenant are outstanding, with respect to the Securities of any series, the
Company may designate an Unrestricted Subsidiary as a Restricted Subsidiary or
designate a Restricted Subsidiary as an Unrestricted Subsidiary at any time,
provided that (1) immediately after giving effect to such designation, the
Leverage Ratio of the Restricted Group is not greater than 8.0:1 and the
Company and the Restricted Subsidiaries are in compliance with Sections 4.02
and 4.04, and (2) an Officers' Certificate with respect to such designation is
delivered to the Trustee within 75 days after the end of the fiscal quarter of
the Company in which such designation is made (or, in the case of a
designation made during the last fiscal quarter of any fiscal year of the
Company, within 120 days after the end of such fiscal year), which
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Officers' Certificate shall state the effective date of such designation; the
Company shall make the initial designation of Restricted Subsidiaries with
respect to the Securities of any series, and deliver the required Officers'
Certificate with respect thereto to the Trustee, on or prior to the date of
initial issuance of Securities of such series.
Section 4.04. Limitation on Liens.
(a) As long as any Securities of a series entitled to the benefit of this
covenant are outstanding, the Company will not, and will not permit any
Subsidiary to, create, incur or assume any Lien, except for Permitted Liens, on
any Property to secure the payment of Funded Debt of the Company or any
Subsidiary if, immediately after the creation, incurrence or assumption of such
Lien, the aggregate outstanding principal amount of all Funded Debt of the
Company and the Subsidiaries that is secured by Liens (other than Permitted
Liens) on Property would exceed ten percent (10%) of Total Consolidated Assets,
unless in any such case the Company makes effective provision whereby the
Securities (together with, if the Company shall so determine, any other Funded
Debt ranking equally with the Securities, whether then existing or thereafter
created) are secured equally and ratably with (or prior to) such Funded Debt
(but only for so long as such Funded Debt is so secured). (For the purpose of
providing such equal and ratable security the principal amount of the
Securities means that principal amount or portion thereof that could be
declared to be due and payable pursuant to Section 6.02 on the date of the
creation, incurrence or assumption of the Lien and the extent of such equal and
ratable security will be adjusted as and when said principal amount or portion
thereof changes over time pursuant to Section 6.02 and any other provision of
this Indenture or such Securities.)
(b) The provisions of Section 4.04(a) shall not apply to the creation,
incurrence or assumption of the following Liens ("Permitted Liens"):
(1) Any Lien which arises out of a judgment or award against the Company
or any Subsidiary with respect to which the Company or such Subsidiary at
the time shall be prosecuting an appeal or proceeding for review (or with
respect to which the period within which such appeal or proceeding for
review may be initiated shall not have expired) and with respect to which
it shall have secured a stay of execution pending such appeal or
proceedings for review or with respect to which the Company or such
Subsidiary shall have posted a bond and established adequate reserves (in
accordance with generally accepted accounting principles) for the payment
of such judgment or award;
(2) Liens on assets or property of a person existing at the time such
person is merged into or consolidated with the Company or any Subsidiary or
becomes a Subsidiary; provided, that such Liens were in existence prior to
the contemplation of such merger, consolidation or acquisition and do not
secure any Property of the Company or any Subsidiary other than the
property and assets subject to the Liens prior to such merger,
consolidation or acquisition;
(3) with respect to Securities of any series, Liens existing on the date
of original issuance of such Securities;
(4) Liens securing Funded Debt (including in the form of Capitalized
Lease Obligations and purchase money indebtedness) incurred for the purpose
of financing the cost (including without limitation the cost of design,
development, site acquisition, construction, integration, manufacture or
acquisition) of real or personal Property (tangible or intangible) which is
incurred contemporaneously therewith or within 60 days thereafter; provided
(i) such Liens secure Funded Debt in an amount not in excess of the cost of
such Property (plus an amount equal to the reasonable fees and expenses
incurred in connection with the incurrence of such Funded Debt) and (ii)
such Liens do not extend to any Property of the Company or any Subsidiary
other than the Property for which such Funded Debt was incurred;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
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(6) Liens to secure the Securities;
(7) Liens granted in favor of the Company or any Subsidiary; and
(8) Any Lien representing the extension, refinancing, renewal or
replacement (or successive extensions, refinancings, renewals or
replacements) of Liens referred to in clauses (2), (3), (4), (5), (6) and
(7) above, provided that the principal of the Funded Debt secured thereby
does not exceed the principal of the Funded Debt secured thereby
immediately prior to such extension, renewal or replacement, plus any
accrued and unpaid interest or capitalized interest payable thereon,
reasonable fees and expenses incurred in connection therewith, and the
amount of any prepayment premium necessary to accomplish any refinancing;
provided, that such extension, renewal or replacement shall be limited to
all or a part of the Property (or interest therein) subject to the Lien so
extended, renewed or replaced (plus improvements and construction on such
Property).
Section 4.05. SEC Reports.
The Company shall file with the Trustee within 15 days after it files them
with the SEC copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the
SEC may by rules and regulations prescribe) which the Company is required to
file with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. The Company also shall comply with the other provisions of TIA
(S) 314(a).
Section 4.06. Compliance Certificate.
The Company shall, within 120 days after the end of each fiscal year of the
Company, commencing with the first fiscal year following the issuance of
Securities of any series under this Indenture, file with the Trustee a
certificate of the principal executive officer, principal financial officer or
principal accounting officer of the Company covering the period from the date
of issuance of such Securities to the end of the fiscal year in which such
Securities were issued, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the knowledge of the signer, the Company has
complied with all conditions and covenants on its part contained in this
Indenture, and, if the signer has obtained knowledge of any default by the
Company in the performance, observance or fulfillment of any such condition or
covenant, specifying each such default and the nature thereof. For the purpose
of this Section 4.06, compliance shall be determined without regard to any
grace period or requirement of notice provided pursuant to the terms of this
Indenture. The certificate need not comply with Section 11.05.
The Company shall deliver to the Trustee within 120 days after the end of
each fiscal year of the Company a written statement signed by the Company's
independent auditors stating (1) that their audit examination has included a
review of the terms of this Indenture and the Securities as they relate to
accounting matters, and (2) whether, in connection with their audit
examination, any Event of Default has come to their attention and if such an
Event of Default has come to their attention, specifying the nature and period
of existence thereof.
Section 4.07. Corporate Existence.
Subject to the provisions of Section 5.01 hereof, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence.
Section 4.08. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 4.02 to 4.04, inclusive, with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the outstanding
Securities of such series shall either waive such compliance in such instance
or generally waive compliance with such term, provision or condition, but no
such waiver shall extend to or affect such term, provision or condition except
to the extent so
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expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any
such term, provision or condition shall remain in full force and effect.
Section 4.09. No Lien Created.
This Indenture and the Securities do not create a Lien, charge or
encumbrance on any property of the Company or any Subsidiary.
Section 4.10. Calculation of Original Issue Discount.
The Company shall file with the Trustee promptly at the end of each calendar
year a written notice specifying the amount of original issue discount
(including daily rates and accrual periods) accrued on outstanding Securities
as of the end of such year.
ARTICLE FIVE
Successor Corporation
Section 5.01. When Company May Merge, etc.
The Company shall not consolidate with or merge into, or transfer its
properties and assets substantially as an entirety to, another corporation
unless (1) the successor corporation, which shall be a corporation organized
and existing under the laws of the United States or a State thereof, assumes
by supplemental indenture all the obligations of the Company under the
Securities and any coupons appertaining thereto and this Indenture, and (2)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing. Thereafter, unless otherwise
specified as contemplated by Section 2.02 for the Securities of any series and
any related coupons, all such obligations of the predecessor corporation shall
terminate.
ARTICLE SIX
Defaults and Remedies
Section 6.01. Events of Default.
An "Event of Default" with respect to Securities of any series means each
one of the events specified below in this Section 6.01, unless it is either
inapplicable to a particular series or is specifically deleted or modified as
contemplated by Section 2.02 for the Securities of such series, and any other
events as may be specified as contemplated by Section 2.02 for the Securities
of such series:
(1) the Company defaults in the payment of any interest on any Security
of that series when the same becomes due and payable and the default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of any Security
of that series when the same becomes due and payable at maturity, upon
redemption (including default in the making of any mandatory sinking fund
payment), upon purchase by the Company at the option of the Holder pursuant
to the terms of such Security or otherwise;
(3) the Company fails to comply with any of its other agreements in
Securities of that series or this Indenture (other than an agreement which
has expressly been included in this Indenture solely for the benefit of
Securities of any series other than that series or is expressly made
inapplicable to the Securities of such series as contemplated by Section
2.02) and the default continues for the period and after the notice
specified below;
(4) the happening of an event of default as defined in any mortgage,
indenture or instrument under which there may be issued or by which there
may be secured or evidenced any Debt of the Company (including an Event of
Default under this Indenture with respect to Securities of any series other
than that series), whether
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now existing or hereafter created, which event of default shall have
resulted in Debt of the Company becoming or being declared due and payable
prior to the date on which it would otherwise have become due and payable
if the aggregate principal amount (or, if applicable, with an issue price
plus accrued original issue discount) of such Debt is in excess of five
percent (5%) of the aggregate principal amount of the Company's Funded Debt
then outstanding, unless, within the period and after the notice specified
below, such acceleration has been rescinded or annulled, such Debt has been
paid or the Company shall have contested such acceleration in good faith
and by appropriate proceedings and have obtained and thereafter maintained
a stay of all consequences thereof that would have a material adverse
effect on the Company; provided, however, that if after the expiration of
such period, such event of default shall be remedied or cured by the
Company or be waived by the holders of such Debt in any manner authorized
by such mortgage, indenture or instrument or shall otherwise cease to
exist, then the Event of Default hereunder by reason thereof shall, without
further action by the Company, the Trustee or any Holder, be deemed cured
and not continuing;
(5) the Company pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or consents to the commencement of a
case against it,
(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors;
(6) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case or
adjudicates the Company insolvent or bankrupt,
(B) appoints a Custodian of the Company or for all or substantially
all of its property, or
(C) orders the winding up or liquidation of the Company, and the
order or decree remains unstayed and in effect for 90 days; or
(7) any other Event of Default provided with respect to Securities of
that series occurs.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or State law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
A Default under clause (3) or clause (4) is not an Event of Default until
the Trustee notifies the Company or the Holders of at least 25% in aggregate
principal amount of the outstanding Securities of that series notify the
Company and the Trustee of the Default and the Company does not cure the
Default within 30 days after receipt of the notice. The notice must specify
the Default, demand that it be remedied and state that the notice is a "Notice
of Default."
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in Section
6.01(5) or (6)) occurs and is continuing with respect to Securities of any
series at the time outstanding, the Trustee by notice to the Company, or the
Holders of at least 25% in aggregate principal amount of the outstanding
Securities of that series by notice to the Company and the Trustee, may
declare to be due and payable immediately (1) the principal amount (or, if
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of Securities of that
series) of all of the Securities of that series then outstanding and
(2) interest, if any, accrued to the date of acceleration. Upon such
declaration, such principal amount (or specified amount) and interest, if any,
shall be due and payable immediately. If an Event of Default specified in
Section 6.01(5) or (6) occurs and is continuing, (1) the principal amount (or,
if the Securities of that series are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of the
Securities of that series) of all of the Securities of that series then
outstanding and (2) interest, if any, accrued to the date of
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such acceleration, shall become and be immediately due and payable without any
declaration or other act on the part of the Trustee or Securityholders. The
Holders of a majority in aggregate principal amount of the outstanding
Securities of the series with respect to which an acceleration applies by
notice to the Trustee may rescind an acceleration and its consequences with
respect to such series if all existing Events of Default (other than the non-
payment of the principal of and accrued interest, if any, on Securities that
have become due solely by such acceleration) with respect to Securities of
that series have been cured or waived and if the rescission would not conflict
with any judgment or decree. In the event of a declaration of acceleration
under this Indenture with respect to Securities of any series because an Event
of Default set forth in Section 6.01(4) has occurred and is continuing, such
declaration of acceleration shall be automatically annulled if (a) as a result
of the contest by the Company in appropriate proceedings of the acceleration
of the Debt which is the subject of such Event of Default the acceleration of
such indebtedness is declared void ab initio, or (b) within 90 days of such
declaration of acceleration under this Indenture the declaration of
acceleration of the Debt which is the subject of such Event of Default has
been rescinded or annulled in any manner authorized by the mortgage, indenture
or instrument evidencing or creating such Debt and, in the case of this clause
(b), the annulment of the declaration of acceleration under this Indenture
would not conflict with any judgment or decree, and, in either case, all other
existing Events of Default (other than the non-payment of the principal of and
accrued interest, if any, on Securities that have become due solely by such
acceleration) with respect to Securities of that series have been cured or
waived. No such rescission or annulment shall affect any subsequent default or
impair any right consequent thereon.
Section 6.03. Other Remedies.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may pursue any available remedy by proceeding at
law or in equity to collect the payment of the whole amount which then shall
have become due and remain unpaid for principal or interest, if any, on the
Securities of that series and any related coupons or to enforce the
performance of any provision of the Securities of that series or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the
Securities of that series or any related coupons or does not produce any of
them in the proceeding. A delay or omission by the Trustee or any Holder of
Securities or related coupons, if any, in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 6.04. Waiver of Existing Defaults.
Subject to Section 9.02, the Holders of a majority in aggregate principal
amount of the outstanding Securities of any series by notice to the Trustee
may waive on behalf of the Holders of all the Securities of such series and
any related coupons an existing Default or Event of Default and its
consequences. When a Default or Event of Default is waived, it is cured and
stops continuing.
Section 6.05. Control by Majority.
The Holders of a majority in aggregate principal amount of the outstanding
Securities of any series may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it, with respect to the Securities of such series. The
Trustee, however, may refuse to follow any direction that conflicts with law
or this Indenture, that is unduly prejudicial to the rights of another
Securityholder or that would involve the Trustee in personal liability.
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Section 6.06. Limitation on Suits.
No Holder of any Security of any series or any related coupons shall have
the right to pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice of a continuing Event
of Default with respect to the Securities of that series;
(2) the Holders of at least 25% in aggregate principal amount of the
outstanding Securities of that series make a written request to the Trustee
to pursue the remedy;
(3) such Holder or Holders offer and provide to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the outstanding Securities of such series.
A Securityholder of any series may not use this Indenture to prejudice the
rights of another Securityholder of such series or to obtain a preference or
priority over another Securityholder of such series, except in the manner
herein provided and for the equal and ratable benefit of all Securityholders
of such series.
Section 6.07. Rights of Holders to Receive Payment and to Convert.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security or a coupon to receive payment of principal of and
(subject to Sections 2.08 and 2.13) interest, if any, on the Security or
payment on such coupon, on or after the respective due dates with respect to
such payments expressed in such Security or coupon, and, if applicable, to
convert such Security on the terms and subject to the conditions applicable to
Securities of such series, or to bring suit for the enforcement of any such
payment on or after such respective dates or of such right to convert, if any,
shall not be impaired or affected without the consent of the Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2) occurs and is
continuing with respect to the Securities of any series, the Trustee may
recover judgment in its own name and as trustee of an express trust against
the Company for the whole amount which then shall have become due and remain
unpaid for principal and interest, if any, on the Securities of such series
and any related coupons.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee and
the Securityholders (including the Holders of any coupons) allowed in any
judicial proceedings relative to the Company, its creditors or its property
and to collect and receive money, property or securities payable or
deliverable on any such claims and to distribute the same.
Section 6.10. Priorities.
Any money collected by the Trustee pursuant to this Article shall be applied
in the following order, at the date or dates fixed by the Trustee and, in the
case of the distribution of such money on account of principal or interest,
upon presentation of the Securities or coupons, or both, as the case may be,
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
First: to the Trustee for amounts due under Section 7.07;
Second: to the payment of amounts due and unpaid for principal and
interest, if any, on the Securities and coupons in respect of which such
money has been collected, ratably, without preference or priority of
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any kind, according to the amounts which then shall have become due and
payable on such Securities and coupons for principal and interest,
respectively; and
Third: to the Company.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
aggregate principal amount of the outstanding Securities of any series.
ARTICLE SEVEN
Trustee
All the provisions of this Article Seven apply to the Trustee acting in all
its appointed capacities pursuant to this Indenture unless any provision
specifically applies to the Trustee only in its capacity as Trustee.
Section 7.01. Duties of Trustee.
(a) If an Event of Default with respect to Securities of any series has
occurred and is continuing, the Trustee shall with respect to such series
exercise such of the rights and powers vested in it by this Indenture with
respect to such series and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) With respect to Securities of any series, except during the continuance
of an Event of Default with respect to Securities of such series:
(1) The Trustee need perform only those duties that are specifically set
forth in this Indenture or the TIA and no others.
(2) In the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture. The Trustee, however,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, shall be
under a duty to examine the same to determine whether or not they conform
to the requirements of this Indenture (but need not confirm or investigate
the accuracy of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the Trustee
is subject to paragraphs (a), (b) and (c) of this Section.
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(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee may refuse to perform
any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received by it
except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult with
counsel or require an Officers' Certificate, an Opinion of Counsel and/or an
accountant's certificate. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on the Certificate, Opinion,
or accountant's certificate.
(c) The Trustee may act through agents and counsel and shall not be
responsible for the misconduct or negligence of any agent or counsel appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take
in good faith which it believes to be authorized or within its rights or
powers.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and coupons and may otherwise deal with the Company or
its Affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee, however, must comply with
Sections 7.10 and 7.11.
Section 7.04. Trustee's and Authenticating Agent's Disclaimer.
Neither the Trustee nor any Authenticating Agent makes any representation as
to the validity or adequacy of this Indenture or the Securities or the
coupons, if any, appertaining thereto; neither shall be accountable for the
Company's use of the proceeds from the Securities; and neither shall be
responsible for any statement in the Indenture or the Securities or any
coupons other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default occurs and is continuing with respect to Securities of any
series and if it is known to a Trust Officer of the Trustee, the Trustee shall
transmit by mail to the Holders of Securities of such series in the manner and
to the extent provided in TIA (S) 313(c) notice of the Default within 90 days
after it occurs or as soon as reasonably practicable thereafter. Except in the
case of a default in payment of principal of or interest on any Security of
such series or any related coupons (including default in the making of any
mandatory sinking fund or mandatory repurchase payment), the Trustee may
withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is in the interests of
Securityholders of such series.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following the
date on which Securities are originally issued under this Indenture, the
Trustee shall transmit by mail to the Holders of Securities, in the manner and
to the extent provided in TIA (S) 313(c), a brief report dated as of such May
15 that complies with TIA (S) 313(a). The Trustee also shall comply with TIA
(S) 313(b).
A copy of each report at the time of its mailing to Securityholders shall be
filed by the Company with the SEC and each stock exchange on which the
Securities are listed.
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The Company will promptly notify the Trustee if and when the Securities are
listed on or delisted from any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee such compensation as shall have been
agreed upon in writing. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out- of-pocket expenses
incurred by it. Such expenses shall include the reasonable compensation and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it arising out of or in connection with the acceptance or
administration of this trust and its duties hereunder. The Trustee shall
notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity. Failure of the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
have the right to elect to defend the claim and the Trustee shall cooperate in
the defense. The Trustee may have separate counsel and the Company shall pay
the reasonable fees and expenses of such counsel. The Company need not pay for
any settlement made without its written consent. The Company need not
reimburse any expense or indemnify against any loss or liability incurred by
the Trustee through the Trustee's negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee, except that held in trust to pay principal of or
interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
The Trustee may resign at any time with respect to the Securities of one or
more series by so notifying the Company. The Holders of a majority in
aggregate principal amount of the outstanding Securities of any series may
remove the Trustee with respect to the Securities of such series by so
notifying the removed Trustee and may appoint a successor Trustee with the
Company's consent. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
The Company may remove the Trustee at any time with respect to the
Securities of any series upon delivery to the Trustee of a resolution of the
Board of Directors to such effect, provided that contemporaneously therewith
no Default with respect to the Securities of such series shall have occurred
and be continuing.
If the Trustee resigns or is removed, or if a vacancy exists in the office
of Trustee for any reason, with respect to the Securities of one or more
series, the Company shall promptly appoint a successor Trustee or Trustees (it
being understood that any such successor Trustee may be appointed with respect
to the Securities of one or more or all of such series and that at any time
there shall be only one Trustee with respect to the Securities of any
particular series).
A successor Trustee shall deliver a written acceptance of its appointment to
the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee (subject to the lien, if any, provided for in Section 7.07), the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of
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the Trustee under this Indenture. A successor Trustee shall give notice in the
manner provided in Section 11.02 of its succession to each Securityholder.
If a successor Trustee with respect to the Securities of any series does not
take office within 60 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Company or the Holders of a majority in aggregate
principal amount of the outstanding Securities of such series may petition, at
the expense of the Company, any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee
with respect to all Securities and the appointment of a successor Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust assets to, another corporation or
national banking association, the successor corporation or national banking
association without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the requirements of
TIA (S) 310(a). The Trustee shall always have a combined capital and surplus
of at least $50,000,000 as set forth in its most recent published annual
report of condition. With respect to the Securities of each series, the
Trustee shall comply with TIA (S) 310(b). In determining whether the Trustee
has a conflicting interest as defined in TIA (S) 310(b) with respect to the
Securities of any series, there shall be excluded from such determination this
Indenture with respect to Securities of any particular series of Securities
other than that series. Nothing herein shall prevent the Trustee from filing
with the SEC the application referred to in the second to last paragraph of
TIA (S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated.
ARTICLE EIGHT
Discharge of Indenture
Section 8.01. Termination of Company's Obligations.
The Company may terminate all of its obligations under the Securities of any
series and all coupons, if any, appertaining thereto, and this Indenture with
respect to the Securities of such series if either (1) all Securities of such
series and all coupons, if any, appertaining thereto, previously authenticated
and delivered (other than (i) destroyed, lost or wrongfully-taken Securities
or coupons which have been replaced or paid as provided in Section 2.09, (ii)
Securities or coupons for whose payment money (or, if permitted by the terms
of such Securities, securities) has theretofore been held in trust and
thereafter repaid to the Company, as provided in Section 8.03, (iii) coupons
appertaining to Bearer Securities surrendered for exchange for Registered
Securities and maturing after such exchange whose surrender is not required or
has been waived as provided in Section 2.08, and (iv) coupons appertaining to
Bearer Securities called for redemption and maturing after the relevant
redemption date, whose surrender has been waived as provided in Section 3.05;
or (2) the Company irrevocably deposits in trust with the Trustee money or
Government Obligations sufficient to pay the principal of and interest, if
any, on all Securities of such series and all coupons, if any, appertaining
thereto previously authenticated and delivered, and not theretofore cancelled
or delivered to the Trustee for cancellation (other than any such Security or
coupon referenced in subclauses (i), (ii), (iii) or (iv) of clause (1) above),
to maturity or redemption, as the case may be.
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The Company's obligations in Sections 2.05, 2.06, 2.07, 2.08, 2.09, 4.01,
7.07, 7.08, 8.01, 8.03 and Article Ten of this Indenture, however, shall
survive until the Securities of such series are no longer outstanding.
Thereafter the Company's obligations in Sections 7.07 and 8.03 shall survive.
Notwithstanding the satisfaction and discharge of this Indenture with respect
to the Securities of any series, if money or Government Obligations shall have
been deposited with the Trustee pursuant to clause (2) of this Section, the
obligations of the Trustee under Section 8.02 and the second sentence of
Section 8.03 shall survive.
After a deposit and if all other conditions thereto are met, the Trustee for
the Securities of such series and the coupons, if any, appertaining thereto,
shall be required to execute an instrument acknowledging satisfaction and
discharge of this Indenture with respect to such Securities, except for those
surviving obligations specified above; provided, however, that the Trustee
shall not be required to execute such instrument until the expiration of
ninety days after the date of a deposit.
In order to have money available on a payment date to pay the principal of
or interest, if any, on the Securities, the Government Obligations shall be
payable as to principal or interest on or before such payment date in such
amounts as will provide the necessary money. U.S. Government Obligations shall
not be callable at the issuer's option.
Section 8.02. Application of Trust Fund.
The Trustee shall hold in trust money and Government Obligations deposited
with it pursuant to Section 8.01. It shall apply the deposited money and the
money from the Government Obligations through the Paying Agent and in
accordance with the provisions of the Securities, the coupons and this
Indenture to the payment of principal of and interest, if any, on the
Securities and related coupons, if any, for the payment of which such money or
Government Obligations has been deposited with the Trustee.
The Company shall pay, and indemnify the Trustee against, any tax, fee or
other charge imposed on or assessed against the Government Obligations
deposited pursuant to Section 8.01 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of outstanding Securities.
Section 8.03. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time. The
Trustee and the Paying Agent shall pay to the Company upon written request any
money or securities held by them for the payment of principal or interest, if
any, that remains unclaimed for two years; provided, however, that the Trustee
and the Paying Agent, before being required to make any such payment may at
the expense of the Company cause to be published once, in an Authorized
Newspaper in each place of payment, notice that such money remains unclaimed
and that, after a date specified therein, which date shall not be less than 30
days from such date of such publication, any unclaimed balance of such money
then remaining will be paid to the Company. After that, Holders entitled to
the money or securities must look to the Company for payment unless an
applicable abandoned property law designates another person.
ARTICLE NINE
Amendments, Supplements and Waivers
Section 9.01. Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or the
Securities of any series without notice to or consent of any Holder of
Securities or coupons or the Holder of any coupons:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Sections 5.01 and 10.16;
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(3) to secure the Securities pursuant to the requirements of Section
4.04, including to provide for the receipt and holding of any security to
which the Holders are entitled under Section 4.04, and to release such
security and the Lien of the Holders in accordance with the provisions of
Section 4.04;
(4) to establish the form or terms of Securities of any series and any
related coupons as permitted by Sections 2.01 and 2.02;
(5) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company;
(6) to add any additional Events of Default (and if such Events of
Default are to be applicable to less than all series of Securities, stating
that such Events of Default are expressly being included solely to be
applicable to such series);
(7) to change or eliminate any of the provisions of this Indenture,
provided that, except as otherwise contemplated by Section 2.02(20), any
such change or elimination shall become effective only when there is no
Security outstanding of any series created prior thereto which is entitled
to the benefit of such provision;
(8) to add to or change any of the provisions of this Indenture to
provide that Bearer Securities may be registrable as to principal, to
change or eliminate any restrictions on the payment of principal of or
interest on Bearer Securities, to permit Bearer Securities to be issued in
exchange for Registered Securities, or to permit Bearer Securities to be
issued in exchange for Bearer Securities of other authorized denominations
or to facilitate or permit the issuance of Securities in uncertificated
form (so long as any "registration-required obligation" within the meaning
of Section 163(f)(2) of the Internal Revenue Code of 1986, as amended (the
"Code") is in registered form for purposes of the Code) provided, that any
such action shall not adversely affect the interests of Holders of
Securities of any series or any related coupons in any material respect;
(9) to make any change that, in the opinion of the Board of Directors,
does not materially adversely affect the rights of any Securityholder or
the Holder of any coupon; or
(10) to comply with any requirement of the SEC in connection with the
qualification of this Indenture under the TIA.
Section 9.02. With Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or the
Securities of any series without notice to any Holder of Securities or coupons
but with the consent of the Holders of a majority in aggregate principal
amount of the outstanding Securities of each series affected by such amendment
or supplement, by Act of said Holders delivered to the Trustee. The Holders of
a majority in aggregate principal amount of the outstanding Securities of any
series, by Act of said Holders delivered to the Trustee, may on behalf of the
Holders of all Securities of such series and any related coupons waive
compliance by the Company with any provision of this Indenture or of
Securities of such series without any notice to any Holder of Securities or
coupons. Without the consent of the Holder of each outstanding Security
affected thereby, however, an amendment, supplement or waiver, including a
waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Securities of any series whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the rate of or extend the time for payment of interest on any
Security (or, in the case of an Original Issue Discount Security, reduce
the rate of accrual of original issue discount);
(3) reduce the principal of (or any premium payable upon the redemption
of) or extend the fixed maturity of any Security (or, in the case of an
Original Issue Discount Security, reduce the portion of the principal
amount that would be due and payable upon acceleration of the maturity
thereof pursuant to Section 6.02);
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(4) change the amount or time of any payment required by any sinking fund
provisions of the Securities of any series;
(5) make any change that materially adversely affects the right of a
Holder to require the Company to purchase a Security in accordance with the
terms thereof and this Indenture;
(6) waive a default in the payment of principal of or interest, if any,
on any Security;
(7) make any Security payable in money or securities other than that
stated in the Security;
(8) make any change that materially adversely affects the right to
convert any Security or that increases the conversion price or reduces the
conversion rate of any Security; or
(9) change any obligation of the Company to maintain an office or agency
in the places and for the purposes specified in Section 4.01.
It shall not be necessary for the Act of the Holders under this Section to
approve the particular form of any proposed supplement or amendment, but it
shall be sufficient if such Act approves the substance thereof.
An amendment to or supplement of this Indenture which changes or eliminates
any covenant or other provision of this Indenture which has expressly been
included solely for the benefit of one or more particular series of
Securities, or which modifies the rights of the Holders of Securities of such
series with respect to such covenant or other provision, shall be deemed not
to affect the rights under this Indenture of the Holders of Securities of any
other series.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect.
Section 9.04. Effect of Amendments and Supplements.
Upon the execution of any amendment or supplement authorized pursuant to
this Article, this Indenture shall be modified in accordance therewith, and
such amendment or supplement shall form a part of this Indenture for all
purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder and of any coupon appertaining thereto
shall be bound thereby.
Section 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the
changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article if the amendment, supplement or waiver does not
adversely affect the rights, duties, immunities or liabilities of the Trustee.
If it does, the Trustee may but need not sign it. The Company may not sign an
amendment or supplement until the Board of Directors approves it.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modification thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture.
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ARTICLE TEN
Conversion
Section 10.01. Applicability of Article.
Securities of any series which are convertible into Parent Stock at the
option of the Holder shall be convertible in accordance with their terms and
(except as otherwise specified as contemplated by Section 2.02 for Securities
of any series) in accordance with this Article. Each reference in this Article
to "a Security" or "the Securities" refers to the Securities of the particular
series that is convertible into Parent Stock. If more than one series of
Securities with conversion privileges are outstanding at any time, the
provisions of this Article shall be applied separately to each such series.
Section 10.02. Conversion Privilege.
A Holder of a Security of any authorized denomination of any series may
convert it into Parent Stock, at any time during the period specified on the
Securities of that series, at the conversion price or conversion rate in
effect on the conversion date, except that, with respect to any Security (or
portion thereof) called for redemption, such right shall (except as otherwise
provided in Section 3.08) terminate at the close of business on the fifteenth
day prior to the date fixed for redemption of such Security (or portion
thereof) (or such other day as may be specified as contemplated by Section
2.02 for Securities of such series), unless the Company shall default in
payment of the amount due upon redemption thereof.
The initial conversion price or conversion rate in respect of a series of
Securities shall be as specified on the Securities of that series. The
conversion price or conversion rate will be subject to adjustment on the terms
set forth in Sections 10.07 through 10.13 or such other or different terms, if
any, as may be specified as contemplated by Section 2.02 for Securities of
such series.
A Holder may convert any Security in full and may convert a portion of a
Security if the portion to be converted and the remaining portion of such
Security are in denominations issuable for that series of Securities.
Provisions of this Indenture that apply to conversion of all of a Security
also apply to conversion of a portion of it.
Section 10.03. Conversion Procedure.
To convert a Security of any series, a Holder must satisfy the requirements
for conversion contained on the Securities of that series. The date on which
the Holder satisfies all those requirements is the conversion date. As soon as
practicable after the conversion date, the Company shall, or shall cause the
Parent to, deliver to the Holder through the Conversion Agent a certificate
for the number of shares of Parent Stock deliverable upon the conversion and
cash or its check in lieu of any fractional share. The person in whose name
the certificate is registered becomes a stockholder of record on the
conversion date and the rights of the Holder of the Securities so converted as
a Holder thereof cease as of such date.
If the Holder converts more than one Security of any series at the same
time, the number of full shares issuable upon the conversion shall be based on
the total principal amount of the Securities of such series so converted.
Upon surrender of a Security of any series that is converted in part, the
Trustee shall authenticate for the Holder a new Security of that series equal
in principal amount to the unconverted portion of the Security surrendered.
If the last day on which a Security may be converted is a Legal Holiday in a
place where a Conversion Agent is located, the Security may be surrendered to
that Conversion Agent on the next succeeding day that is not a Legal Holiday.
The Company will not be required to deliver, or cause the Parent to deliver,
certificates for shares of Parent Stock upon conversion while the Parent's
stock transfer books are closed for a meeting of stockholders or for
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the payment of dividends or for any other purpose, but certificates for shares
of Parent Stock shall be delivered as soon as the stock transfer books shall
again be opened.
Registered Securities of any series surrendered for conversion during the
period from the close of business on any Regular Record Date next preceding
any Interest Payment Date for such series to the opening of business on such
Interest Payment Date shall (except in the case of Securities or portions
thereof which have been called for redemption on a redemption date within such
period) be accompanied by payment in funds acceptable to the Company of an
amount equal to the interest payable on such Interest Payment Date on the
principal amount of Registered Securities being surrendered for conversion;
provided, that no such payment need be made if there shall exist, at the time
of conversion, a default in the payment of interest on the Securities of such
series. The funds so delivered to the Conversion Agent shall be paid to the
Company on or after such Interest Payment Date unless the Company shall
default on the payment of the interest due on such Interest Payment Date, in
which event such funds shall be paid to the Holder who delivered the same.
Except as provided in the preceding sentence and subject to the penultimate
paragraph of Section 2.13, no payment or adjustment shall be made upon any
conversion on account of any interest accrued on the Registered Securities
surrendered for conversion or on account of any dividends on the Parent Stock
issued upon conversion. If Bearer Securities of a series are convertible into
Parent Stock, then such Securities, to be converted, shall be surrendered,
together with all unmatured coupons and all matured coupons in default
appertaining thereto, at the place and in the manner specified for Bearer
Securities of said series as contemplated by Section 2.02.
Section 10.04. Fractional Shares.
No fractional share of Parent Stock shall be issued upon conversion of a
Security. Instead, the Company will deliver cash or its check for the current
market value of a fractional share. The current market value of a fractional
share is determined as follows: Multiply the current market price of a full
share on the last full trading day prior to the conversion date by the
fraction (rounded to the nearest 1/100 of a share) and round the result to the
nearest whole cent.
Section 10.05. Taxes on Conversion.
If a Holder of a Security converts it, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the delivery of
shares of Parent Stock upon the conversion. The Holder, however, shall pay any
such tax which is due because the shares are issued in a name other than the
Holder's name.
Section 10.06. Reservation of Parent Stock, Etc.
The Company shall cause the Parent to, from time to time as may be
necessary, reserve out of Parent's authorized but unissued Parent Stock or
Parent Stock held in treasury enough shares of Parent Stock to permit the
conversion of all outstanding Securities.
All shares of Parent Stock which may be delivered upon conversion of the
Securities shall be validly issued, fully paid and non-assessable and shall be
free from any preemptive rights.
In order that shares of Parent Stock may be validly delivered upon
conversion of the Securities, the Company will, and will cause the Parent to,
endeavor to comply with all applicable Federal and State securities laws and
will endeavor to cause such shares to be listed on each national securities
exchange or other stock market on which other shares of the Parent Stock is
listed.
Section 10.07. Adjustment for Change in Parent Capital Stock.
If the Parent:
(1) pays a dividend or makes a distribution on the Parent Stock in shares
of Parent Stock;
(2) subdivides the outstanding shares of Parent Stock into a greater
number of shares;
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(3) combines the outstanding shares of Parent Stock into a smaller number
of shares;
(4) pays a dividend or makes a distribution on Parent Stock in shares of
its capital stock other than Parent Stock; or
(5) issues by reclassification of its shares of Parent Stock any shares
of its capital stock,
then the conversion privilege and the conversion price or conversion rate in
effect immediately prior to the opening of business on the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted so that the Holder of any
Security thereafter converted may receive the number of shares of capital
stock of the Parent which such Holder would have owned immediately following
such action if such Holder had converted the Security immediately prior to
such time. Such adjustment shall be made successively whenever any event
listed above shall occur.
For a dividend or distribution, the adjustment shall become effective
immediately after the record date for the dividend or distribution. For a
subdivision, combination or reclassification, the adjustment shall become
effective immediately after the effective date of the subdivision, combination
or reclassification.
If after an adjustment a Holder of a Security upon conversion of it may
receive shares of two or more classes of capital stock of the Parent, the
conversion prices of the classes of capital stock (after giving effect to such
allocation of the adjusted conversion price between or among the classes of
capital stock as the Board of Directors shall determine to be appropriate) or
the conversion rate, as the case may be, shall thereafter be subject to
adjustment on terms comparable to those applicable to Parent Stock in this
Indenture.
Any shares of Parent Stock issuable in payment of a dividend shall be deemed
to have been issued immediately prior to the time of the record date for such
dividend for purposes of calculating the number of outstanding shares of
Parent Stock under Sections 10.08 and 10.09 below.
Section 10.08. Adjustment for Rights Issue.
If the Parent issues any rights or warrants to all holders of shares of
Parent Stock entitling them for a period expiring within 45 days after the
record date mentioned below to purchase shares of Parent Stock (or Convertible
Securities) at a price per share (or having a conversion price per share,
after adding thereto an allocable portion of the exercise price of the right
or warrant to purchase such Convertible Securities, computed on the basis of
the maximum number of shares of Parent Stock issuable upon conversion of such
Convertible Securities) less than the Average Market Price on the
Determination Date, the conversion price or rate shall be adjusted so that it
shall equal the price or rate determined by multiplying the conversion price
or dividing the conversion rate, as the case may be, in effect immediately
prior to the opening of business on that record date by a fraction, of which
the numerator shall be the number of shares of Parent Stock outstanding on
such record date plus the number of shares of Parent Stock which the aggregate
offering price of the total number of shares of Parent Stock so offered (or
the aggregate conversion price of the Convertible Securities to be so offered,
after adding thereto the aggregate exercise price of the rights or warrants to
purchase such Convertible Securities) would purchase at such Average Market
Price and of which the denominator shall be the number of shares of Parent
Stock outstanding on such record date plus the number of additional shares of
Parent Stock offered for subscription or purchase (or into which the
Convertible Securities so offered are convertible). Shares of Parent Stock
owned by or held for the account of the Parent shall not be deemed outstanding
for the purpose of any such adjustment.
For purposes of this Section 10.08, the number of shares of Parent Stock
outstanding on any record date shall be deemed to include (i) the maximum
number of shares of Parent Stock the issuance of which would be necessary to
effect the full exercise, exchange or conversion of all Convertible Securities
outstanding on such record date which are then exercisable, exchangeable or
convertible at a price equal to or less than the Average Market Price per
share of Parent Stock, if all of such Convertible Securities were deemed to
have been exercised, exchanged or converted immediately prior to the opening
of business on such record date and (ii) if the Series B
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Stock is convertible into Parent Stock, the maximum number of shares of Parent
Stock the issuance of which would be necessary to effect the full conversion
of all shares of Series B Stock outstanding on such record date, if all of
such shares of Series B Stock were deemed to have been converted immediately
prior to the opening of business on such record date.
The adjustment shall be made successively whenever any such rights or
warrants are issued, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the rights or
warrants. If all of the shares of Parent Stock (or all of the Convertible
Securities) subject to such rights or warrants have not been issued when such
rights or warrants expire (or, in the case of rights or warrants to purchase
Convertible Securities which have been exercised, all of the shares of Parent
Stock issuable upon conversion of such Convertible Securities have not been
issued prior to the expiration of the conversion right thereof), then the
conversion price or conversion rate shall promptly be readjusted to the
conversion price or conversion rate which would then be in effect had the
adjustment upon the issuance of such rights or warrants been made on the basis
of the actual number of shares of Parent Stock (or Convertible Securities)
issued upon the exercise of such rights or warrants (or the conversion of such
Convertible Securities).
No adjustment shall be made under this Section 10.08 if the adjusted
conversion price would be higher than, or the adjusted conversion rate would
be less than, the conversion price or conversion rate, as the case may be, in
effect prior to such adjustment.
Section 10.09. Adjustments for Other Distributions.
If the Parent distributes to all holders of shares of Parent Stock any
assets or debt securities or any rights or warrants to purchase securities,
the conversion price or conversion rate shall be adjusted by multiplying the
conversion price or dividing the conversion rate, as the case may be, in
effect immediately prior to the opening of business on the record date
mentioned below by a fraction, of which the numerator shall be the total
number of shares of Parent Stock outstanding on such record date multiplied by
the Average Market Price on the Determination Date, less the fair market value
(as determined by the Board of Directors) on such record date of said assets
or debt securities or rights or warrants so distributed, and of which the
denominator shall be the total number of shares of Parent Stock outstanding on
such record date multiplied by such Average Market Price.
For purposes of this Section 10.09, the number of shares of Parent Stock
outstanding on any record date shall be deemed to include (i) the maximum
number of shares of Parent Stock the issuance of which would be necessary to
effect the full exercise, exchange or conversion of all Convertible Securities
outstanding on such record date which are then exercisable, exchangeable or
convertible at a price equal to or less than the Average Market Price, if all
of such Convertible Securities were deemed to have been exercised, exchanged
or converted immediately prior to the opening of business on such record date
and (ii) if the Series B Stock is convertible into Parent Stock, the maximum
number of shares of Parent Stock the issuance of which would be necessary to
effect the full conversion of all shares of Series B Stock outstanding on such
record date, if all of such shares of Series B Stock were deemed to have been
converted immediately prior to the opening of business on such record date.
The adjustment shall be made successively whenever any such distribution is
made, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution. Shares of
Parent Stock owned by or held for the account of the Parent shall not be
deemed outstanding for the purpose of any such adjustment.
No adjustment shall be made under this Section 10.09 if the adjusted
conversion price would be higher than, or the adjusted conversion rate would
be less than, the conversion price or conversion rate, as the case may be, in
effect prior to such adjustment.
This Section does not apply to cash dividends or distributions. Also, this
Section does not apply to dividends or distributions referred to in Section
10.07 or to rights or warrants referred to in Section 10.08.
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Section 10.10. Voluntary Adjustment.
The Company at any time may reduce the conversion price or increase the
conversion rate, temporarily or otherwise, by any amount but in no event shall
such adjusted conversion price or conversion rate result in shares of Parent
Stock being issuable upon conversion of the Securities if converted at the
time of such adjustment at an effective conversion price per share less than
the par value of the Parent Stock at the time such adjustment is made.
A voluntary adjustment of the conversion price or conversion rate pursuant
to this Section 10.10 does not change or adjust the conversion price or
conversion rate otherwise in effect for purposes of Section 10.07, 10.08 or
10.09. If an event requiring an adjustment to the conversion price or
conversion rate pursuant to Section 10.07, 10.08 or 10.09 occurs at any time
that a voluntary adjustment to the conversion price or conversion rate is in
effect pursuant to this Section 10.10, then the adjustment required by the
applicable of Section 10.07, 10.08 or 10.09 shall be made to the conversion
price or conversion rate that would otherwise have been in effect as of the
relevant date specified in such Section had no voluntary adjustment pursuant
to this Section 10.10 been made, and for purposes of applying such Section,
any such voluntary adjustment shall be disregarded. If such adjustment would
result in a lower conversion price or a higher conversion rate, as the case
may be, than the conversion price or conversion rate as voluntarily adjusted
by the Company, then such lower conversion price or higher conversion rate
shall be the conversion price or conversion rate, as the case may be.
Section 10.11. Certain Definitions.
For the purposes of this Article, the following terms have the following
meanings:
"Average Market Price" of a share of Parent Stock on the Determination
Date for any issuance of rights or warrants or any distribution in respect
of which the Average Market Price is being calculated means the average of
the daily current market prices of the Parent Stock for the shortest of:
(i) the period of 30 consecutive trading days commencing 45 trading
days before such Determination Date,
(ii) the period commencing on the date next succeeding the first
public announcement of the issuance of rights or warrants or the
distribution in respect of which the Average Market Price is being
calculated and ending on the last full trading day before such
Determination Date, and
(iii) the period, if any, commencing on the date next succeeding the
Ex-Dividend Date with respect to the next preceding issuance of rights
or warrants or distribution for which an adjustment is required by the
provisions of Section 10.07(4), 10.08 or 10.09, and ending on the last
full trading day before such Determination Date.
If the record date for an issuance of rights or warrants or a
distribution for which an adjustment is required by the provisions of
Section 10.07(4), 10.08 or 10.09 (the "preceding adjustment event")
precedes the record date for the issuance or distribution in respect of
which the Average Market Price is being calculated and the Ex-Dividend Date
for such preceding adjustment event is on or after the Determination Date
for the issuance or distribution in respect of which the Average Market
Price is being calculated, then the Average Market Price shall be adjusted
by deducting therefrom the fair market value (on the record date for the
issuance or distribution in respect of which the Average Market Price is
being calculated), as determined by the Board of Directors, of the capital
stock, rights, warrants, assets or debt securities issued or distributed in
respect of each share of Parent Stock in such preceding adjustment event.
Further, in the event that the Ex-Dividend Date (or in the case of a
subdivision, combination or reclassification, the effective date with
respect thereto) with respect to a dividend, subdivision, combination or
reclassification to which Section 10.07(1), (2), (3) or (5) applies occurs
during the period applicable for calculating the Average Market Price, then
the Average Market Price shall be calculated for such period in a manner
determined by the Board of Directors to reflect the impact of such
dividend, subdivision, combination or reclassification on the current
market price of the Parent Stock during such period.
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"current market price" of a share of Parent Stock on any day means the
last reported sale price, regular way (or, if no sale price is reported,
the average of the high and low bid prices), on such day on the Nasdaq
Stock Market or as quoted by the National Quotation Bureau Incorporated, or
if the Parent Stock is listed on an exchange, on the principal exchange on
which the Parent Stock is listed. In the event that no such quotation is
available for any day, the Board of Directors shall be entitled to
determine the current market price on the basis of such quotations as it
considers appropriate.
"Determination Date" for any issuance of rights or warrants or any
distribution to which Section 10.08 or 10.09 applies means the earlier of
(i) the record date for the determination of stockholders entitled to
receive the rights or warrants or the distribution to which such Section
applies and (ii) the Ex-Dividend Date for such rights, warrants or
distribution.
"Ex-Dividend Date" means the date on which "ex-dividend" trading
commences for a dividend, an issuance of rights or warrants or a
distribution to which any of Sections 10.07, 10.08 and 10.09 applies in the
over-the-counter market or on the principal exchange on which the Parent
Stock is then quoted or listed.
Section 10.12. When Adjustment May Be Deferred.
In any case in which this Article shall require that an adjustment shall
become effective immediately after a record date for an event, the Company may
defer until the occurrence of such event (i) issuing to the Holder of any
Security converted after such record date and before the occurrence of such
event the additional shares of Parent Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the shares of
Parent Stock issuable upon such conversion before giving effect to such
adjustment and (ii) paying to such Holder cash or its check in lieu of any
fractional interest to which he is entitled pursuant to Section 10.04;
provided, however, that the Company shall deliver to such Holder a due bill or
other appropriate instrument evidencing such Holder's rights to receive such
additional shares of Parent Stock, and such cash, upon the occurrence of the
event requiring such adjustment.
Section 10.13. When Adjustment Is Not Required.
No adjustments in the conversion price or conversion rate need be made
unless the adjustment would require an increase or decrease of at least one
percent (1%) in the initial conversion price or conversion rate. Any
adjustment which is not made shall be carried forward and taken into account
in any subsequent adjustment.
All calculations under this Article shall be made to the nearest cent or to
the nearest 1/100th of a share, as the case may be.
No adjustment in the conversion price or conversion rate shall be made
because the Parent issues, in exchange for cash, property or services, shares
of Parent Stock, or any securities convertible into or exchangeable for shares
of Parent Stock, or securities carrying the right to purchase shares of Parent
Stock or such convertible or exchangeable securities.
No adjustment in the conversion price or conversion rate need be made under
this Article for sales of shares of Parent Stock pursuant to a Parent plan
providing for reinvestment of dividends or interest or in the event the par
value of the Parent Stock is changed.
No adjustment in the conversion price or conversion rate need be made for a
transaction referred to in Section 10.07, 10.08 or 10.09 if Securityholders
are to participate in the transaction on a basis and with notice that the
Board of Directors determines to be fair and appropriate in light of the basis
and notice on which holders of Parent Stock participate in the transaction;
provided that the basis on which the Securityholders are to participate in the
transaction shall not be deemed to be fair if it would require the conversion
of Securities at any time prior to the expiration of the conversion period
specified for such Securities.
To the extent the Securities become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the cash.
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Section 10.14. Notice of Adjustment.
Whenever the conversion price or conversion rate is adjusted, the Company
shall promptly give notice of the adjustment to Securityholders in accordance
with Section 11.02 hereof and file with the Trustee an Officers' Certificate
briefly stating the new conversion price or conversion rate, the date it
becomes effective, the facts requiring the adjustment and the manner of
computing it. The certificate shall be conclusive evidence that the adjustment
is correct.
Section 10.15. Notice of Certain Transactions.
If:
(1) the Parent takes any action which would require an adjustment in the
conversion price or conversion rate;
(2) the Parent consolidates or merges with, or transfers all or
substantially all of its assets to, another corporation, and stockholders
of the Parent must approve the transaction; or
(3) there is a dissolution or liquidation of the Parent,
a Holder of a Security may want to convert it into shares of Parent Stock
prior to the record date for, or the effective date of, the transaction so
that he may receive the rights, warrants, securities or assets which a holder
of shares of Parent Stock on that date may receive. Therefore, the Company
shall give to the Securityholders and the Trustee in accordance with Section
11.02 a notice stating the proposed record or effective date, as the case may
be. Failure to give the notice or any defect in it shall not affect the
validity of any transaction referred to in clause (1), (2) or (3) of this
Section.
Section 10.16. Consolidation, Merger or Sale of the Parent.
If the Parent is a party to a transaction described in Section 5.01 or a
merger which reclassifies or changes its outstanding Parent Stock, the Company
shall take such actions as may be necessary, in the good faith opinion of the
Board of Directors, to ensure that (i) the Holder of a Security may convert it
into the kind and amount of securities or cash or other assets which he would
have owned immediately after the consolidation, merger or transfer if he had
converted the Security immediately before the effective date of such
transaction, assuming (to the extent applicable) that such Holder failed to
exercise any rights of election with respect thereto and received per share of
Parent Stock the kind and amount of securities, cash or assets received per
share by a plurality of the non-electing shares and (ii) the kind and amount
of securities into which the Securities become convertible as a result of the
consolidation, merger or transfer are subject to adjustments which are as
nearly equivalent as may be practical to the adjustments provided for in this
Article. The Company shall give to each Securityholder in accordance with
Section 11.02 a notice describing the actions so taken.
If this Section applies, Sections 10.07, 10.08 and 10.09 shall not apply.
Section 10.17. Company Determination Final.
Any determination which the Board of Directors must make pursuant to Section
10.07, 10.09, 10.11, 10.13 or 10.16 is conclusive and binding on the Holders.
Section 10.18. Trustee's and Conversion Agent's Disclaimer.
Neither the Trustee nor any Conversion Agent has any duty to determine when
an adjustment under this Article should be made, how it should be made or what
it should be. Neither the Trustee nor the Conversion Agent has any duty to
determine whether any actions taken by the Company in accordance with Section
10.16 are sufficient. Neither the Trustee nor any Conversion Agent makes any
representation as to the validity or value of any securities or assets issued
upon conversion of Securities. Neither the Trustee nor any Conversion Agent
shall be responsible for the Company's failure to comply with this Article.
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Section 10.19. Simultaneous Adjustments.
In the event that this Article Ten requires adjustments to the conversion
price or conversion rate under more than one of Sections 10.07(4), 10.08 or
10.09, and the record dates for the distributions giving rise to such
adjustments shall occur on the same date, then such adjustments shall be made
by applying, first, the provisions of Section 10.07, second, the provisions of
Section 10.09 and, third, the provisions of Section 10.08.
ARTICLE ELEVEN
Miscellaneous
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of TIA (S)(S) 310 to 317, inclusive, through operation
of TIA (S) 318(c), such imposed duties shall control.
Section 11.02. Notices.
Any notice or communication (including any Act of Holders) shall be
sufficiently given if in writing and delivered in person or mailed by first-
class mail addressed as follows:
If to the Company:
TCI Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000
Attention: Bernard W. Schotters, Executive Vice President and
Treasurer
If to the Trustee:
The Bank of New York 101 Barclay Street, Floor 21W New York, New
York 10286
Attention: Corporate Trust Administration
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Except as otherwise expressly provided herein or otherwise specified with
respect to any series of Securities issuable as Bearer Securities pursuant to
Section 2.02, where this Indenture provides for notice to Holders of
Securities of any event:
(1) such notice shall be sufficiently given to Holders of Registered
Securities if in writing and mailed, first-class postage prepaid, to each
Holder of a Registered Security affected by such event, at his address as
it appears in the security register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such
notice; and
(2) such notice shall be sufficiently given to Holders of Bearer
Securities if published in an Authorized Newspaper in the City of New York
and in such other city or cities as may be specified in such Securities on
a Business Day at least twice, the first such publication to be not earlier
than the earliest date, and not later than the latest date, prescribed for
the giving of such notice (except that, for purposes of Section 2.05,
notice of the appointment of a successor Authenticating Agent shall be
sufficiently given to Holders of Bearer Securities if published as provided
herein at least once).
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice to Holders of
Registered Securities by mail, then such notification as shall be
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made with the approval of the Trustee shall constitute a sufficient
notification for every purpose hereunder. In any case where notice to Holders
of Registered Securities is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder of a
Registered Security shall affect the sufficiency of such notice with respect
to other Holders of Registered Securities or the sufficiency of any notice to
Holders of Bearer Securities given as provided herein.
In case by reason of the suspension of publication of any Authorized
Newspaper or Authorized Newspapers or by reason of any other cause it shall be
impracticable to publish any notice to Holders of Bearer Securities as
provided above, then such notification to Holders of Bearer Securities as
shall be given with the approval of the Trustee shall constitute sufficient
notice to such Holders for every purpose hereunder. Neither the failure to
give notice by publication to Holders of Bearer Securities as provided above,
nor any defect in any notice so published, shall affect the sufficiency of any
notice to Holders of Registered Securities given as provided herein.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the person entitled to receive such notice, either before
or after the event, and such waiver shall be equivalent of such notice.
Waivers of notice by Holders of Securities shall be filed with the Trustee,
but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
Except for a notice to the Trustee, which is deemed given only when
received, if a notice or communication is mailed in the manner provided above,
it is duly given, whether or not the addressee receives it. Any notice or
communication published in the manner provided above shall be deemed to have
been given on the date of publication or, if published more than once, on the
date of the first such publication.
Any notice or communication required or permitted under this Indenture shall
be in the English language, except that any published notice may be in the
official language of the country of publication.
Section 11.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S) 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the signers,
all conditions precedent (including any covenants compliance with which
constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent (including any covenants compliance with
which constitutes a condition precedent) have been complied with.
Section 11.05. Statements Required in Certificate or Opinion.
Each Officers' Certificate or Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture other than
certificates provided pursuant to Section 4.07 shall include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
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(4) a statement as to whether or not, in the opinion of such person, such
condition or covenant has been complied with.
Section 11.06. When Treasury Securities Disregarded.
In determining whether the Holders of the required aggregate principal
amount of outstanding Securities of any series have given any request, demand,
authorization, direction, notice, consent or waiver or taken any other action
hereunder, Securities of such series owned by the Company or by any Affiliate
of the Company shall be disregarded and deemed not to be outstanding, except
that for the purpose of determining whether the Trustee shall be protected in
relying on such request, demand, authorization, direction, notice, consent,
waiver or action, only Securities of such series which the Trustee actually
knows are so owned shall be so disregarded. Securities so owned that have been
pledged in good faith may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right to so act
with respect to such Securities and that the pledgee is not the Company or any
Affiliate of the Company.
Section 11.07. Rules by Trustee and Agents.
Subject to Section 11.15 and Article Twelve, the Trustee may make reasonable
rules for action by or a meeting of Securityholders of all series or any
series. The Registrar, Paying Agent or Conversion Agent may make reasonable
rules for its functions.
Section 11.08. Legal Holidays.
A "Legal Holiday" with respect to any place of payment or conversion or
other location is a Saturday, a Sunday or a day on which banking institutions
or trust companies in that place of payment, conversion or other location are
not authorized or required to be open. If a payment date or the last day to
convert a Security is a Legal Holiday at a place of payment or conversion,
payment or conversion may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest or original issue discount, as
the case may be, shall accrue for the intervening period.
Section 11.09. Governing Law.
The internal laws of the State of New York shall govern this Indenture, the
Securities and coupons.
Section 11.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 11.11. No Recourse Against Others.
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
Securities or any coupons appertaining thereto or this Indenture 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 the Securities.
Section 11.12. Successors.
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
Section 11.13. Duplicate Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
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Section 11.14. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
Section 11.15. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by an agent duly appointed
in writing. If Securities of a series are issuable as Bearer Securities, any
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by Holders of
Securities of such series may, alternatively, be embodied in and evidenced by
the record of Holders of Securities of such series voting in favor thereof,
either in person or by proxies duly appointed in writing, at any meeting of
Holders of Securities of such series duly called and held in accordance with
the provisions of Article Twelve, or a combination of such instruments and any
such record. Except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments or record or both are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments and any such record (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Holders signing such instrument or instruments and so voting
at any such meeting. Proof of execution of any such instrument or of a writing
appointing any such agent, or of the holding by any person of a Security,
shall be sufficient for any purpose of this Indenture and (subject to Section
7.01) conclusive in favor of the Trustee and the Company and any agent of the
Trustee or the Company, if made in the manner provided in this Section. The
record of any meeting of Holders of Securities shall be proved in the manner
provided in Section 12.06.
(b) The fact and date of the execution by any person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
a certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and date of
the execution of any such instrument or writing, or the authority of the
person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
(c) The ownership, principal amount and serial numbers of outstanding
Registered Securities held by any person, and the date of holding the same,
shall be proved by the security register.
(d) The ownership, principal amount and serial numbers of outstanding Bearer
Securities held by any person, and the date of holding the same, may be proved
by the production of such Bearer Securities or by a certificate executed, as
depositary, by any trust company, bank, banker or other depositary, wherever
situated, if such certificate shall be deemed by the Trustee to be
satisfactory, showing that at the date therein mentioned such person had on
deposit with such depositary or exhibited to it, the Bearer Securities therein
described, or such facts may be proved by the certificate or affidavit of the
person holding such Bearer Securities, if such certificate or affidavit is
deemed by the Trustee to be satisfactory. The Trustee and the Company may
assume that such ownership of any Bearer Securities continues until (1)
another certificate or affidavit bearing a later date issued in respect of the
same Bearer Security is produced, or (2) such Bearer Security is produced to
the Trustee by some other person or (3) such Bearer Security is surrendered in
exchange for a Registered Security or (4) such Bearer Security is no longer
outstanding. The ownership, principal amount and serial numbers of outstanding
Bearer Securities held by any person, and the date of holding the same, may
also be proved in any other manner which the Trustee deems sufficient.
(e) If the Company shall solicit from the Holders of any Registered
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may at its option (but is not obligated to),
by or pursuant to a resolution of the Board of Directors, fix in advance a
record date for the determination of Holders of Registered Securities entitled
to give such request, demand, authorization, direction, notice, consent,
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waiver or other Act. Notwithstanding TIA (S) 316(c), such record date shall be
the record date specified in or pursuant to such resolution of the Board of
Directors, which shall be a date not earlier than 30 days prior to the first
solicitation of Holders generally in connection therewith and not later than
the date such solicitation is completed. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent, waiver or other
Act may be given before or after such record date, but only the Holders of
Registered Securities of record at the close of business on such record date
shall be deemed to be Holders for the purpose of determining whether Holders
of the requisite proportion of outstanding Securities have authorized or
agreed or consented to such request, demand, authorization, direction, notice,
consent, waiver or other Act, and for that purpose the outstanding Securities
shall be computed as of such record date; provided that no such authorization,
agreement or consent by the Holders of Registered Securities shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than eleven months after the record date.
(f) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind such Holder and every
future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee, any Agent or the Company in reliance thereon, whether or not notation
of such action is made upon such Security.
ARTICLE TWELVE
Meetings of Holders of Securities
Section 12.01. Purposes for which Meetings may be Called.
If Securities of a series are issuable as Bearer Securities, a meeting of
Holders of Securities of such series may be called at any time and from time
to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.
Section 12.02. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of Securities of
any series for any purpose specified in Section 12.01, to be held at such time
and at such place in the Borough of Manhattan, the City of New York, or in
London as the Trustee shall determine. Notice of every meeting of Holders of
Securities of any series, setting forth the time and the place of such meeting
and in general terms the action proposed to be taken at such meeting, shall be
given, in the manner provided in Section 11.02, not less than 21 nor more than
180 days prior to the date for the meeting.
(b) In case at any time the Company pursuant to a resolution of the Board of
Directors or the Holders of at least 10% of the aggregate principal amount of
outstanding Securities of any series shall have requested the Trustee to call
a meeting of the Holders of Securities of such series for any purpose
specified in Section 12.01, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall
not have made the first publication of the notice of such meeting within 21
days after receipt of such request or shall not thereafter proceed to cause
the meeting to be held as provided herein, the Company or the Holders of
Securities of such series in the amount above specified, as the case may be,
may determine the time and the place in the Borough of Manhattan, the City of
New York, or in London for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in subsection (a) of this
Section.
Section 12.03. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities of any
series, a person shall be (1) a Holder of one or more outstanding Securities
of such series, or (2) a person appointed by an instrument in writing as proxy
for a Holder or Holders of one or more outstanding Securities of such series
by such Holder or Holders.
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The only persons who shall be entitled to be present or to speak at any
meeting of Holder of Securities of any series shall be the persons entitled to
vote at such meeting and their counsel, any representatives of the Trustee and
its counsel and any representatives of the Company and its counsel.
Section 12.04. Quorum; Action.
The persons entitled to vote a majority of the aggregate principal amount of
the outstanding Securities of a series shall constitute a quorum for a meeting
of Holders of Securities of such series. In the absence of a quorum within 30
minutes of the time appointed for any such meeting, the meeting shall, if
convened at the request of Holders of Securities of such series, be dissolved.
In any other case the meeting may be adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment
of such meeting. In the absence of a quorum at any such adjourned meeting,
such adjourned meeting may be further adjourned for a period of not less than
10 days as determined by the chairman of the meeting prior to the adjournment
of such adjourned meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided in Section 12.02(a), except that such notice shall
be given only once not less than five days prior to the date on which the
meeting is scheduled to be reconvened.
Except as limited by the third sentence of Section 9.02, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum
is present as aforesaid may be adopted by the affirmative vote of the Holders
of a majority in aggregate principal amount of the outstanding Securities of
that series; provided, however, that, except as limited by the third sentence
and of Section 9.02, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which this
Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage, which is less than a majority, in aggregate principal
amount of the outstanding Securities of a series, may be adopted at a meeting
or an adjourned meeting duly reconvened at which a quorum is present as
aforesaid, by the affirmative vote of the Holders of such specified percentage
in aggregate principal amount of the outstanding Securities of that series.
Any resolution passed or decision taken at any meeting of Holders of
Securities of any series duly held in accordance with this Section shall be
binding on all the Holders of Securities of such series and the related
coupons, whether or not present or represented at the meeting.
Notwithstanding the foregoing provisions of this Section 12.04, if any
action is to be taken at a meeting of Holders of Securities of any series with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage in aggregate principal
amount of all outstanding Securities affected thereby, or of the Holders of
such series and one or more additional series:
(i) there shall be no minimum quorum requirement for such meeting; and
(ii) the principal amount of the outstanding Securities of such series
that vote in favor of such request, demand, authorization, direction,
notice, consent, waiver or other action shall be taken into account in
determining whether such request, demand, authorization, direction, notice,
consent, waiver or other action has been made, given or taken under this
Indenture.
Section 12.05. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities of a series in regard to proof of the holding of
Securities of such series and of the appointment of proxies and in regard to
the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote
and such other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Securities shall be proved in the manner specified
in Section 11.15 and the appointment of any proxy shall be proved in the
manner specified in Section 11.15 or by having the signature of the person
executing the proxy witnessed or guaranteed by any trust
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company, bank or banker authorized by Section 11.15 to certify to the holding
of Bearer Securities. Such regulations may provide that written instruments
appointing proxies, regular on their face, may be presumed valid and genuine
without the proof specified in Section 11.15 or other proof.
(b) The Trustee shall by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders of Securities as provided in Section 12.02(b), in which
case the Company or the Holders of Securities of the series calling the
meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall
be elected by vote of the persons entitled to vote a majority of the aggregate
principal amount of the outstanding Securities of such series represented at
the meeting.
(c) At any meeting each Holder of a Security of such series or proxy shall
be entitled to one vote for each $1,000 principal amount of the outstanding
Securities of such series held or represented by him, provided, however, that
no vote shall be cast or counted at any meeting in respect of any Security
challenged as not outstanding and ruled by the chairman of the meeting to be
not outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Security of such series or proxy.
(d) Any meeting of Holders of Securities of any series duly called pursuant
to Section 12.02 at which a quorum is present may be adjourned from time to
time by persons entitled to vote a majority of the aggregate principal amount
of the outstanding Securities of such series represented at the meeting and
the meeting may be held as so adjourned without further notice.
Section 12.06. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities of any series shall be by written ballots on which shall be
subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amount and serial numbers of
the outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and
who shall make and file with the secretary of the meeting their verified
written reports in duplicate of all votes cast at the meeting. A record, at
least in duplicate, of the proceedings of each meeting of Holders of
Securities of any series shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors
of votes on any vote by ballot taken thereat and affidavits by one or more
persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was given as provided in
Section 12.02 and, if applicable, Section 12.04. Each copy shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company, and another to
the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.
59
<PAGE>
Signatures
Dated: January , 1998
TCI Communications, Inc.
By
------------------------------------
(Seal)
Dated: January , 1998
The Bank of New York, Trustee
By
------------------------------------
(Seal)
60
<PAGE>
EXHIBIT 4.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TCI COMMUNICATIONS, INC.
AND
,
TRUSTEE
----------------
INDENTURE
DATED AS OF JANUARY , 1998
----------------
SENIOR SUBORDINATED DEBT SECURITIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
<C> <S> <C>
310 (a)(1).............................................. 7.10
(a)(2).............................................. 7.10
(a)(3).............................................. N.A.
(a)(4).............................................. N.A.
(a)(5).............................................. 7.10
(b)................................................. 7.08; 7.10; 12.02
(c)................................................. N.A.
311 (a)................................................. 7.11
(b)................................................. 7.11
(c)................................................. N.A.
312 (a)................................................. 2.07
(b)................................................. 12.03
(c)................................................. 12.03
313 (a)................................................. 7.06
(b)(1).............................................. N.A.
(b)(2).............................................. 7.06
(c)................................................. 12.02
(d)................................................. 7.06
314 (a)................................................. 4.02; 4.03; 12.02
(b)................................................. N.A.
(c)(1).............................................. 12.04
(c)(2).............................................. 12.04
(c)(3).............................................. N.A.
(d)................................................. N.A.
(e)................................................. 12.05
(f)................................................. N.A.
315 (a)................................................. 7.01(b)
(b)................................................. 7.05; 12.02
(c)................................................. 7.01(a)
(d)................................................. 7.01(c)
(e)................................................. 6.11
316 (a)(last sentence).................................. 12.06
(a)(1)(A)........................................... 6.05
(a)(1)(B)........................................... 6.04
(a)(2).............................................. N.A.
(b)................................................. 6.07
317 (a)(1).............................................. 6.08
(a)(2).............................................. 6.09
(b)................................................. 2.06
318 (a)................................................. 12.01
</TABLE>
- --------
N.A. means Not Applicable.
2
<PAGE>
TABLE OF CONTENTS
----------------
<TABLE>
<CAPTION>
Section Heading Page
<C> <S> <C>
ARTICLE ONE
Definitions and Incorporation by Reference
1.01. Definitions...................................................... 7
1.02. Other Definitions................................................ 9
1.03. Incorporation by Reference of Trust Indenture Act................ 9
1.04. Rules of Construction............................................ 9
ARTICLE TWO
The Securities
2.01. Forms Generally and Dating....................................... 9
2.02. Amount Unlimited; Issuable in Series............................. 10
2.03. Denominations.................................................... 12
2.04. Execution and Authentication..................................... 12
2.05. Registrar, Paying Agent and Conversion Agent..................... 14
2.06. Paying Agent to Hold Money and Securities in Trust............... 14
2.07. Securityholder Lists............................................. 14
2.08. Transfer and Exchange............................................ 14
2.09. Replacement Securities........................................... 16
2.10. Outstanding Securities........................................... 16
2.11. Temporary Securities............................................. 17
2.12. Cancellation..................................................... 17
2.13. Payment of Interest; Defaulted Interest.......................... 17
2.14. Persons Deemed Owners............................................ 18
2.15. Securities in Global Form........................................ 18
ARTICLE THREE
Redemption
3.01. Applicability of Article......................................... 19
3.02. Notices to Trustee............................................... 19
3.03. Selection of Securities to be Redeemed........................... 19
3.04. Notice of Redemption............................................. 20
3.05. Effect of Notice of Redemption................................... 20
3.06. Deposit of Redemption Price...................................... 20
3.07. Securities Redeemed in Part...................................... 21
3.08. Conversion Arrangement on Call For Redemption.................... 21
ARTICLE FOUR
Covenants
4.01. Payment of Securities............................................ 21
4.02. SEC Reports...................................................... 21
4.03. Compliance Certificate........................................... 22
4.04. Corporate Existence.............................................. 22
4.05. Securities Senior to Junior Subordinated Debt.................... 22
4.06. Limitation on Subordinated Debt Senior to the Securities......... 23
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Section Heading Page
<C> <S> <C>
ARTICLE FIVE
Successor Corporation
5.01. When Company May Merge, etc...................................... 23
ARTICLE SIX
Defaults and Remedies
6.01. Events of Default................................................ 23
6.02. Acceleration..................................................... 24
6.03. Other Remedies................................................... 24
6.04. Waiver of Existing Defaults...................................... 25
6.05. Control by Majority.............................................. 25
6.06. Limitation on Suits.............................................. 25
6.07. Rights of Holders to Receive Payment and to Convert.............. 25
6.08. Collection Suit by Trustee....................................... 26
6.09. Trustee May File Proofs of Claim................................. 26
6.10. Priorities....................................................... 26
6.11. Undertaking for Costs............................................ 26
ARTICLE SEVEN
Trustee
7.01. Duties of Trustee................................................ 26
7.02. Rights of Trustee................................................ 27
7.03. Individual Rights of Trustee..................................... 27
7.04. Trustee's Disclaimer............................................. 27
7.05. Notice of Defaults............................................... 28
7.06. Reports by Trustee to Holders.................................... 28
7.07. Compensation and Indemnity....................................... 28
7.08. Replacement of Trustee........................................... 28
7.09. Successor Trustee by Merger, etc................................. 29
7.10. Eligibility; Disqualification.................................... 29
7.11. Preferential Collection of Claims Against Company................ 29
ARTICLE EIGHT
Discharge of Indenture
8.01. Termination of Company's Obligations............................. 29
8.02. Application of Trust Fund........................................ 30
8.03. Repayment to Company............................................. 30
ARTICLE NINE
Amendments, Supplements and Waivers
9.01. Without Consent of Holders....................................... 30
9.02. With Consent of Holders.......................................... 31
9.03. Compliance with Trust Indenture Act.............................. 32
9.04. Revocation and Effect of Consents................................ 32
9.05. Notation on or Exchange of Securities............................ 32
9.06. Trustee to Sign Amendments, etc. ................................ 32
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Section Heading Page
<C> <S> <C>
ARTICLE TEN
Subordination
10.01. Securities Subordinated to Senior Debt........................... 32
10.02. Company Not to Make Payments with Respect to Securities in
Certain Circumstances............................................ 33
10.03. Securities Subordinated to Prior Payment of All Senior Debt on
Dissolution, Liquidation or Reorganization of Company........... 33
10.04. Securityholders to be Subrogated to Right of Holders of Senior
Debt............................................................. 34
10.05. Obligation of the Company Unconditional.......................... 34
Trustee Entitled to Assume Payments Not Prohibited in Absence of
10.06. Notice........................................................... 35
10.07. Application by Trustee of Monies or U.S. Government Obligations
Deposited with It................................................ 35
10.08. Subordination Rights Not Impaired by Acts or Omissions of Company
or Holders of Senior Debt....................................... 36
10.09. Securityholders Authorize Trustee to Effectuate Subordination of
Securities....................................................... 36
10.10. Right of Trustee to Hold Senior Debt............................. 36
10.11. Article Ten Not to Prevent Events of Default..................... 36
ARTICLE ELEVEN
Conversion
11.01. Applicability of Article......................................... 36
11.02. Conversion Privilege............................................. 37
11.03. Conversion Procedure............................................. 37
11.04. Fractional Shares................................................ 38
11.05. Taxes on Conversion.............................................. 38
11.06. Reservation of Parent Stock, Etc. ............................... 38
11.07. Adjustment for Change in Parent Capital Stock.................... 38
11.08. Adjustment for Rights Issue...................................... 39
11.09. Adjustments for Other Distributions.............................. 40
11.10. Voluntary Adjustment............................................. 40
11.11. Certain Definitions.............................................. 41
11.12. When Adjustment May Be Deferred.................................. 42
11.13. When Adjustment Is Not Required.................................. 42
11.14. Notice of Adjustment............................................. 42
11.15. Notice of Certain Transactions................................... 43
11.16. Consolidation, Merger or Sale of the Parent...................... 43
11.17. Company Determination Final...................................... 43
11.18. Trustee's Disclaimer............................................. 43
11.19. Simultaneous Adjustments......................................... 43
ARTICLE TWELVE
Miscellaneous
12.01. Trust Indenture Act Controls..................................... 44
12.02. Notices.......................................................... 44
12.03. Communication by Holders with Other Holders...................... 44
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Section Heading Page
<C> <S> <C>
12.04. Certificate and Opinion as to Conditions Precedent............... 44
12.05. Statements Required in Certificate or Opinion.................... 45
12.06. When Treasury Securities Disregarded............................. 45
12.07. Rules by Trustee and Agents...................................... 45
12.08. Legal Holidays................................................... 45
12.09. Governing Law.................................................... 45
12.10. No Adverse Interpretation of Other Agreements.................... 45
12.11. No Recourse Against Others....................................... 45
12.12. Successors....................................................... 46
12.13. Duplicate Originals.............................................. 46
12.14. Table of Contents, Headings, etc. ............................... 46
Signatures................................................................ 47
</TABLE>
6
<PAGE>
INDENTURE dated as of January , 1998, between TCI COMMUNICATIONS, INC., a
Delaware corporation ("Company"), and ("Trustee").
The Company has duly authorized the execution and delivery of this Indenture
to provide for the issuance from time to time of its unsecured senior
subordinated debentures, notes, bonds or other evidences of subordinated
indebtedness ("Securities"), to be issued in one or more series as provided in
this Indenture.
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the respective Holders from time to time of
Securities or of series thereof:
ARTICLE ONE
Definitions and Incorporation by Reference
Section 1.01. Definitions.
Affiliate of any person means any other person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such person.
Agent means any Registrar, Paying Agent, co-Registrar or Conversion Agent.
See Section 2.05.
Board of Directors means the Board of Directors of the Company or any
authorized committee thereof.
Business Day means any day which is not a Legal Holiday.
Company means TCI Communications, Inc., a Delaware corporation, until a
successor replaces it pursuant to the applicable provisions of this Indenture
and thereafter means the successor.
Convertible Securities means any or all options, warrants, securities and
rights, except the Series B Stock and the Securities, which are convertible
into or exercisable or exchangeable for Parent Stock or which otherwise
entitle the holder thereof to subscribe for, purchase or otherwise acquire
Parent Stock.
Default means any event which is, or after notice or passage of time or both
would be, an Event of Default.
Holder or Securityholder means the person in whose name a Security is
registered on the Registrar's books.
Indenture means this Indenture as amended or supplemented from time to time
and, unless the context indicates otherwise, shall include the form and terms
of a particular series of Securities established as contemplated hereunder.
interest, when used with respect to an Original Issue Discount Security
which by its terms bears interest only after maturity or upon default in any
other payment due on such Security, means interest payable after maturity or
upon such a default, as the case may be.
Interest Payment Date means the date, if any, specified in the Securities of
any series as the fixed date on which any installment of interest on the
Securities of that series is due and payable.
Officer means the Chairman of the Board, the President, any Vice President,
the Treasurer or the Secretary of the Company.
Officers' Certificate means a certificate signed by two Officers or by an
Officer and an Assistant Treasurer or an Assistant Secretary of the Company
and delivered to the Trustee. See Sections 12.04 and 12.05.
Opinion of Counsel means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee. See Sections 12.04 and 12.05.
7
<PAGE>
original issue discount of any debt security, including any Original Issue
Discount Security, means the difference between the principal amount of such
debt security and the initial issue price of such debt security (as set forth,
in the case of an Original Issue Discount Security, on the face of such
Security).
Original Issue Discount Security means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon
acceleration of the maturity thereof pursuant to Section 6.02.
Parent means Tele-Communications, Inc., a Delaware corporation, and any
successor thereof.
Parent Stock means the Tele-Communications, Inc. Series A TCI Group Common
Stock, $1.00 par value, of the Parent as it exists on the date of this
Indenture and any other capital stock into which such Series A TCI Group
Common Stock may thereafter have been changed.
principal of a debt security, including any Security, means the amount
(including, without limitation, if and to the extent applicable, any premium
and, in the case of an Original Issue Discount Security, any accrued original
issue discount, but excluding interest) that is payable with respect to such
debt security as of any date and for any purpose (including, without
limitation, in connection with any sinking fund, upon any redemption at the
option of the Company, upon any purchase or exchange at the option of the
Company or the holder of such debt security and upon any acceleration of the
maturity of such debt security).
principal amount of a debt security, including any Security, means the
principal amount as set forth on the face of such debt security.
Regular Record Date means the date, if any, specified in the Securities of
any series as the record date for the determination of Securityholders to whom
interest is payable on the next succeeding Interest Payment Date.
SEC means the Securities and Exchange Commission.
Securities means the Securities that are issued from time to time in one or
more series under this Indenture as such Securities are amended or
supplemented from time to time.
Series B Stock means the Tele-Communications, Inc. Series B TCI Group Common
Stock, $1.00 par value, of the Parent as it exists on the date of this
Indenture and stock of any other class into which such Series B TCI Group
Common Stock may thereafter have been changed.
Subsidiary means any corporation, association, partnership or other business
entity of which a majority of the total voting power of the capital stock or
other interests (including partnership interests) entitled (without regard to
the occurrence of a contingency) to vote in the election of directors,
managers, or trustees thereof is at the time owned or controlled, directly or
indirectly, by (i) the Company, (ii) the Company and one or more of its
Subsidiaries or (iii) one or more Subsidiaries of the Company.
TIA means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)77aaa-77bbbb)
as in effect on the date of this Indenture, except as provided in Section
9.03.
Trustee means the party named as such in this Indenture until a successor
replaces it and thereafter means the successor and if at any time there is
more than one such party, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
Trust Officer means an officer or assistant officer in the Corporate Trust
Administration department of the Trustee assigned by the Trustee to administer
its corporate trust matters.
United States means the United States of America.
U.S. Government Obligations means direct obligations of, or obligations
entitled to the full faith and credit of, the United States of America.
8
<PAGE>
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
DEFINED IN
TERM SECTION
<S> <C>
Average Market Price.......................................... 11.11
Bankruptcy Law................................................ 6.01
Code.......................................................... 9.01
Conversion Agent.............................................. 2.05
current market price.......................................... 11.11
Custodian..................................................... 6.01
Debt.......................................................... 10.01
Determination Date............................................ 11.11
Event of Default.............................................. 6.01
Ex-Dividend Date.............................................. 11.11
Junior Subordinated Debt...................................... 4.05
Legal Holiday................................................. 12.08
Paying Agent.................................................. 2.05
Registrar..................................................... 2.05
Senior Debt................................................... 10.01
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
Commission means the SEC.
indenture securities means the Securities.
indenture security holder means a Securityholder.
indenture to be qualified means this Indenture.
indenture trustee or institutional trustee means the Trustee.
obligor on the indenture securities means the Company and any other
obligor thereon.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires;
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles in effect on
the date of this Indenture;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in the plural include
the singular.
ARTICLE TWO
The Securities
Section 2.01. Forms Generally and Dating.
The Securities of each series may be issued in whole or in part in the form
of one or more global Securities as shall be specified as contemplated by
Section 2.02. The Securities of each series (including any temporary
9
<PAGE>
global Securities) shall be in one of the forms established from time to time
by or pursuant to a resolution of the Board of Directors or in or pursuant to
one or more indentures supplemental hereto, which shall set forth the
information required by Section 2.02. The Securities shall have such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture or by a resolution of the Board of
Directors and may have such notations, legends or endorsements as the Company
may deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required by law, stock exchange rule or usage. The
Company shall approve the form or forms of the Securities and any notation,
legend or endorsement on them. If the form or forms of Securities of any
series is established by action taken pursuant to a resolution of the Board of
Directors or indenture supplemental hereto, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee at or prior to the delivery of the
written order of the Company contemplated by Section 2.04 for the
authentication and delivery of such Securities.
Each Security shall be dated the date of its authentication. The form of the
Trustee's certificate of authentication to be borne by the Securities shall be
substantially as follows:
CERTIFICATE OF AUTHENTICATION
The undersigned certifies that this is one of the Securities of the series
designated herein referred to in the within-mentioned Indenture.
as Trustee
By___________________________________
Authorized Officer
Section 2.02. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a resolution of the Board of Directors or
established in or pursuant to one or more indentures supplemental hereto,
prior to the issuance of Securities of any series:
(1) the title of the Securities of the series (which shall distinguish
Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of Securities of the
series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 2.08, 2.09, 2.11, 3.07, or 9.05 and except for
any Securities which pursuant to Section 2.04 are deemed not to have been
authenticated and delivered hereunder);
(3) (A) whether any of the Securities of the series are to be issuable in
global form and, if so, (i) the identity of the depositary with respect to
any such global Security and (ii) whether beneficial owners of interests in
any such global Security may exchange such interests for Securities of the
same series and of like tenor and of any authorized form and denomination,
and, if so, the circumstances under which and the manner in which any such
exchanges may occur, if other than as specified in Section 2.08; (B) if any
of the Securities of the series are to be issuable in global form, the date
as of which any global Security shall be
10
<PAGE>
dated (if other than the date of original issuance of the first of such
Securities to be issued); and (C) if Securities of the series are to be
issuable in definitive form (whether upon original issue, upon exchange of
a temporary Security of such series, or in exchange for a beneficial
ownership interest in a permanent global Security) only upon receipt of
certain certificates or other documents or satisfaction of other
conditions, or if Securities of the series are initially issuable in
temporary global form and if owners of beneficial interests therein may
exchange such interest for an interest in a permanent global Security only
upon receipt of certain certificates or other documents or satisfaction of
other conditions, then the form and/or terms of such certificates,
documents or conditions;
(4) the date or dates (and whether fixed or extendible) on which the
principal of Securities of the series is payable;
(5) the rate or rates at which Securities of the series shall bear
interest, or the method of determining the same, if any, the date or dates
from which such interest shall accrue, the Interest Payment Dates and the
Regular Record Dates;
(6) the place or places where the principal of and any interest on
Securities of the series shall be payable;
(7) any provisions relating to the issuance of Securities of such series
at an original issue discount (including, without limitation, the issue
price thereof, the rate or rates at which such original issue discount
shall accrue, if any, and the date or dates from or to which or period or
periods during which such original issue discount shall accrue at such rate
or rates);
(8) the price or prices at which, the period or periods within which and
the terms and conditions upon which Securities of the series may be
redeemed or otherwise purchased, in whole or in part, at the option of the
Company, pursuant to any sinking fund or otherwise (including, without
limitation, the form or method or payment thereof if other than in cash);
(9) the obligation, if any, of the Company to redeem, purchase or repay
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Securityholder thereof and the price or
prices at which and the period or periods within which and the terms and
conditions upon which Securities of the series shall be redeemed, purchased
or repaid, in whole or in part, pursuant to such obligation (including,
without limitation, the form or method of payment thereof if other than in
cash);
(10) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(11) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section
6.02 or provable in bankruptcy pursuant to Section 6.09, or, if applicable,
which is convertible in accordance with Article Eleven;
(12) any Events of Default with respect to the Securities of a particular
series in lieu of or in addition to those set forth herein and the remedies
therefor;
(13) the obligation, if any, of the Company to permit the conversion of
Securities of such series into Parent Stock and the terms and conditions
upon which such conversion shall be effected (including, without
limitation, the initial conversion price or rate, the conversion period and
any other provision in addition to or in lieu of those set forth in this
Indenture relative to such obligation); and
(14) any other terms of a particular series and any other provisions
expressing or referring to the terms and conditions upon which the
Securities of that series are to be issued under the Indenture, which terms
and provisions are not in conflict with the provisions of this Indenture;
provided, however, that the addition to or subtraction from or variation of
Articles Four, Five, Six, Eight and Eleven (and Sections 1.01 and 1.02,
insofar as they relate to the definition of certain terms as used in such
Articles) with regard to the Securities of a particular series shall not be
deemed to constitute a conflict with the provisions of those Articles.
11
<PAGE>
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to such
resolution of the Board of Directors or in any such indenture supplemental
hereto. Not all Securities of any one series need be issued at the same time,
and, unless otherwise so provided, a series may be reopened for issuances of
additional Securities of such series.
If any of the terms of the Securities of a series are established by action
taken pursuant to a resolution of the Board of Directors or indenture
supplemental hereto, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee with an Officers' Certificate setting forth the terms
or the manner of determining the terms of the Securities of such series. With
respect to Securities of a series which are not to be issued at one time, such
resolution of the Board of Directors or action may provide general terms or
parameters for Securities of such series and provide either that the specific
terms of particular Securities of such series shall be specified in a written
order of the Company or that such terms shall be determined by the Company or
its agents in accordance with a written order of the Company as contemplated
by the proviso clause of the fourth paragraph of Section 2.04.
Section 2.03. Denominations.
The Securities of each series shall be issuable in registered form without
coupons in such denominations as shall be specified as contemplated by Section
2.02. In the absence of any such provisions with respect to the Securities of
any series, the Securities of such series shall be issuable in denominations
of $1,000 and any integral multiple thereof.
Section 2.04. Execution and Authentication.
Two Officers shall sign the Securities for the Company by facsimile
signature. The Company's seal shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds the office at
the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be entitled to any benefit under this Indenture or be
valid for any purpose until the Trustee manually signs the certificate of
authentication on the Security. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture. Notwithstanding
the foregoing, if any Security shall have been duly authenticated and
delivered hereunder but never issued and sold by the Company, and the Company
shall deliver such Security to the Trustee for cancellation as provided in
Section 2.12 together with a written statement (which need not comply with
Section 12.04 and 12.05 and need not be accompanied by an Opinion of Counsel)
stating that such Security has not been issued and sold by the Company, for
all purposes of this Indenture such Security shall be deemed not to have been
authenticated and delivered hereunder and shall not be entitled to the
benefits of this Indenture.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, and the Trustee shall authenticate
and deliver said Securities to or upon the written order of the Company,
signed by two Officers or by an Officer and an Assistant Treasurer of the
Company, without any further action by the Company. Such written order shall
specify the date on which said Securities shall be authenticated; provided,
however, that if not all the Securities of a series are to be issued at one
time and if the resolution of the Board of Directors or indenture supplemental
hereto establishing such series as contemplated by Sections 2.01 and 2.02
shall so permit, such written order may set forth procedures acceptable to the
Trustee for the issuance of such Securities and for determining the form or
terms of particular Securities of such series including, but not limited to,
interest rate, maturity date, date of issuance and date from which interest
shall accrue.
If the form or forms or terms of the Securities of the series have been
established in or pursuant to one or more resolutions of the Board of
Directors or indentures supplemental hereto as permitted by Sections 2.01 and
12
<PAGE>
2.02, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon, an Opinion of Counsel stating:
(1) if the form or forms of such Securities has been established by or
pursuant to a resolution of the Board of Directors or indenture
supplemental hereto, that such form or forms has been established in
conformity with the provisions of the Indenture;
(2) if the terms of such Securities have been established by or pursuant
to a resolution of the Board of Directors or indenture supplemental hereto,
that such terms have been established in conformity with the provisions of
the Indenture; and
(3) that such Securities, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization and other laws of general applicability relating to or
affecting the enforcement of creditors' rights and to general equitable
principles;
provided, however, that, with respect to Securities of a series which are not
to be issued at one time, the Trustee shall be entitled to receive such
Opinion of Counsel only once at or prior to the time of the first
authentication of Securities of such series and that the opinions described in
clauses (2) and (3) above may state, respectively,
(a) that, when the terms of such Securities shall have been established
pursuant to a written order of the Company or pursuant to such procedures
as may be specified from time to time by a written order of the Company,
all as contemplated by and in accordance with a resolution of the Board of
Directors or an Officers' Certificate pursuant to a resolution of the Board
of Directors or indenture supplemental hereto, as the case may be, such
terms will have been established in conformity with the provisions of this
Indenture; and
(b) that such Securities, when (i) executed by the Company, (ii)
completed, authenticated and delivered by the Trustee in accordance with
this Indenture, (iii) issued and delivered by the Company and (iv) paid
for, all as contemplated by and in accordance with the aforesaid written
order of the Company or specified procedures, as the case may be, will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization and other laws of general
applicability relating to or affecting the enforcement of creditors' rights
and general equitable principles.
Notwithstanding the provisions of Sections 2.01, 2.02, 12.04 and this
Section, if all the Securities of a series are not to be originally issued at
one time, the resolution of the Board of Directors or indenture supplemental
hereto, the certified copy of the record of action taken pursuant to such
resolution or supplemental indenture, the Officers' Certificate, the written
order of the Company and any other documents otherwise required pursuant to
such Sections need not be delivered to or prior to the time of authentication
of each Security of such series if such documents are delivered at or prior to
the authentication upon original issuance of the first Security of such series
to be issued; provided, however, that any subsequent request by the Company to
the Trustee to authenticate Securities of such series shall constitute a
representation and warranty by the Company that as of the date of such
request, the statements, made in the Officers' Certificate delivered pursuant
to Section 12.04 at or prior to authentication of the first such Security
shall be true and correct on the date thereof.
The Trustee shall have the right to decline to authenticate and make
available for delivery any Securities under this Section if the issuance of
such Securities pursuant to this Indenture will affect the Trustee's own
rights, duties or immunities under the Securities and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee.
With respect to Securities of a series which are not all issued at one time,
the Trustee may conclusively rely, as to the authorization by the Company of
any of such Securities, the form and terms thereof and the legality, validity,
binding effect and enforceability thereof, upon the Opinion of Counsel,
Officers' Certificate
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and other documents delivered pursuant to Sections 2.01, 2.02, 12.04 and this
Section, as applicable, at or prior to the time of the first authentication of
Securities of such series unless and until such opinion, certificate or other
documents have been superseded or revoked. In connection with the
authentication and delivery of Securities of a series which are not all issued
at one time, the Trustee shall be entitled to assume that the Company's
instructions to authenticate and deliver such Securities do not violate any
rules, regulations or orders of any governmental agency or commission having
jurisdiction over the Company.
Section 2.05. Registrar, Paying Agent and Conversion Agent.
The Company shall maintain an office or agency where Securities of each
series may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities of each series may be
presented for payment ("Paying Agent") and an office or agency where
Securities of each series that is convertible may be presented for conversion
("Conversion Agent"). The Registrar shall keep a register of the Securities of
each series issued hereunder and of their transfer and exchange. The Company
may have one or more co-Registrars (provided that there shall be only one
register, which shall be maintained by the principal Registrar), one or more
additional paying agents and one or more additional conversion agents with
respect to any series. The term "Paying Agent" includes any additional paying
agent and the term "Conversion Agent" includes any additional conversion
agent.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company shall promptly notify
the Trustee of the name and address of any such Agent. If the Company fails to
maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall act
as such.
The Company initially appoints the Trustee as Registrar and Paying Agent for
each series and a Conversion Agent for any series that is convertible.
Section 2.06. Paying Agent to Hold Money and Securities in Trust.
Subject to Section 10.07, each Paying Agent shall hold in trust for the
benefit of Securityholders of the relevant series or the Trustee all money and
securities held by the Paying Agent for the payment of any amount in respect
of the Securities of such series, and shall notify the Trustee of any default
by the Company in making any such payment. If the Company or a Subsidiary acts
as Paying Agent, it shall segregate such money and securities and hold them as
a separate trust fund. The Company at any time may require a Paying Agent to
pay all money and securities held by it to the Trustee and account for any
fund or securities disbursed. Upon doing so the Paying Agent shall have no
further liability for the money or securities.
Section 2.07. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably practicable
the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee on or before either (1) April 1 and October 1 in each
year in the case of Original Issue Discount Securities of any series which by
their terms do not bear interest prior to maturity (other than upon a default
in any payment upon such a Security) or (2) the Interest Payment Date for the
Securities of any other series, but in no event less frequently than semi-
annually, and at such other times as the Trustee may request in writing a list
in such form and as of such date as the Trustee may reasonably require of the
names and addresses of Securityholders.
Section 2.08. Transfer and Exchange.
Where a Security is presented to the Registrar or a co-Registrar with a
request to register a transfer, the Registrar shall register the transfer as
requested if its requirements for such transfer are met. Where Securities are
presented in the Registrar or a co-Registrar with a request to exchange them
for an equal aggregate principal amount of Securities of the same series of
other authorized denominations, the Registrar shall make the exchange
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as requested if its requirements for such exchange are met. The Registrar
shall require, among other things, that any Security presented or surrendered
for transfer or exchange be duly endorsed, or be accompanied by appropriate
transfer documents duly executed, by the Holder thereof or his attorney duly
authorized in writing. To permit transfers and exchanges, the Trustee shall
authenticate Securities at the Registrar's request. Any exchange or transfer
shall be without charge, except that the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto.
The Registrar need not transfer or exchange any Security selected for
redemption or purchase (except, in the case of Securities to be redeemed or
purchased in part, the portion thereof not to be redeemed or purchased) or any
Security in respect of which a notice requiring the purchase or redemption
thereof by the Company at the option of the Holder has been given and not
withdrawn by the Holder thereof in accordance with the terms of such
Securities (except, in the case of Securities to be so purchased or redeemed
in part, the portion thereof not to be so purchased or redeemed), or transfer
or exchange Securities of any particular series during a period of 15 days
before a selection of Securities of such series to be redeemed.
Except as otherwise provided with respect to the Securities of any series as
contemplated by Section 2.02, a global Security may be exchanged only as
provided below in this Section.
If at any time the depositary with respect to a global Security representing
all or a portion of the Securities of or within a series notifies the Company
that it is unwilling, unable or ineligible to continue as such depositary, the
Company shall appoint a successor depositary with respect to such Securities.
Unless otherwise provided with respect to a series of Securities as
contemplated by Section 2.02, if a successor depositary is not so appointed by
the Company within 90 days after the Company receives such notice, the Company
will execute and the Trustee, upon receipt of a written order of the Company
as contemplated by Section 2.04 for the authentication and delivery of
definitive Securities of such series (or, if such written order has previously
been delivered, then upon receipt of written instructions from the person or
persons specified in such written order), will authenticate and deliver
Securities of such series in definitive form equal in aggregate principal
amount to the principal amount of the global Security or Securities
representing such series in exchange for such global Security or Securities.
The Company may at any time and in its sole discretion determine that the
Securities of any series issued in the form of one or more global Securities
shall no longer be represented by such global Security or Securities. In such
event the Company will execute and the Trustee, upon receipt of a written
order of the Company as contemplated by Section 2.04 for the authentication
and delivery of definitive Securities of such series (or, if such written
order has previously been delivered, then upon receipt of written instructions
from the person or persons specified in such written order), will authenticate
and deliver Securities of such series in definitive form equal in aggregate
principal amount to the principal amount of the global Security or Securities
representing such series in exchange for such global Security or Securities.
If a global Security is otherwise exchangeable as specified by the Company
pursuant to Section 2.02(3) with respect to a series of Securities, the
depositary with respect to a global Security representing all or a portion of
the Securities of or within such series may surrender such global Security to
the Trustee, as the Company's agent for such purpose, to be exchanged in whole
or in part for Securities of such series in definitive form in the manner and
under the circumstances so specified and on such terms as are acceptable to
the Company and such depositary. In such event, the Company shall execute and
the Trustee shall authenticate and deliver or make available for delivery:
(i) to each Person specified by such depositary a new Security or
Securities of the same series and of like tenor, of any authorized form and
denomination as requested by such Person in aggregate principal amount
equal to and in exchange for such Person's beneficial interest in the
global Security; and
(ii) unless endorsement of the surrendered global Security as
contemplated by Section 2.15 or another procedure is specified for the
Securities of such series as contemplated by Section 2.02, to such
depositary a new global Security in a denomination equal to the difference,
if any, between the principal amount of the
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surrendered global Security and the aggregate principal amount of
Securities delivered pursuant to clause (i) above in exchange for
beneficial interests in such surrendered global Security.
In any exchange provided for in any of the preceding three paragraphs, the
Company will execute and the Trustee will authenticate and deliver Securities
in definitive registered form in authorized denominations.
Upon the exchange of a global Security for Securities in definitive form,
such global Security shall be cancelled by the Trustee, unless endorsement of
the surrendered global Security as contemplated by Section 2.15 or another
procedure is specified for the Securities of such series as contemplated by
Section 2.02. Securities issued in exchange for a global Security pursuant to
this Section shall be registered in such names and in such authorized
denominations as the depositary for such global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Securities to the persons
in whose names such Securities are so registered.
If a Security is issued in exchange for any portion of a global Security
after the close of business at the office or agency where such exchange occurs
(i) on any Regular Record Date and before the opening of business at such
office or agency on the relevant Interest Payment Date, or (ii) on any special
record date and before the opening of business at such office or agency on the
related date for payment of defaulted interest, interest or defaulted
interest, as the case may be, will not be payable on such Interest Payment
Date or proposed date for payment, as the case may be, in respect of such
Security, but will be payable on such Interest Payment Date or proposed date
for payment, as the case may be, only to the Person to whom interest in
respect of such portion of such global Security is payable in accordance with
the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Section 2.09. Replacement Securities
If a mutilated Security is surrendered to the Registrar or if the Holder of
a Security claims that the Security has been lost, destroyed or wrongfully
taken, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall issue
and the Trustee shall authenticate a replacement Security if the Trustee's
requirements are met. If required, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Trustee to protect the
Company, the Trustee or any Agent from any loss which any of them may suffer
if a Security is replaced. The Company may charge for its expenses in
replacing a Security. Every replacement Security is an additional obligation
of the Company.
In case any such lost, destroyed or wrongfully-taken Security has become or
is about to become due and payable, or is about to be purchased by the Company
pursuant to any provision of the Securities of such series providing for the
purchase thereof at the option of the Holder or the Company, the Company in
its discretion may, instead of issuing a new Security, pay or purchase such
Security.
Section 2.10. Outstanding Securities
Securities outstanding at any time are all Securities authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation and those described in this Section as not being outstanding. A
Security does not cease to be outstanding because the Company or one of its
Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.09, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
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If the Paying Agent holds on a redemption date or maturity date or on the
Business Day following a date on which Securities of such series are to be
purchased by the Company pursuant to any provision thereof providing for such
purchase at the option of the Holder or the Company, money (or securities if
permitted by the terms of such Securities) in trust or, if the Company, acting
as its own Paying Agent, sets aside and segregates money (or securities if
permitted by the terms of such Securities) in trust, sufficient to pay
Securities payable on that date, then on and after that date such Securities
cease to be outstanding and interest, if any (and original issue discount, if
Original Issue Discount Securities) on them ceases to accrue, unless the
Trustee or the Paying Agent is restricted under Article Ten in applying such
money.
Section 2.11 Temporary Securities.
Until a permanent global Security or definitive Securities are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities of any series shall be substantially in the
form of definitive Securities of such series, but may have variations that the
Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities of the same series. Until so
exchanged the temporary Securities of any series shall in all respect be
entitled to the same benefits under this Indenture as definitive Securities of
such series.
Section 2.12. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation, including Securities authenticated which the Company has not
issued and sold. The Company, Paying Agent and Conversion Agent shall forward
to the Trustee any Securities surrendered to them for transfer, exchange,
payment, redemption, purchase by the Company pursuant to any provision thereof
providing for such purchase at the option of the Holder, or conversion. The
Trustee and no one else shall cancel all Securities surrendered for transfer,
exchange, payment, redemption, purchase, conversion or cancellation, and may
dispose of cancelled Securities as the Company directs. Except as otherwise
provided in the resolution of the Board of Directors or indenture supplemental
hereto establishing such series as contemplated by Section 2.02, the Company
may not issue new Securities of a series to replace Securities of the same
series that it has paid or that have been delivered to the Trustee for
cancellation.
Section 2.13. Payment of Interest; Defaulted Interest.
Interest (except defaulted interest) on the Securities of any series which
is payable on any Interest Payment Date shall be paid to the persons who are
Holders of such series at the close of business on the Regular Record Date for
such interest payment. At the option of the Company, payment of interest on
any Security may be made by check mailed to the Holder's registered address.
If the Company defaults in a payment of interest on the Securities of any
series on any Interest Payment Date, it shall pay the defaulted interest to
the persons who are Securityholders of such series at the close of business on
a subsequent special record date. The Company shall fix the record date and
payment date. At least 15 days before the record date, the Company shall mail
to each Securityholder of such series a notice that states the record date,
the payment date and the amount of defaulted interest to be paid. The Company
shall notify the Trustee in writing of the amount of defaulted interest
proposed to be paid on each Security of such series and the date of the
proposed payment, and at the same time the Company shall deposit with the
Paying Agent an amount of money equal to the aggregate amount proposed to be
paid in respect of such defaulted interest or shall make arrangements
satisfactory to the Paying Agent for such deposit prior to the date of the
proposed payment. The Company may pay defaulted interest in any other lawful
manner.
Unless otherwise provided with respect to the Securities of any series as
contemplated by Section 2.02, in the case of any Security of any series which
is converted after any Regular Record Date and on or prior to the next
succeeding Interest Payment Date (other than any Security which is due and
payable prior to such Interest
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Payment Date), interest which is due and payable on such Interest Payment Date
shall be payable on such Interest Payment Date notwithstanding such
conversion, and such interest shall be paid to the Holder in whose name that
Security is registered at the close of business on such Regular Record Date.
Section 2.14. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any Agent may treat the person in whose name such
Security is registered as the owner of such Security for the purpose of
receiving payment of principal of and (subject to Section 2.13) interest on
such Security and for all other purposes whatsoever, and neither the Company,
the Trustee nor any Agent shall be affected by notice to the contrary.
No holder of any beneficial interest in any global Security held on its
behalf by a depositary shall have any rights under this Indenture with respect
to such global Security, and such depositary (or its nominee, if such global
Security is registered in the name of a nominee) may be treated by the
Company, the Trustee, and any Agent as the owner of such global Security for
all purposes whatsoever. None of the Company, the Trustee, or any Agent will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of a global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security, nothing
herein shall prevent the Company, the Trustee, or any Agent from giving effect
to any written certification, proxy or other authorization furnished by any
depositary, as a Holder, with respect to such global Security or impair, as
between such depositary and owners of beneficial interests in such global
Security, the operation of customary practices governing the exercise of the
rights of such depositary (or its nominee) as Holder of such global Security.
Section 2.15. Securities in Global Form.
If the Company shall establish pursuant to Section 2.02 that the Securities
of or within a series are to be issued in whole or in part in global form,
then the Company shall execute, and the Trustee shall, in accordance with
Section 2.04 and the written order of the Company contemplated thereby,
authenticate and deliver one or more global Securities in temporary or
permanent form that (i) shall be registered in the name of the depositary for
such global Security or Securities or the nominee of such depositary, (ii)
shall be delivered by the Trustee to such depositary or pursuant to such
depositary's instructions, and (iii) shall bear a legend substantially to the
following effect: "Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security 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." Each depositary
designated pursuant to Section 2.02 for a global Security in registered form
must be, to the extent required by applicable law or regulation, a clearing
agency registered under the Securities Exchange Act of 1934, as amended, and
any other applicable statute or regulation, at the time of its designation and
at all times that it serves as depositary. Notwithstanding clause (14) of
Section 2.02 and the provisions of Section 2.03, any such global Security
shall represent such of the outstanding Securities of such series as shall be
specified therein and may provide that it shall represent the aggregate amount
of outstanding Securities of such series from time to time endorsed thereon
and that the aggregate amount of outstanding Securities represented thereby
may from time to time be increased or decreased to reflect exchanges. Any
endorsement of a Security in a global form to reflect the amount, or any
increase or decrease in the amount, or changes in the rights of Holders, of
outstanding Securities represented thereby shall be made in such manner and
upon instructions given by such Person or Persons as shall be specified
therein or in the written order of the Company to be delivered to the Trustee
pursuant to Section 2.04. Subject to the provisions of Section 2.04 and, if
applicable, Section 2.11, the Trustee shall deliver and redeliver any Security
in permanent global form in the manner and upon instructions given by the
Person or Persons specified therein or in the applicable written order of the
Company. If a written order of the Company pursuant to Section 2.04 has been,
or simultaneously is, delivered, any instructions with respect to a Security
in global form shall be in writing but need not comply with Sections 12.04 and
12.05 and need not be accompanied by an Opinion of Counsel.
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The provisions of the last sentence of the third paragraph of Section 2.04
shall apply to any Security represented by a Security in global form if such
Security was never issued and sold by the Company and the Company delivers to
the Trustee the Security in global form together with written instructions
(which need not comply with Sections 12.04 and 12.05 and need not be
accompanied by an Opinion of Counsel) with regard to the reduction in the
principal amount of Securities represented thereby, together with the written
statement contemplated by the last sentence of the third paragraph of Section
2.04.
ARTICLE THREE
Redemption
Section 3.01. Applicability of Article.
Securities of any series which are redeemable before their stated maturity
at the election of the Company or through the operation of any sinking fund
for the requirement of Securities of such series shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 2.02 for Securities of any series) in accordance with this Article.
Section 3.02. Notices to Trustee.
If the Company elects to redeem all or less than all the Securities of any
series, it shall notify the Trustee of the redemption date, the principal
amount of Securities to be redeemed, the specific provision of the Securities
pursuant to which the Securities being called for redemption are being
redeemed and the redemption price. In the case of any redemption of Securities
prior to the expiration of any restriction on such redemption provided in the
terms of such Securities or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officers' Certificate evidencing compliance with
such restriction. If the Company wants to make any permitted optional sinking
fund payment, it shall notify the Trustee of the principal amount of the
Securities to be redeemed.
The Company (1) may deliver outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit Securities
of a series which (i) have been redeemed or otherwise purchased either at the
election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities or (ii) have been converted pursuant to the terms of
such Securities, in each case in satisfaction of all or any part of any
sinking fund payment required to be made pursuant to the terms of the
Securities of such series as provided for by the terms of such series;
provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at
the redemption price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment
shall be reduced accordingly. The Company shall notify the Trustee of its
intention to so reduce the amount of such sinking fund payment, the amount of
the reduction and the basis for it. The Company shall deliver to the Trustee
with such notice any Securities to be credited for such purpose that it has
not previously delivered to the Trustee for cancellation.
The Company shall give each notice and Officers' Certificate provided for in
this Section at least 60 days before the redemption date (unless a shorter
notice shall be satisfactory to the Trustee or is otherwise specified as
contemplated by Section 2.02 for Securities of any series).
Section 3.03. Selection of Securities to be Redeemed.
Except as otherwise specified as contemplated by Section 2.02 for Securities
of any series, if less than all the Securities of any series are to be
redeemed, the particular Securities to be redeemed shall be selected from
Securities of the same series outstanding not previously called for redemption
by lot or by such method as the Trustee considers fair and appropriate (and in
such manner as complies with applicable requirements of any stock
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exchange on which Securities of such series are listed) and which may provide
for the selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof)
of the principal amount of Securities of such series that have denominations
larger than the minimum authorized denomination for Securities of that series.
Provisions of this Indenture that apply to Securities called for redemption
also apply to portions of Securities called for redemption. If any Security
selected for partial redemption is converted in part after such selection but
before the termination of the conversion right with respect to the portion of
the Security so selected, the converted portion of such Security shall be
deemed (so far as may be practicable) to be the portion selected for
redemption.
Section 3.04. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date (unless
a shorter notice is specified as contemplated by Section 2.02 for Securities
of any series), the Company shall mail a notice of redemption by first-class
mail to each Holder of Securities of the series to be redeemed.
The notice shall identify the Securities (and, in the case of partial
redemption, the principal amounts of the Securities) to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price and method of payment, if other than in cash;
(3) if applicable, the current conversion price or rate;
(4) the name and address of the Paying Agent and, if applicable, the
Conversion Agent;
(5) if applicable, that the right of the Holder to convert Securities
called for redemption shall terminate at the close of business on the
fifteenth day prior to the redemption date (or such other day as may be
specified as contemplated by Section 2.02 for Securities of any series);
(6) if applicable, that Holders who want to convert Securities called for
redemption must satisfy the requirements for conversion contained in such
Securities;
(7) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(8) that interest, if any (or original issue discount, if Original Issue
Discount Securities), on Securities called for redemption ceases to accrue
on and after the redemption date unless the Company defaults in making such
redemption payment; and
(9) that the redemption is for a sinking fund or at the election of the
Company, whichever is the case.
At the Company's request, the Trustee shall give the notice of redemption in
the Company's name and at the Company's expense.
Section 3.05. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities of the series called for
redemption become due and payable on the redemption date and at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at
the redemption price, plus, if applicable, accrued interest, if any, to the
redemption date; provided, however, that installments of interest the Interest
Payment Date for which is on or prior to the redemption date shall be payable
to the persons who are Holders of such Securities on the relevant record dates
for such interest according to their terms and Section 2.13.
Section 3.06. Deposit of Redemption Price.
Unless otherwise provided as contemplated by Section 2.02 with respect to
any series of Securities, on or before noon, New York time, on the redemption
date, the Company shall deposit with the Paying Agent money in immediately
available funds (or securities if permitted by the terms of such Securities)
sufficient to pay the
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redemption price of, and (except if the redemption date is an Interest Payment
Date) accrued interest, if any, on, all Securities to be redeemed on that date
other than Securities or portions thereof called for redemption on that date
which are delivered by the Company to the Trustee for cancellation. The Paying
Agent shall return to the Company any money (or securities) not required for
that purpose because of conversion of Securities.
Section 3.07. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Trustee shall
authenticate for the Holder a new Security of the same series, of any
authorized denomination requested by such Holder, equal in principal amount to
the unredeemed portion of the Security surrendered.
Section 3.08. Conversion Arrangement on Call for Redemption.
In connection with any redemption of Securities, the Company may arrange for
the purchase and conversion of any Securities called for redemption by an
agreement with one or more investment bankers or other purchasers to purchase
such Securities by paying to the Trustee in trust for the Securityholders, on
or before the close of business on the redemption date, an amount in cash not
less than the redemption price, together with interest, if any, accrued to the
redemption date, of such Securities. Notwithstanding anything to the contrary
contained in this Article Three, the obligation of the Company to pay the
redemption price of such Securities, including all accrued interest, if any,
shall be deemed to be satisfied and discharged to the extent such amount is so
paid by such purchasers. If such an agreement is entered into, any Securities
not duly surrendered for conversion by the Holders thereof may, at the option
of the Company, be deemed, to the fullest extent permitted by law, acquired by
such purchasers from such Holders and (notwithstanding anything to the
contrary contained in Article Eleven) surrendered by such purchasers for
conversion, all as of immediately prior to the close of business on the last
day on which Securities of such series called for redemption may be converted
in accordance with this Indenture and the terms of such Securities, subject to
payment of the above amount as aforesaid. The Trustee shall hold and pay to
the Holders whose Securities are selected for redemption any such amount paid
to it in the same manner as it would moneys deposited with it by the Company
for the redemption of Securities. Without the Trustee's prior written consent,
no arrangement between the Company and such purchasers for the purchase and
conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture, and the Company agrees to indemnify the Trustee from, and hold
it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.
ARTICLE FOUR
Covenants
Section 4.01. Payment of Securities.
The Company shall pay the principal of and any interest on the Securities of
each series in accordance with the terms of the Securities of such series and
this Indenture.
To the extent enforceable under applicable law, the Company shall pay
interest on overdue principal at the rate borne by the Securities of such
series (unless a different rate is specified as contemplated by Section 2.02
for Securities of such series).
Section 4.02. SEC Reports.
The Company shall file with the Trustee within 15 days after it files them
with the SEC copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing
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as the SEC may by rules and regulations prescribe) which the Company is
required to file with the SEC pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. The Company also shall comply with the other
provisions of TIA (S)314(a).
Section 4.03. Compliance Certificate.
The Company will, within 120 days after the close of each fiscal year of the
Company, commencing with the first fiscal year following the issuance of
financial Securities of any series under this Indenture, file with the Trustee
a certificate of the principal executive officer, the principal officer or the
principal accounting officer of the Company, covering the period from the date
of issuance of such Securities to the end of the fiscal year in which such
Securities were issued, in the case of the first such certificate, and
covering the preceding fiscal year in the case of each subsequent certificate,
and stating whether or not, to the knowledge of the signer, the Company has
complied with all conditions and covenants on its part contained in this
Indenture, and, if the signer has obtained knowledge of any default by the
Company in the performance, observance or fulfillment of any such condition or
covenant, specifying each such default and the nature thereof. For the purpose
of this Section 4.03, compliance shall be determined without regard to any
grace period or requirement of notice provided pursuant to the terms of this
Indenture. The certificate need not comply with Section 12.05.
Section 4.04. Corporate Existence.
Subject to the provisions of Section 5.01 hereof, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence.
Section 4.05. Securities Senior to Junior Subordinated Debt.
(a) The Company covenants that the Securities shall be superior in right of
payment as provided in this Section to all Junior Subordinated Debt. Junior
Subordinated Debt means the principal of and interest on Debt of the Company
hereafter created or incurred which by its terms is subordinate in right of
payment to the Securities. "Debt" has the meaning specified in Section 10.01.
(b) Upon the happening of any default in the payment of the principal of or
interest on the Securities of any series when the same becomes due and
payable, then, unless and until such default shall have been cured or waived
or shall have ceased to exist, no payment shall be made by the Company with
respect to the principal of or interest on any Junior Subordinated Debt or to
acquire any instruments evidencing any issue of Junior Subordinated Debt or on
account of any sinking fund provisions of any Junior Subordinated Debt (except
payments made in capital stock of the Company or in warrants, rights or
options to purchase or acquire capital stock of the Company, sinking fund
payments made in instruments evidencing Junior Subordinated Debt of the same
issue acquired before such default and notice thereof, and payments made
through the exchange of other debt obligations of the Company for such Junior
Subordinated Debt in accordance with the terms of such Junior Subordinated
Debt provided that such debt obligations are subordinated to the Securities at
least to the extent that the Junior Subordinated Debt for which they are
exchanged is so subordinated in accordance with this Section 4.05).
(c) Upon the maturity of the Securities of any series by lapse of time,
acceleration or otherwise, all principal thereof and interest thereon shall
first be paid in full, or such payment duly provided for in a manner
satisfactory to the Trustee of the Securities of that series, before any
payment is made on account of the principal of or interest on any Junior
Subordinated Debt or to acquire any instruments evidencing any issue of Junior
Subordinated Debt or on account of any sinking fund provisions of any Junior
Subordinated Debt (except payments made in capital stock of the Company or in
warrants, rights or options to purchase or acquire capital stock of the
Company, sinking fund payments made in instruments evidencing Junior
Subordinated Debt of the same issue acquired before the maturity of the
Securities of such series, and payments made through the exchange of other
debt obligations of the Company for such Junior Subordinated Debt in
accordance with the
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terms of such Junior Subordinated Debt provided that such debt obligations are
subordinated to the Securities at least to the extent that the Junior
Subordinated Debt for which they are exchanged is so subordinated in
accordance with this Section 4.05).
(d) Upon any distribution of assets of the Company in any dissolution,
winding up, liquidation or reorganization of the Company (whether in
bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or otherwise), the Holders of the Securities shall be
entitled to receive payment in full of the principal thereof and interest due
thereon before the holders of any Junior Subordinated Debt are entitled to
receive any payment on account of the principal of or interest on such Junior
Subordinated Debt.
Section 4.06. Limitation on Subordinated Debt Senior to the Securities.
The Company will not create or incur any Debt which is subordinate or junior
in right of payment to any Senior Debt, as defined in Section 10.01, if such
Debt is superior in right of payment to the Securities.
ARTICLE FIVE
Successor Corporation
Section 5.01. When Company May Merge, etc.
The Company shall not consolidate with or merge into, or transfer its
properties and assets substantially as an entirety to, another corporation
unless (1) the successor corporation, which shall be a corporation organized
and existing under the laws of the United States or a State thereof, assumes
by supplemental indenture all the obligations of the Company under the
Securities and this Indenture, and (2) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing. Thereafter, unless otherwise specified as contemplated by Section
2.02 for the Securities of any series, all such obligations of the predecessor
corporation shall terminate.
ARTICLE SIX
Defaults and Remedies
Section 6.01. Events of Default.
An "Event of Default" with respect to Securities of any series means each
one of the events specified below in this Section 6.01, unless it is either
inapplicable to a particular series or is specifically deleted or modified as
contemplated by Section 2.02 for the Securities of such series, and any other
events as may be specified as contemplated by Section 2.02 for the Securities
of such series:
(1) the Company defaults in the payment of any interest on any Security
of that series when the same becomes due and payable and the default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of any Security
of that series when the same becomes due and payable at maturity, upon
redemption (including default in the making of any mandatory sinking fund
payment), upon purchase by the Company at the option of the Holder pursuant
to the terms of such Security or otherwise;
(3) the Company fails to comply with any of its other agreements in
Securities of that series or this Indenture (other than an agreement which
has expressly been included in this Indenture solely for the benefit of
Securities of any series other than that series or is expressly made
inapplicable to the Securities of such series as contemplated by Section
2.02) and the default continues for the period and after the notice
specified below;
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(4) the Company pursuant to or within the meaning of any Bankruptcy Law;
(A) commences a voluntary case or consents to the commencement of a
case against it,
(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors;
(5) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case or
adjudicates the Company insolvent or bankrupt,
(B) appoints a Custodian of the Company or for all or substantially
all of its property, or
(C) orders the winding up or liquidation of the Company,
and the order or decree remains unstayed and in effect for 90 days; or
(6) any other Event of Default provided with respect to Securities of
that series occurs.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or State law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
A Default under clause (3) is not an Event of Default until the Trustee
notifies the Company or the Holders of at least 25% in aggregate principal
amount of the outstanding Securities of that series notify the Company and the
Trustee of the Default and the Company does not cure the Default within 30
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default."
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in Section
6.01(4) or (5)) occurs and is continuing with respect to Securities of any
series at the time outstanding, the Trustee by notice to the Company, or the
Holders of at least 25% in aggregate principal amount of the outstanding
Securities of that series by notice to the Company and the Trustee, may
declare to be due and payable immediately (1) the principal amount (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of the Securities of
that series) of all of the Securities of that series then outstanding and (2)
interest, if any, accrued to the date of acceleration. Upon such declaration,
such principal amount (or specified amount) and interest, if any, shall be due
and payable immediately. If an Event of Default specified in Section 6.01(4)
or (5) occurs and is continuing, (1) the principal amount (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of the Securities of
that series) of all of the Securities of that series then outstanding and (2)
interest, if any, accrued to the date of such acceleration shall become and be
immediately due and payable without any declaration or other act on the part
of the Trustee or Securityholders. The Holders of a majority in aggregate
principal amount of the outstanding Securities of the series with respect to
which an acceleration applies by notice to the Trustee may rescind an
acceleration and its consequences with respect to such series if all existing
Events of Default (other than the non-payment of the principal of and accrued
interest if any, on Securities that have become due solely by such
acceleration) with respect to Securities of that series have been cured or
waived and if the rescission would not conflict with any judgment or decree.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 6.03. Other Remedies.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may pursue any available remedy by proceeding at
law or in equity to collect the payment of the whole amount which then shall
have become due and remain unpaid for principal or interest, if any, on the
Securities of that series or to enforce the performance of any provision of
the Securities of that series or this Indenture.
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The Trustee may maintain a proceeding even if it does not possess any of the
Securities of that series or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. No
remedy is exclusive of any other remedy. All available remedies are
cumulative.
Section 6.04. Waiver of Existing Defaults.
Subject to Section 9.02, the Holders of a majority in aggregate principal
amount of the outstanding Securities of any series by notice to the Trustee
may waive on behalf of the Holders of all the Securities of such series an
existing Default or Event of Default and its consequences. When a Default or
Event of Default is waived, it is cured and stops continuing.
Section 6.05. Control by Majority.
The Holders of a majority in aggregate principal amount of the outstanding
Securities of any series may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it, with respect to the Securities of such series. The
Trustee, however, may refuse to follow any direction that conflicts with law
or this Indenture, that is unduly prejudicial to the rights of another
Securityholder or that would involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
No holder of any Security of any series shall have the right to pursue
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of a continuing Event
of Default with respect to the Securities of that series;
(2) the Holders of at least 25% in aggregate principal amount of the
outstanding Securities of that series make a written request to the Trustee
to pursue the remedy;
(3) such Holder or Holders offer and provide to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the outstanding Securities of such series.
A Securityholder of any series may not use this Indenture to prejudice the
rights of another Securityholder of such series or to obtain a preference or
priority over another Securityholder of such series, except in the manner
herein provided and for the equal and ratable benefit of all Securityholders
of such series.
Section 6.07. Rights of Holders to Receive Payment and to Convert.
Subject to Article Ten and notwithstanding any other provision of this
Indenture, the right of any Holder of a Security to receive payment of
principal of and (subject to Section 2.13) interest, if any, on the Security,
on or after the respective due dates with respect to such payments expressed
in such Security, and, if applicable, to convert such Security on the terms
and subject to the conditions applicable to Securities of such series, or to
bring suit for the enforcement of any such payment on or after such respective
dates or of such right to convert, if any, shall not be impaired or affected
without the consent of the Holder.
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Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2) occurs and is
continuing with respect to the Securities of any series, the Trustee may
recover judgment in its own name and as trustee of an express trust against
the Company for the whole amount which then shall have become due and remain
unpaid for principal and interest, if any, on the Securities of such series.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee and
the Securityholders allowed in any judicial proceeding relative to the
Company, its creditors or its property and to collect and receive money,
property or securities payable or deliverable on any such claims and to
distribute the same.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay out
the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to holders of Senior Debt to the extent required by Article Ten;
Third: to the payment of amounts due and unpaid for principal and
interest, if any, on the Securities in respect of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts which then shall have become due and payable on such
Securities for principal and interest, respectively; and
Fourth: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section, notice of which shall be mailed to
each Securityholder by the Company at least 15 days before such record date.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
aggregate principal amount of the outstanding Securities of any series.
ARTICLE SEVEN
Trustee
Section 7.01. Duties of Trustee.
(a) If an Event of Default with respect to Securities of any series has
occurred and is continuing, the Trustee shall with respect to such series
exercise such of the rights and powers vested in it by this Indenture with
respect to such series and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) With respect to Securities of any series, except during the continuance
of an Event of Default with respect to Securities of such series:
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(1) The Trustee need perform only those duties that are specifically set
forth in this Indenture or the TIA and no others.
(2) In the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture. The Trustee, however,
shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the Trustee
is subject to paragraphs (a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee may refuse to perform
any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received by it
except as the Trustee may agree with the Company. Money held in trust by the
Trustee need not be segregated from other funds except to the extent required
by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult with
counsel or require an Officers' Certificate, an Opinion of Counsel, and/or an
accountant's certificate. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on the Certificate, Opinion
or accountant's certificate.
(c) The Trustee may act through agents and counsel and shall not be
responsible for the misconduct or negligence of any agent or counsel appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take
in good faith which it believes to be authorized or within its rights or
powers.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee, however, must comply with
Sections 7.10 and 7.11.
Section 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities; it shall not be accountable for the Company's use
of the proceeds from the Securities; and it shall not be responsible for any
statement in the Indenture or the Securities other than its certificate of
authentication.
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Section 7.05. Notice of Defaults.
If a Default occurs and is continuing with respect to Securities of any
series and if it is known to a Trust Officer of the Trustee, the Trustee shall
mail to each Securityholder of such series notice of the Default within 90
days after it occurs or as soon as reasonably practicable thereafter. Except
in the case of a default in payment of principal of or interest on any
Security of such series (including default in the making of any mandatory
sinking fund or mandatory repurchase payment), the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Securityholders
of such series.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following the
date on which Securities are originally issued after this Indenture, the
Trustee shall mail to each Securityholder a brief report dated as of such May
15 that complies with TIA (S)313(a) if required by said Section. The Trustee
also shall comply with TIA (S)313(b).
A copy of each report at the time of its mailing to Securityholders shall be
filed by the Company with the SEC and each stock exchange on which the
Securities are listed.
The Company will notify the Trustee if and when the Securities are listed on
or delisted from any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred by it. Such expenses shall include the reasonable compensation and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it arising out of or in connection with the acceptance or
administration of this trust and its duties hereunder. The Trustee shall
notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity. Failure of the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
have the right to elect to defend the claim and the Trustee shall cooperate in
the defense. The Trustee may have separate counsel and the Company shall pay
the reasonable fees and expenses of such counsel. The Company need not pay for
any settlement made without its written consent. The Company need not
reimburse any expense or indemnify against any loss or liability incurred by
the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee, except that held in trust to pay principal of or
interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
The Trustee may resign at any time with respect to Securities of one or more
series by so notifying the Company. The Holders of a majority in aggregate
principal amount of the outstanding Securities of any series may remove the
Trustee with respect to the Securities of such series by so notifying the
Company. The Holders of a majority in aggregate principal amount of the
outstanding Securities of any series may remove the Trustee with respect to
the Securities of such series by so notifying the removed Trustee and may
appoint a successor Trustee with the Company's consent. The Company shall
remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
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(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
The Company may remove the Trustee at any time with respect to the
Securities of any series upon delivery to the Trustee of a resolution of the
Board of Directors to such effect, provided that contemporaneously therewith
no Default with respect to the Securities of such series shall have occurred
and be continuing.
If the Trustee resigns or is removed, or if a vacancy exists in the office
of Trustee for any reason, with respect to the Securities of one or more
series, the Company shall promptly appoint a successor Trustee or Trustees (it
being understood that any such successor Trustee may be appointed with respect
to the Securities of one or more or all of such series and that at any time
there shall be only one Trustee with respect to the Securities of any
particular series).
A successor Trustee shall deliver a written acceptance of its appointment to
the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee (subject to its lien, if any, provided for in Section 7.07), the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Securityholder.
If a successor Trustee with respect to Securities of any series does not
take office within 60 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Company or the Holders of a majority in aggregate
principal amount of the outstanding Securities of such series may petition, at
the expense of the Company, any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee
with respect to all Securities and the appointment of a successor Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust assets to, another corporation or
national banking association, the successor corporation or national banking
association without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the requirements of
TIA (S)310(a). The Trustee shall always have a combined capital and surplus of
at least $50,000,000 as set forth in its most recent published annual report
of condition. With respect to the Securities of each series, the Trustee shall
comply with TIA (S)310(b) and in determining whether the Trustee has a
conflicting interest as defined in TIA (S)310(b) with respect to the
Securities of any series, there shall be excluded from such determination this
Indenture with respect to the Securities of any series other than such series.
Nothing herein shall prevent the Trustee from filing with the SEC the
application referred to in the second to last paragraph of TIA (S)310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA (S)311(a), excluding any creditor
relationship listed in TIA (S)311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S)311(a) to the extent indicated.
ARTICLE EIGHT
Discharge of Indenture
Section 8.01. Termination of Company's Obligations.
The Company may terminate all of its obligations under the Securities of any
series and this Indenture with respect to the Securities of such series if
either (1) all Securities of such series previously authenticated and
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delivered (other than destroyed, lost or stolen Securities which have been
replaced or paid or Securities for whose payment money (or, if permitted by
the terms of such Securities, securities) has theretofore been held in trust
and thereafter repaid to the Company, as provided in Section 8.03) have been
delivered to the Trustee for cancellation; or (2) the Company irrevocably
deposits in trust with the Trustee money or U.S. Government Obligations
sufficient to pay the principal of and interest, if any, on all Securities of
such series not theretofore cancelled or delivered to the Trustee for
cancellation (other than destroyed, lost or stolen Securities which have been
replaced or paid or Securities for whose payment money (or, if permitted by
the terms of such Securities, securities) has theretofore been held in trust
and thereafter repaid to the Company, as provided in Section 8.03) to maturity
or redemption, as the case may be.
The Company's obligations in Sections 2.05, 2.06, 2.07, 2.08, 20.9, 4.01,
7.07, 7.08, 8.01, 8.03 and Article Eleven of this Indenture, however, shall
survive until the Securities of such series are no longer outstanding.
Thereafter the Company's obligations in Sections 7.07 and 8.03 shall survive.
Notwithstanding the satisfaction and discharge of this Indenture with respect
to the Securities of any series, if money or U.S. Government Obligations shall
have been deposited with the Trustee pursuant to clause (2) of this Section,
the obligations of the Trustee under Section 8.02 and the second sentence of
Section 8.03 shall survive.
After a deposit and if all other conditions thereto are met, the Trustee for
the Securities of such series shall be required to execute an instrument
acknowledging satisfaction and discharge of this Indenture with respect to
such Securities, except for those surviving obligations specified above;
provided, however, that the Trustee shall not be required to execute such
instrument until the expiration of ninety days after the date of a deposit and
that such instrument may be made subject to the condition that such deposit
had been made prior to the happening of any event specified in Section 10.02.
In order to have money available on a payment date to pay the principal of
or interest, if any, on the Securities, the U.S. Government Obligations shall
be payable as to principal or interest on or before such payment date in such
amounts as well provide the necessary money. U.S. Government Obligations shall
not be callable at the issuer's option.
Section 8.02. Application of Trust Fund.
The Trustee shall hold in trust money and U.S. Government Obligations
deposited with it pursuant to Section 8.01. Subject to Section 10.07, it shall
apply the deposited money and the money from the U.S. Government Obligations
through the Paying Agent and in accordance with the provisions of the
Securities and this Indenture to the payment of principal of and interest, if
any, on the Securities for the payment of which such money or U.S. Government
Obligations has been deposited with the Trustee.
Section 8.03. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time. The
Trustee and the Paying Agent shall pay to the Company upon written request any
money or securities held by them for the payment of principal or interest, if
any, that remains unclaimed for two years. After that, Holders entitled to the
money or securities must look to the Company for payment unless an applicable
abandoned property law designates another person.
ARTICLE NINE
Amendments, Supplements and Waivers
Section 9.01. Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or the
Securities of any series without notice to or consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
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(2) to comply with Section 5.01 and 11.16;
(3) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 2.02;
(4) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company;
(5) to add any additional Events of Default (and if such Events of
Default are to be applicable to less than all series of Securities, stating
that such Events of Default are expressly being included solely to be
applicable to such series);
(6) to change or eliminate any of the provisions of this Indenture,
provided that, except as otherwise contemplated by Section 2.02(13), any
such change or elimination shall become effective only when there is no
Security outstanding of any series created prior thereto which is entitled
to the benefit of such provision;
(7) to add or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to provide for uncertificated
Securities in addition to certificated Securities (so long as any
"registration-required obligation" within the meaning of Section 163(f)(2)
of the Internal Revenue Code of 1986, as amended (the "Code") is in
registered form for purposes of the Code);
(8) to make any change that, in the opinion of the Board of Directors,
does not materially adversely affect the rights of any Securityholder; or
(9) to comply with any requirement of the SEC in connection with the
qualification of this Indenture under the TIA.
Section 9.02. With Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or the
Securities of any series without notice to any Securityholder but with the
written consent of the Holders of a majority in aggregate principal amount of
the outstanding Securities of each series affected by such amendment or
supplement. The Holders of a majority in aggregate principal amount of the
outstanding Securities of any series may on behalf of the Holders of all
Securities of such series waive compliance by the Company with any provision
of this Indenture or of Securities of such series without notice to any
Securityholder. Without the consent of each Securityholder affected, however,
an amendment, supplement or waiver, including a waiver pursuant to Section
6.04, may not:
(1) reduce the amount of Securities of any series whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the rate of or extend the time for payment of interest on any
Security (or, in the case of an Original Issue Discount Security, reduce
the rate of accrual of original issue discount);
(3) reduce the principal of (or any premium payable upon the redemption
of) or extend the fixed maturity of any Security (or, in the case of an
Original Issue Discount Security, reduce the portion of the principal
amount that would be due and payable upon acceleration of the maturity
thereof pursuant to Section 6.02);
(4) change the amount or time of any payment required by any sinking fund
provisions of the Securities of any series;
(5) make any change that materially adversely affects the rights of a
Holder to require the Company to purchase a Security in accordance with the
terms thereof and this Indenture;
(6) waive a default in the payment of the principal of or interest, if
any, on any Security;
(7) make any Security payable in money or securities other than that
stated in the Security; or
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(8) make any change that materially adversely affects the right to
convert any Security or that increases the conversion price or reduces the
conversion rate of any Security.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed supplement, but it shall be
sufficient if such consent approves the substance thereof.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
A consent to an amendment, supplement, waiver or other action by a Holder of
a Security shall bind the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security. Any
such Holder or subsequent Holder, however, may revoke the consent as to his
Security or portion of a Security. Such revocation shall be effective only if
the Trustee receives the notice of revocation before the date the amendment,
supplement, waiver or other action becomes effective. An amendment,
supplement, waiver or other action shall become effective on receipt by the
Trustee of written consents from the Holders of the requisite percentage in
aggregate principal amount of the outstanding Securities of the relevant
series. After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder of each series of Securities so affected.
Section 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the
changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article if the amendment, supplement or waiver does not
adversely affect the rights, duties, immunities or liabilities of the Trustee.
If it does, the Trustee may but need not sign it. The Company may not sign an
amendment or supplement until the Board of Directors approves it.
ARTICLE TEN
Subordination
Section 10.01. Securities Subordinated to Senior Debt.
The Company agrees, and each holder of the Securities by his acceptance
thereof likewise agrees, that the payment of the principal of and interest, if
any, on the Securities is subordinated, to the extent and in the manner
provided in this Article, to the prior payment in full of all Senior Debt.
Senior Debt means the principal of and interest on Debt of the Company
outstanding at any time other than (i) the Securities, (ii) the Company's
outstanding 11 1/8% senior subordinated debentures due October 1, 2003, which
shall rank pari passu with the Securities, and (iii) Debt which by its terms
is not superior in right of payment to the Securities. "Debt" of any person
means:
(1) any indebtedness of such person (i) for borrowed money or (ii)
evidenced by a note, debenture or similar instrument (including a purchase
money obligation) given in connection with the acquisition of any property
or assets, including securities;
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(2) any guarantee by such person of any indebtedness of others described
in the preceding clause (1); and
(3) any amendment, renewal, extension or refunding of any such
indebtedness or guarantee.
This Article shall constitute a continuing offer to all persons who, in
reliance upon such provisions, become holders of, or continue to hold, Senior
Debt, and such provisions are made for the benefit of the holders of Senior
Debt, and such holders are made obligees hereunder and they and/or each of
them may enforce such provisions.
Section 10.02. Company Not to Make Payments with Respect to Securities in
Certain Circumstances.
(a) Upon the maturity of any Senior Debt by lapse of time, acceleration or
otherwise, all principal thereof and interest thereon shall first be paid in
full, or such payment duly provided for in cash or in a manner satisfactory to
the holders of such Senior Debt, before any payment is made on account of the
principal of or interest on the Securities or to acquire any of the Securities
or on account of any sinking fund provisions of the Securities (except payments
made in capital stock of the Company or in warrants, rights or options to
purchase or acquire capital stock of the Company, sinking fund payments made in
Securities acquired by the Company before the maturity of such Senior Debt, and
payments made through the exchange of other debt obligations of the Company for
such Securities in accordance with the terms of such Securities, provided that
such debt obligations are subordinated to Senior Debt at least to the extent
that the Securities for which they are exchanged are so subordinated pursuant
to this Article Ten).
(b) Upon the happening of any default in payment of the principal of or
interest on any Senior Debt when the same becomes due and payable, then,
unless and until such default shall have been cured or waived or shall have
ceased to exist, no payment shall be made by the Company with respect to the
principal of or interest on the Securities or to acquire any of the Securities
or on account of any sinking fund provisions of the Securities (except
payments made in capital stock of the Company or in warrants, rights or
options to purchase or acquire capital stock of the Company, sinking fund
payments made in Securities acquired by the Company before such default and
notice thereof, and payments made through the exchange of other debt
obligations of the Company for such Securities in accordance with the terms of
such Securities, provided that such debt obligations are subordinated to
Senior Debt at least to the extent that the Securities for which they are
exchanged are so subordinated pursuant to this Article Ten).
(c) In the event that notwithstanding the provisions of this Section 10.02
the Company shall make any payment to the Trustee on account of the principal
of or interest on the Securities, or on account of any sinking fund provisions
of the Securities, after the maturity of any Senior Debt as described in
Section 10.02(a) above or after the happening of a default in payment of the
principal of or interest on any Senior Debt as described in Section 10.02(b)
above, then, unless and until all Senior Debt which shall have matured, and
all interest thereon, shall have been paid in full (or the declaration of
acceleration thereof shall have been rescinded or annulled), or such default
shall have been cured or waived or shall have ceased to exist, such payment
(subject to the provisions of Sections 10.06 and 10.07) shall be held by the
Trustee, in trust for the benefit of, and shall be paid forthwith over and
delivered to, the holders of such Senior Debt (pro rata as to each of such
holders on the basis of the respective amounts of Senior Debt held by them) or
their representative or the trustee under the indenture or other agreement (if
any) pursuant to which such Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all such
Senior Debt remaining unpaid to the extent necessary to pay the same in full
in accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt. The Company shall give
prompt written notice to the Trustee of any default in the payment of
principal of or interest on any Senior Debt.
Section 10.03. Securities Subordinated to Prior Payment of All Senior Debt on
Dissolution, Liquidation or Reorganization of Company.
Upon any distribution of assets of the Company in any dissolution, winding
up, liquidation or reorganization of the Company (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit
of creditors or otherwise):
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(a) the holders of all Senior Debt shall first be entitled to receive
payments in full of the principal thereof and interest due thereon before
the Holders of the Securities are entitled to receive any payment on
account of the principal of or interest on the Securities;
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than securities
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 subordinate, at least to the extent
provided in this Article Ten with respect to the Securities, to the payment
in full without diminution or modification by such plan of all Senior
Debt), to which the Holders of the Securities or the Trustee on behalf of
the Holders of the Securities would be entitled except for the provisions
of this Article Ten, shall be paid by the liquidating trustee or agent or
other person making such payment or distribution directly to the holders of
Senior Debt or their representative, or to the trustee under any indenture
under which Senior Debt may have been issued (pro rata as to each such
holder, representative or trustee on the basis of the respective amounts of
unpaid Senior Debt held or represented by each), to the extent necessary to
make payment in full of all Senior Debt remaining unpaid, after giving
effect to any concurrent payment or distribution or provision therefor to
the holders of such Senior Debt; and
(c) in the event that notwithstanding the foregoing provisions of this
Section 10.03, any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities (other than
securities 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 subordinate, at least to the extent
provided in this Article Ten with respect to the Securities, to the payment
in full without diminution or modification by such plan of all Senior
Debt), shall be received by the Trustee or the Holders of the Securities on
account of principal of or interest on the Securities before all Senior
Debt is paid in full, or effective provision made for its payment, such
payment or distribution (subject to the provisions of Sections 10.06 and
10.07) shall be received and held in trust for and shall be paid over to
the holders of the Senior Debt remaining unpaid or unprovided for or their
representative, or to the trustee under any indenture under which such
Senior Debt may have been issued (pro rata as provided in subsection (b)
above), for application to the payment of such Senior Debt until all such
Senior Debt shall have been paid in full, after giving effect to any
concurrent payment or distribution or provision therefor to the holders of
such Senior Debt.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company.
Section 10.04. Securityholders to be Subrogated to Right of Holders of Senior
Debt.
Subject to the payment in full of all Senior Debt, the Holders of the
Securities shall be subrogated equally and ratably to the rights of the
holders of Senior Debt to receive payments or distributions of assets of the
Company applicable to the Senior Debt until all amounts owing on the
Securities shall be paid in full, and for the purpose of such subrogation no
payments or distributions to the holders of the Senior Debt by or on behalf of
the Company or by or on behalf of the Holders of the Securities by virtue of
this Article Ten which otherwise would have been made to the Holders of the
Securities shall, as between the Company, its creditors other than holders of
Senior Debt and the Holders of the Securities, be deemed to be payment by the
Company to or on account of the Senior Debt, it being understood that the
provisions of this Article Ten are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on the one
hand, and the holders of the Senior Debt, on the other hand.
Section 10.05. Obligation of the Company Unconditional.
Nothing contained in this Article Ten or elsewhere in this Indenture or in
any Security is intended to or shall impair, as between the Company, its
creditors other than holders of Senior Debt and the Holders of the Securities,
the obligation of the Company, which is absolute and unconditional, to pay to
the holders of the
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Securities the principal of and interest on the Securities 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
Securities and creditors of the Company other than the holders of the Senior
Debt, nor shall anything herein or therein prevent the Trustee or the Holder
of any Security from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture, subject to the rights, if any, under
this Article Ten of the holders of Senior Debt 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 Ten, the Trustee and the Holders of the Securities 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, subject to the provisions of Sections 7.01 and
7.02, a certificate of the receiver, trustee in bankruptcy, liquidating
trustee or agent or other person making such payment or distribution to the
Trustee or the Holders of the Securities, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the
Senior Debt 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 Ten.
Nothing contained in this Article Ten or elsewhere in this Indenture or in
any Security is intended to or shall affect the obligation of the Company to
make, or prevent the Company from making, at any time except during the
pendency of any dissolution, winding up, liquidation or reorganization
proceeding, and except as provided in subsections (a) and (b) of Section
10.02, payments at any time of the principal of or interest on the Securities.
Section 10.06. Trustee Entitled to Assume Payments Not Prohibited in Absence
of Notice.
The Trustee shall not at any time be charged with knowledge of the existence
of any facts which would prohibit the making of any payment to or by the
Trustee, unless at least one Business Day prior to the making of any such
payment, the Trustee shall have received written notice thereof from the
Company or from one or more holders of Senior Debt or from any representative
thereof or from any trustee therefor, together with proof satisfactory to the
Trustee of such holding of Senior Debt or of the authority of such
representative or trustee; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Sections 7.01 and 7.02,
shall be entitled to assume conclusively that no such facts exist. The Trustee
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 Debt (or a representative
or trustee on behalf of such holder) to establish that such notice has been
given by a holder of Senior Debt or a representative of or trustee on behalf
of any such holder. 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 Senior Debt to participate in any payments or distribution pursuant
to this Article Ten, the Trustee may request such person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amount of Senior Debt
held by such person, as to the extent to which such person is entitled to
participate in such payment or distribution, and as to other facts pertinent
to the rights of such person under this Article Ten, 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.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and nothing in this Article Ten shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 7.07.
Section 10.07. Application by Trustee of Monies or U.S. Government Obligations
Deposited with It.
Money or U.S. Government Obligations deposited in trust with the Trustee
pursuant to and in accordance with Section 8.01 shall be for the sole benefit
of Securityholders and, to the extent allocated for the payment of Securities,
shall not be subject to the subordination provisions of this Article Ten, if
the same are deposited in trust prior to the happening of any event specified
in Section 10.02. Otherwise, any deposit of monies or U.S. Government
Obligations by the Company with the Trustee or any Paying Agent (whether or
not in trust) for the payment of the principal of or interest on any
Securities shall be subject to the provisions of Sections 10.01, 10.02 and
10.03 except that, if prior to the date on which by the terms of this
Indenture any such monies may become payable for any purpose (including,
without limitation, the payment of the principal of or the interest, if
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any, on any Security) the Trustee shall not have received with respect to such
monies the notice provided for in Section 10.06, then the Trustee or the
Paying Agent shall have full power and authority to receive such monies and
U.S. Government Obligations and to apply the same to the purpose for which
they were received, and shall not be affected by any notice to the contrary
which may be received by it on or after such date. This Section 10.07 shall be
construed solely for the benefit of the Trustee and Paying Agent and, as to
the first sentence hereof, the Securityholder, and shall not otherwise affect
the rights of holders of Senior Debt.
Section 10.08. Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Debt.
No right of any present or future holders of any Senior Debt to enforce
subordination as provided herein 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 of this Indenture, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with.
Section 10.09. Securityholders Authorize Trustee to Effectuate Subordination
of Securities.
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Ten and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of the
Company, the immediate filing of a claim for the unpaid balance of his
Securities in the form required in said proceedings and causing said claim to
be approved. If the Trustee does not file a proper claim or proof of debt in
the form required in such proceeding prior to 30 days before the expiration of
the time to file such claim or claims, then the holders of Senior Debt have
the right to file and are hereby authorized to file an appropriate claim for
and on behalf of the Holders of said Securities.
Section 10.10. Right of Trustee to Hold Senior Debt.
The Trustee shall be entitled to all of the rights set forth in this Article
Ten in respect of any Senior Debt at any time held by it to the same extent as
any other holder of Senior Debt, and nothing in this Indenture shall be
construed to deprive the Trustee of any of its rights as such holder.
Section 10.11. Article Ten Not to Prevent Events of Default.
The failure to make a payment on account of principal or interest by reason
of any provision in this Article Ten shall not be construed as preventing the
occurrence of an Event of Default under Section 6.01.
ARTICLE ELEVEN
Conversion
Section 11.01. Applicability of Article.
Securities of any series which are convertible into Parent Stock at the
option of the Holder shall be convertible in accordance with their terms and
(except as otherwise specified as contemplated by Section 2.02 for Securities
of any series) in accordance with this Article. Each reference in this Article
to "a Security" or "the Securities" refers to the Securities of the particular
series that is convertible into Parent Stock. If more than one series of
Securities with conversion privileges are outstanding at any time, the
provisions of this Article shall be applied separately to each such series.
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Section 11.02. Conversion Privilege.
A Holder of a Security of any authorized denomination of any series may
convert it into Parent Stock, at any time during the period specified on the
Securities of that series, at the conversion price or conversion rate in
effect on the conversion date, except that, with respect to any Security (or
portion thereof) called for redemption, such right shall (except as otherwise
provided in Section 3.08) terminate at the close of business on the fifteenth
day prior to the date fixed for redemption of such Security (or portion
thereof) (or such other day as may be specified as contemplated by Section
2.02 for Securities of such series), unless the Company shall default in
payment of the amount due upon redemption thereof.
The initial conversion price or conversion rate in respect of a series of
Securities shall be as specified on the Securities of that series. The
conversion price or conversion rate will be subject to adjustment on the terms
set forth in Sections 11.07 through 11.13 or such other or different terms, if
any, as may be specified as contemplated by Section 2.02 for Securities of
such series.
A Holder may convert any Security in full and may convert a portion of a
Security if the portion to be converted and the remaining portion of such
Security are in denominations issuable for that series of Securities.
Provisions of this Indenture that apply to conversion of all of a Security
also apply to conversion of a portion of it.
Section 11.03. Conversion Procedure.
To convert a Security of any series, a Holder must satisfy the requirements
for conversion contained on the Securities of that series. The date on which
the Holder satisfies all those requirements is the conversion date. As soon as
practicable after the conversion date, the Company shall, or shall cause the
Parent to, deliver to the Holder through the Conversion Agent a certificate
for the number of shares of Parent Stock deliverable upon the conversion and
cash or its check in lieu of any fractional share. The person in whose name
the certificate is registered becomes a stockholder of record on the
conversion date and the rights of the Holder of the Securities so converted as
a Holder thereof cease as of such date.
If the Holder converts more than one Security of any series at the same
time, the number of full shares issuable upon the conversion shall be based on
the total principal amount of the Securities of such series so converted.
Upon surrender of a Security of any series that is converted in part, the
Trustee shall authenticate for the Holder a new Security of that series equal
in principal amount to the unconverted portion of the Security surrendered.
If the last day on which a Security may be converted is a Legal Holiday in a
place where a Conversion Agent is located, the Security may be surrendered to
that Conversion Agent on the next succeeding day that is not a Legal Holiday.
The Company will not be required to deliver, or cause the Parent to deliver,
certificates for shares of Parent Stock upon conversion while the Parent's
stock transfer books are closed for a meeting of stockholders or for the
payment of dividends or for any other purpose, but certificates for shares of
Parent Stock shall be delivered as soon as the stock transfer books shall
again be opened.
Securities of any series surrendered for conversion during the period from
the close of business on any Regular Record Date next preceding any Interest
Payment Date for such series to the opening of business on such Interest
Payment Date shall (except in the case of Securities or portions thereof which
have been called for redemption on a redemption date within such period) be
accompanied by payment in funds acceptable to the Company of an amount equal
to the interest payable on such Interest Payment Date on the principal amount
of Securities being surrendered for conversion; provided, that no such payment
need be made if there shall exist, at the time of conversion, a default in the
payment of interest on the Securities of such series. The funds so
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delivered to the Conversion Agent shall be paid to the Company on or after
such Interest Payment Date unless the Company shall default on the payment of
the interest due on such Interest Payment Date, in which event such funds
shall be paid to the Holder who delivered the same. Except as provided in the
preceding sentence and subject to the last paragraph of Section 2.13, no
payment or adjustment shall be made upon any conversion on account of any
interest accrued on the Securities surrendered for conversion or on account of
any dividends on the Parent Stock issued upon conversion.
Section 11.04. Fractional Shares.
No fractional share of Parent Stock shall be issued upon conversion of a
Security. Instead, the Company will deliver cash or its check for the current
market value of a fractional share. The current market value of a fractional
share is determined as follows: Multiply the current market price of a full
share on the last full trading day prior to the conversion date by the
fraction (rounded to the nearest 1/100 of a share) and round the result to the
nearest whole cent.
Section 11.05. Taxes on Conversion.
If a Holder of a Security converts it, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the delivery of
shares of Parent Stock upon the conversion. The Holder, however, shall pay any
such tax which is due because the shares are issued in a name other than the
Holder's name.
Section 11.06. Reservation of Parent Stock, Etc.
The Company shall cause the Parent to, from time to time as may be
necessary, reserve out of Parent's authorized but unissued Parent Stock or
Parent Stock held in treasury enough shares of Parent Stock to permit the
conversion of all outstanding Securities.
All shares of Parent Stock which may be delivered upon conversion of the
Securities shall be validly issued, fully paid and non-assessable and shall be
free from any preemptive rights.
In order that shares of Parent Stock may be validly delivered upon
conversion of the Securities, the Company will, and will cause the Parent to,
endeavor to comply with all applicable Federal and State securities laws and
will endeavor to cause such shares to be listed on each national securities
exchange or other stock market on which other shares of the Parent Stock is
listed.
If the taking of any action would cause an adjustment to the then prevailing
conversion price or conversion rate which would result in shares of Parent
Stock being issued upon conversion of the Securities at an effective
conversion price below the then par value, if any, of the Parent Stock, or
would raise the par value above the effective conversion price then in effect,
the Company will, and will cause Parent to, take such corporate action as may,
in the opinion of its counsel, be necessary in order that the Parent may
validly and legally issue, and the Company may deliver, fully paid and non-
assessable shares of Parent Stock at such adjusted conversion price or
conversion rate or the conversion price or conversion rate then in effect, as
the case may be.
Section 11.07. Adjustment for Change in Parent Capital Stock.
If the Parent:
(1) pays a dividend or makes a distribution in shares of Parent Stock;
(2) subdivides the outstanding shares of Parent Stock into a greater
number of shares;
(3) combines the outstanding shares of Parent Stock into a smaller number
of shares;
(4) pays a dividend or makes a distribution on the Parent Stock in shares
of its capital stock other than Parent Stock; or
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(5) issues by reclassification of its shares of Parent Stock any shares
of its capital stock,
then the conversion privilege and the conversion price or conversion rate in
effect immediately prior to the opening of business on the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted so that the Holder of any
Security thereafter converted may receive the number of shares of capital
stock of the Parent which such Holder would have owned immediately following
such action if such Holder had converted the Security immediately prior to
such time. Such adjustment shall be made successively whenever any event
listed above shall occur.
For a dividend or distribution, the adjustment shall become effective
immediately after the record date for the dividend or distribution. For a
subdivision, combination or reclassification, the adjustment shall become
effective immediately after the effective date of the subdivision, combination
or reclassification.
If after an adjustment a Holder of a Security upon conversion of it may
receive shares of two or more classes of capital stock of the Parent, the
conversion prices of the classes of capital stock (after giving effect to such
allocation of the adjusted conversion price between or among the classes of
capital stock as the Board of Directors shall determine to be appropriate) or
the conversion rate, as the case may be, shall thereafter be subject to
adjustment on terms comparable to those applicable to Parent Stock in this
Indenture.
Any shares of Parent Stock issuable in payment of a dividend shall be deemed
to have been issued immediately prior to the time of the record date for such
dividend for purposes of calculating the number of outstanding shares of
Parent Stock under Sections 11.08 and 11.09 below.
Section 11.08. Adjustment for Rights Issue.
If the Parent issues any rights or warrants to all holders of shares of its
Parent Stock entitling them for a period expiring within 45 days after the
record date mentioned below to purchase shares of Parent Stock (or Convertible
Securities) at a price per share (or having a conversion price per share,
after adding thereto an allocable portion of the exercise price of the right
or warrant to purchase such Convertible Securities, computed on the basis of
the maximum number of shares of Parent Stock issuable upon conversion of such
Convertible Securities) less than the Average Market Price on the
Determination Date, the conversion price or rate shall be adjusted so that it
shall equal the price or rate determined by multiplying the conversion price
or dividing the conversion rate, as the case may be, in effect immediately
prior to the opening of business on that record date by a fraction, of which
the numerator shall be the number of shares of Parent Stock outstanding on
such record date plus the number of shares of Parent Stock which the aggregate
offering price of the total number of shares of Parent Stock so offered (or
the aggregate conversion price of the Convertible Securities to be so offered,
after adding thereto the aggregate exercise price of the rights or warrants to
purchase such Convertible Securities) would purchase at such Average Market
Price and of which the denominator shall be the number of shares of Parent
Stock outstanding on such record date plus the number of additional shares of
Parent Stock offered for subscription or purchase (or into which the
Convertible Securities so offered are convertible). Shares of Parent Stock
owned by or held for the account of the Parent shall not be deemed outstanding
for the purpose of any such adjustment.
For purposes of this Section 11.08, the number of shares of Parent Stock
outstanding on any record date shall be deemed to include (i) the maximum
number of shares of Parent Stock the issuance of which would be necessary to
effect the full exercise, exchange or conversion of all Convertible Securities
outstanding on such record date which are then exercisable, exchangeable or
convertible at a price equal to or less than the Average Market Price per
share of Parent Stock, if all of such Convertible Securities were deemed to
have been exercised, exchanged or converted immediately prior to the opening
of business of such record date and (ii) if the Series B Stock is convertible
into Parent Stock, the maximum number of shares of Parent Stock the issuance
of which would be necessary to effect the full conversion of all shares of
Series B Stock outstanding on such record date, if all of such shares of
Series B Stock were deemed to have been converted immediately prior to the
opening of business on such record date.
39
<PAGE>
The adjustment shall be made successively whenever any such rights or
warrants are issued, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the rights or
warrants. If all of the shares of Parent Stock (or all of the Convertible
Securities) subject to such rights or warrants have not been issued when such
rights or warrants expire (or, in the case of rights or warrants to purchase
Convertible Securities which have been exercised, all of the shares of Parent
Stock issuable upon conversion of such Convertible Securities have not been
issued prior to the expiration of the conversion right thereof), then the
conversion price or conversion rate shall promptly be readjusted to the
conversion price or conversion rate which would then be in effect had the
adjustment upon the issuance of such rights or warrants been made on the basis
of the actual number of shares of Parent Stock (or Convertible Securities)
issued upon the exercise of such rights or warrants (or the conversion of such
Convertible Securities).
No adjustment shall be made under this Section 11.08 if the adjusted
conversion price would be higher than, or the adjusted conversion rate would
be less than, the conversion price or conversion rate, as the case may be, in
effect prior to such adjustment.
Section 11.09. Adjustments for Other Distributions.
If the Parent distributes to all holders of shares of Parent Stock any
assets or debt securities or any rights or warrants to purchase securities,
the conversion price or conversion rate shall be adjusted by multiplying the
conversion price or dividing the conversion rate, as the case may be, in
effect immediately prior to the opening of business on the record date
mentioned below by a fraction of which the numerator shall be the total number
of shares of Parent Stock outstanding on such record date multiplied by the
Average Market Price on the Determination Date, less the fair market value (as
determined by the Board of Directors) on such record date of said assets or
debt securities or rights or warrants so distributed, and of which the
denominator shall be the total number of shares of Parent Stock outstanding on
such record date multiplied by such Average Market Price.
For purposes of this Section 11.09, the number of shares of Parent Stock
outstanding on any record date shall be deemed to include (i) the maximum
number of shares of Parent Stock the issuance of which would be necessary to
effect the full exercise, exchange or conversion of all Convertible Securities
outstanding on such record date which are then exercisable, exchangeable or
convertible at a price equal to or less than the Average Market Price, if all
of such Convertible Securities were deemed to have been exercised, exchanged
or converted immediately prior to the opening of business on such record date
and (ii) if the Series B Stock is convertible into Parent Stock, the maximum
number of shares of Parent Stock the issuance of which would be necessary to
effect the full conversion of all shares of Series B Stock outstanding on such
record date, if all of such shares of Series B Stock were deemed to have been
converted immediately prior to the opening of business on such record date.
The adjustment shall be made successively whenever any such distribution is
made, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution. Shares of
Parent Stock owned by or held for the account of the Parent shall not be
deemed outstanding for the purpose of any such adjustment.
No adjustment shall be made under this Section 11.09 if the adjusted
conversion price would be higher than, or the adjusted conversion rate would
be less than, the conversion price or conversion rate, as the case may be, in
effect prior to such adjustment.
This Section does not apply to cash dividends or distributions. Also, this
Section does not apply to dividends or distributions referred to in Section
11.07 or to rights or warrants referred to in Section 11.08.
Section 11.10. Voluntary Adjustment.
The Company at any time may reduce the conversion price or increase the
conversion rate, temporarily or otherwise, by any amount but in no event shall
such adjusted conversion price or conversion rate result in shares of Parent
Stock being issuable upon conversion of the Securities if converted at the
time of such adjustment at an effective conversion price per share less than
the par value of the Parent Stock at the time such adjustment is made.
40
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A voluntary adjustment of the conversion price or conversion rate pursuant
to this Section 11.10 does not change or adjust the conversion price or
conversion rate otherwise in effect for purposes of Section 11.07, 11.08 or
11.09. If an event requiring an adjustment to the conversion price or
conversion rate pursuant to Section 11.07, 11.08 or 11.09 occurs at any time
that a voluntary adjustment to the conversion price or conversion rate is in
effect pursuant to this Section 11.10, then the adjustment required by Section
11.07, 11.08 or 11.09, whichever is applicable, shall be made to the
conversion price or conversion rate that would otherwise have been in effect
as of the relevant date specified in such Section had no voluntary adjustment
pursuant to this Section 11.10 been made, and for purposes of applying such
Section, any such voluntary adjustment shall be disregarded. If such
adjustment would result in a lower conversion price or a higher conversion
rate, as the case may be, than the conversion price or conversion rate as
voluntarily adjusted by the Company, then such lower conversion price or
higher conversion rate shall be the conversion price or conversion rate, as
the case may be.
Section 11.11. Certain Definitions.
For the purposes of this Article, the following terms have the following
meanings:
"Average Market Price" of a share of Parent Stock on the Determination
Date for any issuance of rights or warrants or any distribution in respect
of which the Average Market Price is being calculated means the average of
the daily current market prices of the Parent Stock for the shortest of:
(i) the period of 30 consecutive trading days commencing 45 trading
days before such Determination Date,
(ii) the period commencing on the date next succeeding the first
public announcement of the issuance of rights or warrants or the
distribution in respect of which the Average Market Price is being
calculated and ending on the last full trading day before such
Determination Date, and
(iii) the period, if any, commencing on the date next succeeding the
Ex-Dividend Date with respect to the next preceding issuance of rights
or warrants or distribution for which an adjustment is required by the
provisions of Section 11.07(4), 11.08 or 11.09, and ending on the last
full trading day before such Determination Date.
If the record date for an issuance of rights or warrants or a
distribution for which an adjustment is required by the provisions of
Section 11.07(4), 11.08 or 11.09 (the "preceding adjustment event")
precedes the record date for the issuance or distribution in respect of
which the Average Market Price is being calculated and the Ex-Dividend Date
for such preceding adjustment event is on or after the Determination Date
for the issuance or distribution in respect of which the Average Market
Price is being calculated, then the Average Market Price shall be adjusted
by deducting therefrom the fair market value (on the record date for the
issuance or distribution in respect of which the Average Market Price is
being calculated), as determined by the Board of Directors, of the capital
stock, rights, warrants, assets or debt securities issued or distributed in
respect of each share of Parent Stock in such preceding adjustment event.
Further, in the event that the Ex-Dividend Date (or in the case of a
subdivision, combination or reclassification, the effective date with
respect thereto) with respect to a dividend, subdivision, combination or
reclassification to which Section 11.07(1), (2), (3) or (5) applies occurs
during the period applicable for calculating the Average Market Price, then
the Average Market Price shall be calculated for such period in a manner
determined by the Board of Directors to reflect the impact of such
dividend, subdivision, combination or reclassification on the current
market price of the Parent Stock during such period.
"current market price" of a share of Parent Stock on any day means the
last reported sale price, regular way (or, if no sale price is reported,
the average of the high and low bid prices), on such day on the Nasdaq
Stock Market or as quoted by the National Quotation Bureau Incorporated, or
if the Parent Stock is listed on an exchange, on the principal exchange on
which the Parent Stock is listed. In the event that no such quotation is
available for any day, the Board of Directors shall be entitled to
determine the current market price on the basis of such quotations as it
considers appropriate.
"Determination Date" for any issuance of rights or warrants or any
distribution to which Section 11.08 or 11.09 applies means the earlier of
(i) the record date for the determination of stockholders entitled
41
<PAGE>
to receive the rights or warrants or the distribution to which such Section
applies and (ii) the Ex-Dividend Date for such rights, warrants or
distribution.
"Ex-Dividend Date" means the date on which "ex-dividend" trading
commences for a dividend, an issuance of rights or warrants or a
distribution to which any of Sections 11.07, 11.08 and 11.09 applies in the
over-the-counter market or on the principal exchange on which the Parent
Stock is then quoted or listed.
Section 11.12. When Adjustment May Be Deferred.
In any case in which this Article shall require that an adjustment shall
become effective immediately after a record date for an event, the Company may
defer until the occurrence of such event (i) issuing to the Holder of any
Security converted after such record date and before the occurrence of such
event the additional shares of Parent Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the shares of
Parent Stock issuable upon such conversion before giving effect to such
adjustment and (ii) paying to such Holder cash or its check in lieu of any
fractional interest to which he is entitled pursuant to Section 11.04;
provided, however, that the Company shall deliver to such Holder a due bill or
other appropriate instrument evidencing such Holder's rights to receive such
additional shares of Parent Stock, and such cash, upon the occurrence of the
event requiring such adjustment.
Section 11.13. When Adjustment Is Not Required.
No adjustments in the conversion price or conversion rate need be made
unless the adjustment would require an increase or decrease of at least one
percent (1%) in the initial conversion price or conversion rate. Any
adjustment which is not made shall be carried forward and taken into account
in any subsequent adjustment.
All calculations under this Article shall be made to the nearest cent or to
the nearest 1/100th of a share, as the case may be.
No adjustment in the conversion price or conversion rate shall be made
because the Parent issues, in exchange for cash, property or services, shares
of Parent Stock, or any securities convertible into or exchangeable for shares
of Parent Stock, or securities carrying the right to purchase shares of Parent
Stock or such convertible or exchangeable securities.
No adjustment in the conversion price or conversion rate need be made under
this Article for sales of shares of Parent Stock pursuant to a Parent plan
providing for reinvestment of dividends or interest or in the event the par
value of the Parent Stock is changed.
No adjustment in the conversion price or conversion rate need be made for a
transaction referred to in Section 11.07, 11.08 or 11.09 if Securityholders
are to participate in the transaction on a basis and with notice that the
Board of Directors determines to be fair and appropriate in light of the basis
and notice on which holders of Parent Stock participate in the transaction;
provided that the basis on which the Securityholders are to participate in the
transaction shall not be deemed to be fair if it would require the conversion
of Securities at any time prior to the expiration of the conversion period
specified for such Securities.
To the extent the Securities become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the cash.
Section 11.14. Notice of Adjustment.
Whenever the conversion price or conversion rate is adjusted, the Company
shall promptly mail to Securityholders a notice of the adjustment and file
with the Trustee an Officers' Certificate briefly stating the new conversion
price or conversion rate, the date it becomes effective, the facts requiring
the adjustment and the manner of computing it. The certificate shall be
conclusive evidence that the adjustment is correct.
42
<PAGE>
Section 11.15. Notice of Certain Transactions.
If:
(1) the Parent takes any action which would require an adjustment in the
conversion price or conversion rate;
(2) the Parent consolidates or merges with, or transfers all or
substantially all of its assets to, another corporation, and stockholders
of the Parent must approve the transaction; or
(3) there is a dissolution or liquidation of the Parent,
a Holder of a Security may want to convert it into shares of Parent Stock
prior to the record date for, or the effective date of, the transaction so
that he may receive the rights, warrants, securities or assets which a holder
of shares of Parent Stock on that date may receive. Therefore, the Company
shall mail to the Securityholders and the Trustee a notice stating the
proposed record or effective date, as the case may be. Failure to mail the
notice or any defect in it shall not affect the validity of any transaction
referred to in clause (1), (2) or (3) of this Section.
Section 11.16. Consolidation, Merger or Sale of the Parent.
If the Parent is a party to a transaction described in Section 5.01 or a
merger which reclassifies or changes its outstanding Parent Stock, the Company
shall take such actions as may be necessary, in the good faith opinion of the
Board of Directors, to ensure that (i) the Holder of a Security may convert it
into the kind and amount of securities or cash or other assets which he would
have owned immediately after the consolidation, merger or transfer if he had
converted the Security immediately before the effective date of such
transaction, assuming (to the extent applicable) that such Holder failed to
exercise any rights of election with respect thereto and received per share of
Parent Stock the kind and amount of securities, cash or as received per share
by a plurality of the non-electing shares and (ii) the kind and amount of
securities into which the Securities become convertible as a result of the
consolidation, merger or transfer are subject to adjustments which are as
nearly equivalent as may be practical to the adjustments provided for in this
Article. The Company shall give to each Securityholder in accordance with
Section 12.02 a notice describing the actions so taken.
If this Section applies, Sections 11.07, 11.08 and 11.09 shall not apply.
Section 11.17. Company Determination Final.
Any determination which the Board of Directors must make pursuant to
Sections 11.07, 11.09, 11.11, 11.13 or 11.16 is conclusive and binding on the
Holders.
Section 11.18. Trustee's Disclaimer.
Neither the Trustee nor any Conversion Agent has any duty to determine when
an adjustment under this Article should be made, how it should be made or what
it would be. Neither the Trustee nor the Conversion Agent has any duty to
determine whether any actions taken by the Company in accordance with Section
11.16 are sufficient. Neither the Trustee nor any Conversion Agent makes any
representation as to the validity or value of any securities or assets issued
upon conversion of Securities. Neither the Trustee nor any Conversion Agent
shall be responsible for the Company's failure to comply with this Article.
Section 11.19. Simultaneous Adjustments.
In the event that this Article Eleven requires adjustments to the conversion
price or conversion rate under more than one of Sections 11.07(4), 11.08 or
11.09, and the record dates for the distributions giving rise to such
adjustments shall occur on the same date, then such adjustments shall be made
by applying, first, the provisions of Section 11.07, second, the provisions of
Section 11.09 and, third, the provisions of Section 11.08.
43
<PAGE>
ARTICLE TWELVE
Miscellaneous
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of TIA (S)(S)310 to 317, inclusive, through operation of
TIA (S)318(c), such imposed duties shall control.
Section 12.02. Notices.
Any notice or communication shall be sufficiently given if in writing and
delivered in person or mailed by first-class mail addressed as follows:
If to the Company:
TCI Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111
Attention: Bernard W. Schotters,
Executive Vice President and Treasurer
If to the Trustee:
Attention:
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed to
him at his address as it appears on the registration books of the Registrar
and shall be sufficiently given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders.
Except for a notice to the Trustee, which is deemed given only when received,
if a notice or communication is mailed in the manner provided above, it is
duly given, whether or not the addressee receives it.
Section 12.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA (S)312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S)312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the signers,
all conditions precedent (including any covenants compliance with which
constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent (including any covenants compliance with
which constitutes a condition precedent) have been complied with.
44
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Section 12.05. Statements Required in Certificate or Opinion.
Each Officers' Certificate or Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture (other than
certificates provided pursuant to Section 4.03) shall include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such person, such
condition or covenant has been complied with.
Section 12.06. When Treasury Securities Disregarded.
In determining whether the Holders of the required aggregate principal
amount of Securities of any series have concurred in any direction, waiver or
consent, Securities of such series owned by the Company or by any Affiliate of
the Company shall be disregarded and treated as not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities of such
series which the Trustee knows are so owned shall be so disregarded.
Section 12.07. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a meeting of the
Securityholders of all series or any series. The Registrar, Paying Agent or
Conversion Agent may make reasonable rules for its functions.
Section 12.08. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the City of New York, New York are not required to be open. If
a specified date (including a date for giving notice) or the last day to
convert a Security is a Legal Holiday, any action to be taken on such date
pursuant to this Indenture or the Securities (including such conversion) may
be taken on the next succeeding day that is not a Legal Holiday, and to the
extent applicable, no interest, or original issue discount, as the case may
be, shall accrue for the intervening period.
Section 12.09. Governing Law.
The internal laws of the State of New York shall govern this Indenture and
the Securities.
Section 12.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 12.11. No Recourse Against Others.
No past, present or future director, officer, employee or stockholder, as
such, of the Company or any successor thereof shall have any liability for any
obligations of the Company under the Securities or this Indenture 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 the Securities.
45
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Section 12.12. Successors.
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
Section 12.13. Duplicate Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 12.14. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
46
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Signatures
Dated: January , 1998
TCI Communications, Inc.
By
----------------------------------
(Seal)
Dated: January , 1998
, Trustee
By
----------------------------------
(Seal)
47
<PAGE>
EXHIBIT 4.3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TCI COMMUNICATIONS, INC.
AND
, TRUSTEE
----------------
INDENTURE
DATED AS OF JANUARY , 1998
----------------
SUBORDINATED DEBT SECURITIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
<C> <S> <C>
310 (a)(1).............................................. 7.10
(a)(2).............................................. 7.10
(a)(3).............................................. N.A.
(a)(4).............................................. N.A.
(a)(5).............................................. 7.10
(b)................................................. 7.08; 7.10; 12.02
(c)................................................. N.A.
311 (a)................................................. 7.11
(b)................................................. 7.11
(c)................................................. N.A.
312 (a)................................................. 2.07
(b)................................................. 12.03
(c)................................................. 12.03
313 (a)................................................. 7.06
(b)(1).............................................. N.A.
(b)(2).............................................. 7.06
(c)................................................. 12.02
(d)................................................. 7.06
314 (a)................................................. 4.02; 4.03; 12.02
(b)................................................. N.A.
(c)(1).............................................. 12.04
(c)(2).............................................. 12.04
(c)(3).............................................. N.A.
(d)................................................. N.A.
(e)................................................. 12.05
(f)................................................. N.A.
315 (a)................................................. 7.01(b)
(b)................................................. 7.05; 12.02
(c)................................................. 7.01(a)
(d)................................................. 7.01(c)
(e)................................................. 6.11
316 (a)(last sentence).................................. 12.06
(a)(1)(A)........................................... 6.05
(a)(1)(B)........................................... 6.04
(a)(2).............................................. N.A.
(b)................................................. 6.07
317 (a)(1).............................................. 6.08
(a)(2).............................................. 6.09
(b)................................................. 2.06
318 (a)................................................. 12.01
</TABLE>
- --------
N.A. means Not Applicable.
2
<PAGE>
TABLE OF CONTENTS
----------------
<TABLE>
<CAPTION>
Section Heading Page
<C> <S> <C>
ARTICLE ONE
Definitions and Incorporation by Reference
1.01. Definitions...................................................... 7
1.02. Other Definitions................................................ 9
1.03. Incorporation by Reference of Trust Indenture Act................ 9
1.04. Rules of Construction............................................ 9
ARTICLE TWO
The Securities
2.01. Forms Generally and Dating....................................... 10
2.02. Amount Unlimited; Issuable in Series............................. 10
2.03. Denominations.................................................... 12
2.04. Execution and Authentication..................................... 12
2.05. Registrar, Paying Agent and Conversion Agent..................... 14
2.06. Paying Agent to Hold Money and Securities in Trust............... 14
2.07. Securityholder Lists............................................. 14
2.08. Transfer and Exchange............................................ 14
2.09. Replacement Securities........................................... 16
2.10. Outstanding Securities........................................... 16
2.11. Temporary Securities............................................. 17
2.12. Cancellation..................................................... 17
2.13. Payment of Interest; Defaulted Interest.......................... 17
2.14. Persons Deemed Owners............................................ 18
2.15. Securities in Global Form........................................ 18
ARTICLE THREE
Redemption
3.01. Applicability of Article......................................... 19
3.02. Notices to Trustee............................................... 19
3.03. Selection of Securities to be Redeemed........................... 19
3.04. Notice of Redemption............................................. 20
3.05. Effect of Notice of Redemption................................... 20
3.06. Deposit of Redemption Price...................................... 20
3.07. Securities Redeemed in Part...................................... 21
3.08. Conversion Arrangement on Call for Redemption.................... 21
ARTICLE FOUR
Covenants
4.01. Payment of Securities............................................ 21
4.02. SEC Reports...................................................... 21
4.03. Compliance Certificate........................................... 21
4.04. Corporate Existence.............................................. 22
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Section Heading Page
<C> <S> <C>
ARTICLE FIVE
Successor Corporation
5.01. When Company May Merge, etc...................................... 22
ARTICLE SIX
Defaults and Remedies
6.01. Events of Default................................................ 22
6.02. Acceleration..................................................... 23
6.03. Other Remedies................................................... 23
6.04. Waiver of Existing Defaults...................................... 24
6.05. Control by Majority.............................................. 24
6.06. Limitation on Suits.............................................. 24
6.07. Rights of Holders to Receive Payment and to Convert.............. 24
6.08. Collection Suit by Trustee....................................... 24
6.09. Trustee May File Proofs of Claim................................. 25
6.10. Priorities....................................................... 25
6.11. Undertaking for Costs............................................ 25
ARTICLE SEVEN
Trustee
7.01. Duties of Trustee................................................ 25
7.02. Rights of Trustee................................................ 26
7.03. Individual Rights of Trustee..................................... 26
7.04. Trustee's Disclaimer............................................. 26
7.05. Notice of Defaults............................................... 26
7.06. Reports by Trustee to Holders.................................... 27
7.07. Compensation and Indemnity....................................... 27
7.08. Replacement of Trustee........................................... 27
7.09. Successor Trustee by Merger, etc................................. 28
7.10. Eligibility; Disqualification.................................... 28
7.11. Preferential Collection of Claims Against Company................ 28
ARTICLE EIGHT
Discharge of Indenture
8.01. Termination of Company's Obligations............................. 28
8.02. Application of Trust Fund........................................ 29
8.03. Repayment to Company............................................. 29
ARTICLE NINE
Amendments, Supplements and Waivers
9.01. Without Consent of Holders....................................... 29
9.02. With Consent of Holders.......................................... 30
9.03. Compliance with Trust Indenture Act.............................. 31
9.04. Revocation and Effect of Consents................................ 31
9.05. Notation on or Exchange of Securities............................ 31
9.06. Trustee to Sign Amendments, etc.................................. 31
</TABLE>
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<TABLE>
<CAPTION>
Section Heading Page
<C> <S> <C>
ARTICLE TEN
Subordination
10.01. Securities Subordinated to Senior Debt........................... 31
10.02. Company Not to Make Payments with Respect to Securities in
Certain Circumstances........................................... 32
10.03. Securities Subordinated to Prior Payment of All Senior Debt on
Dissolution, Liquidation or Reorganization of Company........... 32
10.04. Securityholders to be Subrogated to Right of Holders of Senior
Debt............................................................ 33
10.05. Obligation of the Company Unconditional.......................... 33
10.06. Trustee Entitled to Assume Payments Not Prohibited in Absence of
Notice.......................................................... 34
10.07. Application by Trustee of Monies or U.S. Government Obligations
Deposited with It............................................... 34
10.08. Subordination Rights Not Impaired by Acts or Omissions of Company
or Holders of Senior Debt....................................... 35
10.09. Securityholders Authorize Trustee to Effective Subordination of
Securities...................................................... 35
10.10. Right of Trustee to Hold Senior Debt............................. 35
10.11. Article Ten Not to Prevent Events of Default..................... 35
ARTICLE ELEVEN
Conversion
11.01. Applicability of Article......................................... 35
11.02. Conversion Privilege............................................. 35
11.03. Conversion Procedures............................................ 36
11.04. Fractional Shares................................................ 37
11.05. Taxes on Conversion.............................................. 37
11.06. Reservation of Parent Stock, Etc. ............................... 37
11.07. Adjustment for Change in Parent Capital Stock.................... 37
11.08. Adjustment for Rights Issue...................................... 38
11.09. Adjustments for Other Distributions.............................. 39
11.10. Voluntary Adjustment............................................. 39
11.11. Certain Definitions.............................................. 40
11.12. When Adjustment May be Deferred.................................. 41
11.13. When Adjustment Is Not Required.................................. 41
11.14. Notice of Adjustment............................................. 41
11.15. Notice of Certain Transactions................................... 41
11.16. Consolidation, Merger or Sale of the Parent...................... 42
11.17. Company Determination Final...................................... 42
11.18. Trustee's Disclaimer............................................. 42
11.19. Simultaneous Adjustments......................................... 42
ARTICLE TWELVE
Miscellaneous
12.01. Trust Indenture Act Controls..................................... 42
12.02. Notices.......................................................... 43
12.03. Communication by Holders with Other Holders...................... 43
12.04. Certificate and Opinion as to Conditions Precedent............... 43
12.05. Statements Required in Certificate or Opinion.................... 43
12.06. When Treasury Securities Disregarded............................. 44
12.07. Rules by Trustee and Agents...................................... 44
12.08. Legal Holidays................................................... 44
</TABLE>
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<TABLE>
<CAPTION>
Section Heading Page
<C> <S> <C>
12.09. Governing Law.................................................... 44
12.10. No Adverse Interpretation of Other Agreements.................... 44
12.11. No Recourse Against Others....................................... 44
12.12. Successors....................................................... 44
12.13. Duplicate Originals.............................................. 45
12.14. Table of Contents, Headings, Etc................................. 45
Signatures................................................................ 46
</TABLE>
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<PAGE>
INDENTURE dated as of January , 1998, between TCI COMMUNICATIONS, INC., a
Delaware corporation ("Company"), and ("Trustee").
The Company has duly authorized the execution and delivery of this Indenture
to provide for the issuance from time to time of its unsecured subordinated
debentures, notes, bonds or other evidences of subordinated indebtedness
("Securities"), to be issued in one or more series as provided in this
Indenture.
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the respective Holders from time to time of
Securities or of series thereof:
ARTICLE ONE
Definitions and Incorporation by Reference
Section 1.01. Definitions.
Affiliate of any person means any other person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such person.
Agent means any Registrar, Paying Agent, co-Registrar or Conversion Agent.
See Section 2.05.
Board of Directors means the Board of Directors of the Company or any
authorized committee thereof.
Business Day means any day which is not a Legal Holiday.
Company means TCI Communications, Inc., a Delaware corporation, until a
successor replaces it pursuant to the applicable provisions of this Indenture
and thereafter means the successor.
Convertible Securities means any or all options, warrants, securities and
rights, except the Series B Stock and the Securities, which are convertible
into or exercisable or exchangeable for Parent Stock or which otherwise
entitle the holder thereof to subscribe for, purchase or otherwise acquire
Parent Stock.
Default means any event which is, or after notice or passage of time or both
would be, an Event of Default.
Holder or Securityholder means the person in whose name a Security is
registered on the Registrar's books.
Indenture means this Indenture as amended or supplemented from time to time
and, unless the context indicates otherwise, shall include the form and terms
of a particular series of Securities established as contemplated hereunder.
interest, when used with respect to an Original Issue Discount Security
which by its terms bears interest only after maturity or upon default in any
other payment due on such Security, means interest payable after maturity or
upon such default, as the case may be.
Interest Payment Date means the date, if any, specified in the Securities of
any series as the fixed date on which any installment of interest on the
Securities of that series is due and payable.
Officer means the Chairman of the Board, the President, any Vice President,
the Treasurer or the Secretary of the Company.
Officers' Certificate means a certificate signed by two Officers or by an
Officer and an Assistant Treasurer or an Assistant Secretary of the Company
and delivered to the Trustee. See Sections 12.04 and 12.05.
Opinion of Counsel means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee. See Sections 12.04 and 12.05.
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<PAGE>
original issue discount of any debt security, including any Original Issue
Discount Security, means the difference between the principal amount of such
debt security and the initial issue price of such debt security (as set forth,
in the case of an Original Issue Discount Security, on the face of such
Security).
Original Issue Discount Security means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon
acceleration of the maturity thereof pursuant to Section 6.02.
Parent means Tele-Communications, Inc., a Delaware corporation, and any
successor thereof.
Parent Stock means the Tele-Communications, Inc. Series A TCI Group Common
Stock, $1.00 par value, of the Parent as it exists on the date of this
Indenture and any other capital stock into which such Series A TCI Group
Common Stock may thereafter have been changed.
principal of a debt security, including any Security, means the amount
(including, without limitation, if and to the extent applicable, any premium
and, in the case of an Original Issue Discount Security, any accrued original
issue discount, but excluding interest) that is payable with respect to such
debt security as of any date and for any purpose (including, without
limitation, in connection with any sinking fund, upon any redemption at the
option of the Company, upon any purchase or exchange at the option of the
Company or the holder of such debt security and upon any acceleration of the
maturity of such debt security).
principal amount of a debt security, including any Security, means the
principal amount as set forth on the face of such debt security.
Regular Record Date means the date, if any, specified in the Securities of
any series as the record date for the determination of Securityholders to whom
interest is payable on the next succeeding Interest Payment Date.
SEC means the Securities and Exchange Commission.
Securities means the Securities that are issued from time to time in one or
more series under this Indenture as such Securities are amended or
supplemented from time to time.
Series B Stock means the Tele-Communications, Inc. Series B TCI Group Common
Stock, $1.00 par value, of the Parent as it exists on the date of this
Indenture and stock of any other class into which such Series B TCI Group
Common Stock may thereafter have been changed.
Subsidiary means any corporation, association, partnership or other business
entity of which a majority of the voting power of the capital stock or other
interests (including partnership interests) entitled (without regard to the
occurrence of a contingency) to vote in the election of directors, managers,
or trustees thereof is at the time owned or controlled, directly or
indirectly, by (i) the Company, (ii) the Company and one or more of its
Subsidiaries or (iii) one or more Subsidiaries of the Company.
TIA means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-77bbbb)
as in effect on the date of this Indenture, except as provided in Section
9.03.
Trustee means the party named as such in this Indenture until a successor
replaces it and thereafter means the successor and if at any time there is
more than one such party, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
Trust Officer, when used with respect to the Trustee, shall mean the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice-president, the
treasurer, any assistant treasurer, the secretary, any assistant secretary,
any trust officer, any second or assistant vice-president, or any officer or
assistant officer of the Trustee other than those specifically above-mentioned
customarily performing functions
8
<PAGE>
similar to those performed by such above-mentioned officers and also means
with respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of his knowledge of and familiarity with the
particular subject.
United States means the United States of America.
U.S. Government Obligations means direct obligations of, or obligations
entitled to the full faith and credit of, the United States of America.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
TERM DEFINED IN SECTION
<S> <C>
Average Market Price.................................. 11.11
Bankruptcy Law........................................ 6.01
Code.................................................. 9.01
Conversion Agent...................................... 2.05
current market price.................................. 11.11
Custodian............................................. 6.01
Debt.................................................. 10.01
Determination Date.................................... 11.11
Event of Default...................................... 6.01
Ex-Dividend Date...................................... 11.11
Legal Holiday......................................... 12.08
Paying Agent.......................................... 2.05
Registrar............................................. 2.05
Senior Debt........................................... 10.01
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
Commission means the SEC.
indenture securities means the Securities.
indenture security holder means a Securityholder.
indenture to be qualified means this Indenture.
indenture trustee or institutional trustee means the Trustee.
obligor on the indenture securities means the Company and any other
obligor thereon.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to
it in accordance with generally accepted accounting principles in effect on
the date of this Indenture;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and in the plural include
the singular.
9
<PAGE>
ARTICLE TWO
The Securities
Section 2.01. Forms Generally and Dating.
The Securities of each series may be issued in whole or in part in the form
of one or more global Securities as shall be specified as contemplated by
Section 2.02. The Securities of each series (including any temporary global
Securities) shall be in one of the forms established from time to time by or
pursuant to a resolution of the Board of Directors or in or pursuant to one or
more indentures supplemental hereto, which shall set forth the information
required by Section 2.02. The Securities shall have such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture or by a resolution of the Board of Directors and
may have such notations, legends or endorsements as the Company may deem
appropriate and as are not inconsistent with the provisions of this Indenture,
or as may be required by law, stock exchange rule or usage. The Company shall
approve the form or forms of the Securities and any notation, legend or
endorsement on them. If the form or forms of Securities of any series is
established by action taken pursuant to a resolution of the Board of Directors
or indenture supplemental hereto, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the
written order of the Company contemplated by Section 2.04 for the
authentication and delivery of such Securities.
Each Security shall be dated the date of its authentication. The form of the
Trustee's certificate of authentication to be borne by the Securities shall be
substantially as follows:
CERTIFICATE OF AUTHENTICATION
The undersigned certifies that this is one of the Securities of the series
designated herein referred to in the within-mentioned Indenture.
as Trustee
By___________________________________
Authorized Officer
Section 2.02. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a resolution of the Board of Directors or
established in or pursuant to one or more indentures supplemental hereto,
prior to the issuance of Securities of any series:
(1) the title of the Securities of the series (which shall distinguish
Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of Securities of the
series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 2.08, 2.09, 2.11, 3.07, or 9.05 and except for
any Securities which pursuant to Section 2.04 are deemed not to have been
authenticated and delivered hereunder);
(3) (A) whether any of the Securities of the series are to be issuable in
global form and, if so, (i) the identity of the depositary with respect to
any such global Security and (ii) whether beneficial owners of
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<PAGE>
interests in any such global Security may exchange such interests for
Securities of the same series and of like tenor and of any authorized form
and denomination, and, if so, the circumstances under which and the manner
in which any such exchanges may occur, if other than as specified in
Section 2.08; (B) if any of the Securities of the series are to be issuable
in global form, the date as of which any global Security shall be dated (if
other than the date of original issuance of the first of such Securities to
be issued); and (C) if Securities of the series are to be issuable in
definitive form (whether upon original issue, upon exchange of a temporary
Security of such series, or in exchange for a beneficial ownership interest
in a permanent global Security) only upon receipt of certain certificates
or other documents or satisfaction of other conditions, or if Securities of
the series are initially issuable in temporary global form and if owners of
beneficial interests therein may exchange such interest for an interest in
a permanent global Security only upon receipt of certain certificates or
other documents or satisfaction of other conditions, then the form and/or
terms of such certificates, documents or conditions;
(4) the date or dates (and whether fixed or extendible) on which the
principal of Securities of the series is payable;
(5) the rate or rates at which Securities of the series shall bear
interest, or the method of determining the same, if any, the date or dates
from which such interest shall accrue, the Interest Payment Dates and the
Regular Record Dates;
(6) the place or places where the principal of any interest on Securities
of the series shall be payable;
(7) any provisions relating to the issuance of Securities of such series
at an original discount (including, without limitation, the issue price
thereof, the rate or rates at which such original issue discount shall
accrue, if any, and the date or dates from or to which or period or periods
during which such original issue discount shall accrue at such rate or
rates):
(8) the price or prices at which, the period or periods within which and
the terms and conditions upon which Securities of the series may be
redeemed or otherwise purchased, in whole or in part, at the option of the
Company, pursuant to any sinking fund or otherwise (including, without
limitation the form or method of payment thereof if other than in cash);
(9) the obligation, if any, of the Company to redeem, purchase or repay
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Securityholder thereof and the price or
prices at which and the period or periods within which and the terms and
conditions upon which Securities of the series shall be redeemed, purchased
or repaid, in whole or in part, pursuant to such obligation (including
without limitation, the form or method of payment thereof if other than in
cash);
(10) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(11) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
acceleration of the maturity thereof pursuant to Section 6.02 or provable
in bankruptcy pursuant to Section 6.09, or, if applicable, which is
convertible in accordance with Article Eleven;
(12) any Events of Default with respect to the Securities of a particular
series in lieu of or in addition to those set forth herein and the remedies
therefor;
(13) the obligation, if any, of the Company to permit the conversion of
Securities of such series into Parent Stock and the terms and conditions
upon which such conversion shall be effected (including, without
limitation, the initial conversion price or rate, the conversion period and
any other provision in addition to or in lieu of those set forth in this
Indenture relative to such obligation); and
(14) any other terms of a particular series and any other provisions
expressing or referring to the terms and conditions upon which the
Securities of that series are to be issued under the Indenture, which terms
and provisions are not in conflict with the provisions of this Indenture;
provided, however, the addition to or subtraction from or variation of
Articles Four, Five, Six, Eight and Eleven (and Sections 1.01 and 1.02,
insofar as they relate to the definition of certain terms as used in such
Articles) with regard to the Securities of a particular series shall not be
deemed to constitute a conflict with the provisions of those Articles.
11
<PAGE>
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to such
resolution of the Board of Directors or in any such indenture supplemental
hereto. Not all Securities of any one series need be issued at the same time,
and, unless otherwise so provided, a series may be reopened for issuances of
additional Securities of such series.
If any of the terms of the Securities of a series are established by action
taken pursuant to a resolution of the Board of Directors or indenture
supplemental hereto, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee with an Officers' Certificate setting forth the terms
or the manner of determining the terms of the Securities of such series. With
respect to Securities of a series which are not to be issued at one time, such
resolution of the Board of Directors or action may provide general terms or
parameters for Securities of such series and provide either that the specific
terms of particular Securities of such series shall be specified in a written
order of the Company or that such terms shall be determined by the Company or
its agents in accordance with a written order of the Company as contemplated
by the proviso clause of the fourth paragraph of Section 2.04.
Section 2.03. Denominations.
The Securities of each series shall be issuable in registered form without
coupons in such denominations as shall be specified as contemplated by Section
2.02. In the absence of any such provisions with respect to the Securities of
any series, the Securities of such series shall be issuable in denominations
of $1,000 and any integral multiple thereof.
Section 2.04 Execution and Authentication.
Two Officers shall sign the Securities for the Company by facsimile
signature. The Company's seal shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds that office
at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be entitled to any benefit under this Indenture or be
valid for any purpose until the Trustee manually signs the certificate of
authentication on the Security. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture. Notwithstanding
the foregoing, if any Security shall have been duly authenticated and
delivered hereunder but never issued and sold by the Company, and the Company
shall deliver such Security to the Trustee for cancellation as provided in
Section 2.12 together with a written statement (which need not comply with
Section 12.04 and 12.05 and need not be accompanied by an Opinion of Counsel)
stating that such Security has not been issued and sold by the Company, for
all purposes of this Indenture such Security shall be deemed not to have been
authenticated and delivered hereunder and shall not be entitled to the
benefits of this Indenture.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, and the Trustee shall authenticate
and deliver said Securities to or upon the written order of the Company,
signed by two Officers or by an Officer and an Assistant Treasurer of the
Company, without any further action by the Company. Such written order shall
specify the date on which said Securities shall be authenticated; provided,
however, that if not all the Securities of a series are to be issued at one
time and if the resolution of the Board of Directors or indenture supplemental
hereto establishing such series as contemplated by Sections 2.01 and 2.02
shall so permit, such written order may set forth procedures acceptable to the
Trustee for the issuance of such Securities and for determining the form or
terms of particular Securities of such series including, but not limited to,
interest rate, maturity date, date of issuance and date from which interest
shall accrue.
If the form or forms or terms of the Securities of the series have been
established in or pursuant to one or more resolutions of the Board of
Directors or indentures supplemental hereto as permitted by Sections 2.01 and
12
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2.02, in authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon, an Opinion of Counsel stating:
(1) if the form or forms of such Securities has been established by or
pursuant to a resolution of the Board of Directors or indenture
supplemental hereto, that such form or forms has been established in
conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or pursuant
to a resolution of the Board of Directors or indenture supplemental hereto,
that such terms have been established in conformity with the provisions of
this Indenture; and
(3) that such Securities, when authenticated and delivered by the Trustee
and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will have been duly issued and will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization and other laws of general
applicability relating to or affecting the enforcement of creditors' rights
and to general equitable principles;
provided, however, that, with respect to Securities of a series which are not
to be issued at one time, the Trustee shall be entitled to receive such
Opinion of Counsel only once at or prior to the time of the first
authentication of Securities of such series and that the opinions described in
clauses (2) and (3) above may state, respectively,
(a) that, when the terms of such Securities shall have been established
pursuant to a written order of the Company or pursuant to such procedures
as may be specified from time to time by a written order of the Company,
all as contemplated by and in accordance with a resolution of the Board of
Directors or an Officers' Certificate pursuant to a resolution of the Board
of Directors or indenture supplemental hereto, as the case may be, such
terms will have been established in conformity with the provisions of this
Indenture; and
(b) that such Securities, when (i) executed by the Company, (ii)
completed, authenticated and delivered by the Trustee in accordance with
this Indenture, (iii) issued and delivered by the Company and (iv) paid
for, all as contemplated by and in accordance with the aforesaid written
order of the Company or specified procedures, as the case may be, will have
been duly issued and will constitute valid and legally binding obligations
of the Company, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization and other
laws of general applicability relating to or affecting the enforcement of
creditors' rights and to general equitable principles.
Notwithstanding the provisions of Sections 2.01, 2.02, 12.04 and this
Section, if all the Securities of a series are not to be originally issued at
one time, the resolution of the Board of Directors or indenture supplemental
hereto, the certified copy of the record of action taken pursuant to such
resolution or supplemental indenture, the Officers' Certificate, the written
resolution or supplemental indenture, the written order of the Company and any
other documents otherwise required pursuant to such Sections need not be
delivered at or prior to the time of authentication of each Security of such
series if such documents are delivered at or prior to the authentication upon
original issuance of the first Security of such series to be issued; provided,
however, that any subsequent request by the Company to the Trustee to
authenticate Securities of such series shall constitute a representation and
warranty by the Company that as of the date of such request, the statements
made in the Officers' Certificate delivered pursuant to Section 12.04 at or
prior to authentication of the first such Security shall be true and correct
on the date thereof as if made on and as of the date thereof.
The Trustee shall have the right to decline to authenticate and make
available for delivery any Securities under this Section if the issuance of
such Securities pursuant to this Indenture will affect the Trustee's own
rights, duties or immunities under the Securities and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee.
With respect to Securities of a series which are not all issued at one time,
the Trustee may conclusively rely, as to the authorization by the Company of
any of such Securities, the form and terms thereof and the
13
<PAGE>
legality, validity, binding effect and enforceability thereof, upon the
Opinion of Counsel, Officers' Certificate and other documents delivered
pursuant to Sections 2.01, 2.02, 12.04 and this Section, as applicable, at or
prior to the time of the first authentication of Securities of such series
unless and until such opinion, certificate or other documents have been
superseded or revoked. In connection with the authentication and delivery of
Securities of a series which are not all issued at one time, the Trustee shall
be entitled to assume that the Company's instructions to authenticate and
deliver such Securities do not violate any rules, regulations or orders of any
governmental agency or commission having jurisdiction over the Company.
Section 2.05. Registrar, Paying Agent and Conversion Agent.
The Company shall maintain an office or agency where Securities of each
series may be presented for registration of transfer or for exchange
("Registrar"), an office or agency where Securities of each series may be
presented for payment ("Paying Agent") and an office or agency where
Securities of each series that is convertible may be presented for conversion
("Conversion Agent"). The Registrar shall keep a register of the Securities of
each series issued hereunder and of their transfer and exchange. The Company
may have one or more co-Registrars (provided that there shall be only one
register, which shall be maintained by the principal Registrar), one or more
additional paying agents and one or more conversion agents with respect to any
series. The term "Paying Agent" includes any additional paying agent and the
term "Conversion Agent" includes any additional conversion agent.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company shall promptly notify
the Trustee of the name and address of any such Agent. If the Company fails to
maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall act
as such.
The Company initially appoints the Trustee Registrar and Paying Agent for
each series and the Conversion Agent for any series that is convertible.
Section 2.06. Paying Agent to Hold Money and Securities in Trust.
Subject to Section 10.07, each Paying Agent shall hold in trust for the
benefit of Securityholders of the relevant series or the Trustee all money and
securities held by the Paying Agent for the payment of any amount in respect
of the Securities of such series, and shall notify the Trustee of any default
by the Company in making any such payment. If the Company or a Subsidiary acts
as Paying Agent, it shall segregate such money and securities and hold it as a
separate trust fund. The Company at any time may require a Paying Agent to pay
all money and securities held by it to the Trustee and account for any funds
or securities disbursed. Upon doing so the Paying Agent shall have no further
liability for the money or securities.
Section 2.07. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably practicable
the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee on or before either (1) April 1 and October 1 in each
year in the case of Original Issue Discount Securities of any series which by
their terms do not bear interest prior to maturity (other than upon a default
in any payment upon such a Security) or (2) the Interest Payment Date for the
Securities of any other series, but in no event less frequently than semi-
annually, and at such other times as the Trustee may request in writing a list
in such form and as of such date as the Trustee may reasonably require of the
names and addresses of Securityholders.
Section 2.08. Transfer and Exchange.
Where a Security is presented to the Registrar or a co-Registrar with a
request to register a transfer, the Registrar shall register the transfer as
requested if its requirements for such transfer are met. Where Securities are
presented to the Registrar or a co-Registrar with a request to exchange them
for an equal aggregate principal amount of Securities of the same series of
other authorized denominations, the Registrar shall make the exchange
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as requested if its requirements for such exchange are met. The Registrar
shall require, among other things, that any Security presented or surrendered
for transfer or exchange be duly endorsed, or be accompanied by appropriate
transfer documents duly executed, by the Holder thereof or his attorney duly
authorized in writing. To permit transfers and exchanges, the Trustee shall
authenticate Securities at the Registrar's request. Any exchange or transfer
shall be without charge, except that the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto.
The Registrar need not transfer or exchange any Security selected for
redemption, or purchase (except, in the case of Securities to be redeemed or
purchased in part, the portion thereof not to be redeemed or purchased) or any
Security in respect of which a notice requiring the purchase or redemption
thereof by the Company at the option of the Holder has been given and not
withdrawn by the Holder thereof in accordance with the terms of such
Securities (except, in the case of Securities to be so purchased or redeemed
in part, the portion thereof not to be so purchased or redeemed) or transfer
or exchange Securities of any particular series during a period of 15 days
before a selection of Securities of such series to be redeemed.
Except as otherwise provided with respect to the Securities of any series as
contemplated by Section 2.02, a global Security may be exchanged only as
provided below in this Section.
If at any time the depositary with respect to a global Security representing
all or a portion of the Securities of or within a series notifies the Company
that it is unwilling, unable or ineligible to continue as such depositary, the
Company shall appoint a successor depositary with respect to such Securities.
Unless otherwise provided with respect to a series of Securities as
contemplated by Section 2.02, if a successor depositary is not so appointed by
the Company within 90 days after the Company receives such notice, the Company
will execute and the Trustee, upon receipt of a written order of the Company
as contemplated by Section 2.04 for the authentication and delivery of
definitive Securities of such series (or, if such written order has previously
been delivered, then upon receipt of written instructions from the person or
persons specified in such written order), will authenticate and deliver
Securities of such series in definitive form equal in aggregate principal
amount to the principal amount of the global Security or Securities
representing such series in exchange for such global Security or Securities.
The Company may at any time and in its sole discretion determine that the
Securities of any series issued in the form of one or more global Securities
shall no longer be represented by such global Security or Securities. In such
event the Company will execute and the Trustee, upon receipt of a written
order of the Company as contemplated by Section 2.04 for the authentication
and delivery of definitive Securities of such series (or, if such written
order has previously been delivered, then upon receipt of written instructions
from the person or persons specified in such written order), will authenticate
and deliver Securities of such series in definitive form equal in aggregate
principal amount to the principal amount of the global Security or Securities
representing such series in exchange for such global Security or Securities.
If a global Security is otherwise exchangeable as specified by the Company
pursuant to Section 2.02(3) with respect to a series of Securities, the
depositary with respect to a global Security representing all or a portion of
the Securities of or within such series may surrender such global Security to
the Trustee, as the Company's agent for such purpose, to be exchanged in whole
or in part for Securities of such series in definitive form in the manner and
under the circumstances so specified and on such terms as are acceptable to
the Company and such depositary. In such event, the Company shall execute and
the Trustee shall authenticate and deliver or make available for delivery:
(i) to each Person specified by such depositary a new Security or
Securities of the same series and of like tenor, of any authorized form and
denomination as requested by such Person in aggregate principal amount
equal to and in exchange for such Person's beneficial interest in the
global Security; and
(ii) unless endorsement of the surrendered global Security as
contemplated by Section 2.15 or another procedure is specified for the
Securities of such series as contemplated by Section 2.02, to such
depositary a new global Security in a denomination equal to the difference,
if any, between the principal amount of the surrendered global Security and
the aggregate principal amount of Securities delivered pursuant to clause
(i) above in exchange for beneficial interests in such surrendered global
Security.
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In any exchange provided for in any of the preceding three paragraphs, the
Company will execute and the Trustee will authenticate and deliver Securities
in definitive registered form in authorized denominations.
Upon the exchange of a global Security for Securities in definitive form,
such global Security shall be cancelled by the Trustee, unless endorsement of
the surrendered global Security as contemplated by Section 2.15 or another
procedure is specified for the Securities of such series as contemplated by
Section 2.02. Securities issued in exchange for a global Security pursuant to
this Section shall be registered in such names and in such authorized
denominations as the depositary for such global Security, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Securities to the persons
in whose names such Securities are so registered.
If a Security is issued in exchange for any portion of a global Security
after the close of business at the office or agency where such exchange occurs
(i) on any Regular Record Date and before the opening of business at such
office or agency on the relevant Interest Payment Date, or (ii) on any special
record date and before the opening of business at such office or agency on the
related date for payment of defaulted interest, interest or defaulted
interest, as the case may be, will not be payable on such Interest Payment
Date or proposed date for payment, as the case may be, in respect of such
Security, but will be payable on such Interest Payment Date or proposed date
for payment, as the case may be, only to the Person to whom interest in
respect of such portion of such global Security is payable in accordance with
the provisions of this Indenture.
All securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Section 2.09. Replacement Securities.
If a mutilated Security is surrendered to the Registrar or if the Holder of
a Security claims that the Security has been lost, destroyed or wrongfully
taken, then, in the absence of notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall issue
and the Trustee shall authenticate a replacement Security if the Trustee's
requirements are met. If required, such Holder shall furnish an indemnity bond
sufficient in the judgment of the Company and the Trustee to protect the
Company, the Trustee or any Agent from any loss which any of them may suffer
if a Security is replaced. The Company may charge for its expenses in
replacing a Security. Every replacement Security is an additional obligation
of the Company.
In case any such lost, destroyed or wrongfully-taken Security has become or
is about to become due and payable, or is about to be purchased by the Company
pursuant to any provision of the Securities of such series providing for the
purchase thereof at the option of the Holder or the Company, the Company in
its discretion may, instead of issuing a new Security, pay or purchase such
Security.
Section 2.10. Outstanding Securities.
Securities outstanding at any time are all Securities authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation and those described in this Section as not being outstanding. A
Security does not cease to be outstanding because the Company or one of its
Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.09, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds on a redemption date or maturity date or on the
Business Day following a date on which Securities of such series are to be
purchased by the Company pursuant to any provision thereof providing for such
purchase at the option of the Holder or the Company, money (or securities if
permitted by the terms of such Securities) in trust or, if the Company, acting
as its own Paying Agent, sets aside and segregates
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money (or securities if permitted by the terms of such Securities) in trust,
sufficient to pay Securities payable on that date, then on and after that date
such Securities cease to be outstanding and interest, if any (and original
issue discount, if Original Issue Discount Securities) on them ceases to
accrue, unless the Trustee or the Paying Agent is restricted under Article Ten
in applying such money.
Section 2.11. Temporary Securities.
Until a permanent global Security or definitive Securities are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities of any series shall be substantially in the
form of definitive Securities of such series, but may have variations that the
Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities of the same series. Until so
exchanged the temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities of
such series.
Section 2.12. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation, including Securities authenticated which the Company has not
issued and sold. The Company, Registrar, Paying Agent and Conversion Agent
shall forward to the Trustee any Securities surrendered to them for transfer,
exchange, payment, redemption, purchase by the Company pursuant to any
provision thereof providing for such purchase at the option of the Holder, or
conversion. The Trustee and no one else shall cancel all Securities
surrendered for transfer, exchange, payment, redemption, purchase, conversion
or cancellation, and may dispose of cancelled Securities as the Company
directs. Except as otherwise provided in the resolution of the Board of
Directors or indenture supplemental hereto establishing such series as
contemplated by Section 2.02, the Company may not issue new Securities of a
series to replace Securities of the same series that it has paid or that have
been delivered to the Trustee for cancellation.
Section 2.13. Payment of Interest; Defaulted Interest.
Interest (except defaulted interest) on the Securities of any series which
is payable on any Interest Payment Date shall be paid to the persons who are
Holders of such series at the close of business on the Regular Record Date for
such interest payment. At the option of the Company, payment of interest on
any Security may be made by check mailed to the Holder's registered address.
If the Company defaults in a payment of interest on the Securities of any
series on any Interest Payment Date, it shall pay the defaulted interest to
the persons who are Securityholders of such series at the close of business on
a subsequent special record date. The Company shall fix the record date and
payment date. At least 15 days before the record date, the Company shall mail
to each Securityholder of such series a notice that states the record date,
the payment date and the amount of defaulted interest to be paid. The Company
shall notify the Trustee in writing of the amount of defaulted interest
proposed to be paid on each Security of such series and the date of the
proposed payment, and at the same time the Company shall deposit with the
Paying Agent an amount of money equal to the aggregate amount proposed to be
paid in respect of such defaulted interest or shall make arrangements
satisfactory to the Paying Agent for such deposit prior to the date of the
proposed payment. The Company may pay defaulted interest in any other lawful
manner.
Unless otherwise provided with respect to the Securities of any series as
contemplated by Section 2.02, in the case of any Security of any series which
is converted after any Regular Record Date and on or prior to the next
succeeding Interest Payment Date (other than any Security which is due and
payable prior to such Interest Payment Date), interest which is due and
payable on such Interest Payment Date shall be payable on such Interest
Payment Date notwithstanding such conversion, and such interest shall be paid
to the Holder in whose name that Security is registered at the close of
business on such Regular Record Date.
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Section 2.14. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any Agent may treat the person in whose name such
Security is registered as the owner of such Security for the purpose of
receiving payment of principal of and (subject to Section 2.13) interest on
such Security and for all other purposes whatsoever, and neither the Company,
the Trustee nor any Agent shall be affected by notice to the contrary.
No holder of any beneficial interest in any global Security held on its
behalf by a depositary shall have any rights under this Indenture with respect
to such global Security, and such depositary (or its nominee, if such global
Security is registered in the name of a nominee) may be treated by the
Company, the Trustee, and any Agent as the owner of such global Security for
all purposes whatsoever. None of the Company, the Trustee, or any Agent will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of beneficial ownership interests of a global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any global Security, nothing
herein shall prevent the Company, the Trustee, or any Agent from giving effect
to any written certification, proxy or other authorization furnished by any
depositary, as a Holder, with respect to such global Security or impair, as
between such depositary and owners of beneficial interests in such global
Security, the operation of customary practices governing the exercise of the
rights of such depositary (or its nominee) as Holder of such global Security.
Section 2.15. Securities in Global Form.
If the Company shall establish pursuant to Section 2.02 that the Securities
of or within a series are to be issued in whole or in part in global form,
then the Company shall execute, and the Trustee shall, in accordance with
Section 2.04 and the written order of the Company contemplated thereby,
authenticate and deliver one or more global Securities in temporary or
permanent form that (i) shall be registered in the name of the depositary for
such global Security or Securities or the nominee of such depositary, (ii)
shall be delivered by the Trustee to such depositary or pursuant to such
depositary's instructions, and (iii) shall bear a legend substantially to the
following effect: "Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security 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." Each depositary
designated pursuant to Section 2.02 for a global Security in registered form
must be, to the extent required by applicable law or regulation, a clearing
agency registered under the Securities Exchange Act of 1934, as amended, and
any other applicable statute or regulation, at the time of its designation and
at all times that it serves as depositary. Notwithstanding clause (14) of
Section 2.02 and the provisions of Section 2.03, any such global Security
shall represent such of the outstanding Securities of such series as shall be
specified therein and may provide that it shall represent the aggregate amount
of outstanding Securities of such series from time to time endorsed thereon
and that the aggregate amount of outstanding Securities represented thereby
may from time to time be increased or decreased to reflect exchanges. Any
endorsement of a Security in a global form to reflect the amount, or any
increase or decrease in the amount, or changes in the rights of Holders, of
outstanding Securities represented thereby shall be made in such manner and
upon instructions given by such Person or Persons as shall be specified
therein or in the written order of the Company to be delivered to the Trustee
pursuant to Section 2.04. Subject to the provisions of Section 2.04 and, if
applicable, Section 2.11, the Trustee shall deliver and redeliver any Security
in permanent global form in the manner and upon instructions given by the
Person or Persons specified therein or in the applicable written order of the
Company. If a written order of the Company pursuant to Section 2.04 has been,
or simultaneously is, delivered, any instructions with respect to a Security
in global form shall be in writing but need not comply with Sections 12.04 and
12.05 and need not be accompanied by an Opinion of Counsel.
The provisions of the last sentence of the third paragraph of Section 2.04
shall apply to any Security represented by a Security in global form if such
Security was never issued and sold by the Company and the
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Company delivers to the Trustee the Security in global form together with
written instructions (which need not comply with Sections 12.04 and 12.05 and
need not be accompanied by an Opinion of Counsel) with regard to the reduction
in the principal amount of Securities represented thereby, together with the
written statement contemplated by the last sentence of the third paragraph of
Section 2.04.
ARTICLE THREE
Redemption
Section 3.01. Applicability of Article.
Securities of any series which are redeemable before their stated maturity
at the election of the Company or through the operation of any sinking fund
for the retirement of Securities of such series shall be redeemable in
accordance with their terms and (except as otherwise specified as contemplated
by Section 2.02 for Securities of any series) in accordance with this Article.
Section 3.02. Notices to Trustee.
If the Company elects to redeem all or less than all the Securities of any
series, it shall notify the Trustee of the redemption date, the principal
amount of Securities to be redeemed, the specific provison of the Securities
pursuant to which the Securities being called for redemption are being
redeemed and the redemption price. In the case of any redemption of Securities
prior to the expiration of any restriction on such redemption provided in the
terms of such Securities or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officers' Certificate evidencing compliance with
such restriction. If the Company wants to make any permitted optional sinking
fund payment it shall notify the Trustee of the principal amount of the
Securities to be redeemed.
The Company (1) may deliver outstanding Securities of a series (other than
any previously called for redemption) and (2) may apply as a credit Securities
of a series which (i) have been redeemed or otherwise purchased either at the
election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities or (ii) have been converted pursuant to the terms of
such Securities, in each case in satisfaction of all or any part of any
sinking fund payment required to be made pursuant to the terms of the
Securities of such series as provided for by the terms of such series;
provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at
the redemption price specified in such Securities for redemption through
operation of the sinking fund and the amount of such sinking fund payment
shall be reduced accordingly. The Company shall notify the Trustee of its
intention to so reduce the amount of such sinking fund payment, the amount of
the reduction and the basis for it. The Company shall deliver to the Trustee
with such notice any Securities to be credited for such purpose that it has
not previously delivered to the Trustee for cancellation.
The Company shall give each notice and Officers' Certificate provided for in
this Section at least 60 days before the redemption date (unless a shorter
notice shall be satisfactory to the Trustee or is otherwise specified as
contemplated by Section 2.02 for Securities of any series).
Section 3.03. Selection of Securities to be Redeemed.
Except as otherwise specified as contemplated by Section 2.02 for Securities
of any series, if less than all the Securities of any series are to be
redeemed, the particular Securities to be redeemed shall be selected from
Securities of the same series outstanding not previously called for redemption
by such method as the Trustee considers fair and appropriate and which may
provide for the selection for redemption of portions (equal to the minimum
authorized denomination for Securities of that series or any integral multiple
thereof) of the principal amount of Securities of such series that have
denominations larger than the minimum authorized denomination for Securities
of that series. Provisions of this Indenture that apply to Securities called
for redemption also apply
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to portions of Securities called for redemption. If any Security selected for
partial redemption is converted in part after such selection but before the
termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed
(so far as may be practicable) to be the portion selected for redemption.
Section 3.04. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date (unless
a shorter notice is specified as contemplated by Section 2.02 for Securities
of any series), the Company shall mail a notice of redemption by first-class
mail to each Holder of Securities of the series to be redeemed.
The notice shall identify the Securities (and, in the case of partial
redemption, the principal amount of the Securities) to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price and method of payment, if other than in cash;
(3) if applicable, the current conversion price or rate;
(4) the name and address of the Paying Agent and, if applicable, the
Conversion Agent;
(5) if applicable, that the right of the Holder to convert Securities
called for redemption shall terminate at the close of business on the
fifteenth day prior to the redemption date (or such other day as may be
specified as contemplated by Section 2.02 for Securities of any series);
(6) if applicable, that Holders who want to convert Securities called for
redemption must satisfy the requirements for conversion contained in such
Securities;
(7) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(8) that interest, if any (or original issue discount, if Original Issue
Discount Securities), on Securities called for redemption ceases to accrue
on and after the redemption date, unless the Company defaults in making
such redemption payment; and
(9) that the redemption is for a sinking fund or at the election of the
Company, whichever is the case.
At the Company's request, the Trustee shall give the notice of redemption in
the Company's name and at the Company's expense.
Section 3.05 Effect of Notice of Redemption.
Once notice of redemption is mailed. Securities of the series called for
redemption become due and payable on the redemption date and at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at
the redemption price, plus, if applicable, accrued interest, if any, to the
redemption date; provided, however, that installments of interest the Interest
Payment Date for which is on or prior to the redemption date shall be payable
to the persons who are Holders of such Securities on the relevant record dates
for such interest according to their terms and Section 2.13.
Section 3.06 Deposit of Redemption Price.
Unless otherwise provided as contemplated by Section 2.02 with respect to
any series of Securities, on or before the redemption date, the Company shall
deposit with the Paying Agent money (or securities if permitted by the terms
of such Securities) sufficient to pay the redemption price of, and (except if
the redemption date is an Interest Payment Date) accrued interest, if any, on,
all Securities to be redeemed on that date other than Securities or portions
thereof called for redemption on that date which are delivered by the Company
to the Trustee for cancellation. The Paying Agent shall return to the Company
any money (or securities) not required for that purpose because of conversion
of Securities.
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Section 3.07 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Trustee shall
authenticate for the Holder a new Security of the same series, of any
authorized denomination requested by such Holder, equal in principal amount to
the unredeemed portion of the Security surrendered.
Section 3.08 Conversion Arrangement on Call for Redemption.
In connection with any redemption of Securities, the Company may arrange for
the purchase and conversion of any Securities called for redemption by an
agreement with one or more investment bankers or other purchasers to purchase
such Securities by paying to the Trustee in trust for the Securityholders, on
or before the close of business on the redemption date, an amount in cash not
less than the redemption price, together with interest, if any, accrued to the
redemption date, of such Securities. Notwithstanding anything to the contrary
contained in this Article Three, the obligation of the Company to pay the
redemption price of such Securities, including all accrued interest, if any,
shall be deemed to be satisfied and discharged to the extent such amount is so
paid by such purchasers. If such an agreement is entered into, any Securities
not duly surrendered for conversion by the Holders thereof may, at the option
of the Company, be deemed, to the fullest extent permitted by law, acquired by
such purchasers from such Holders and (notwithstanding anything to the
contrary contained in Article Eleven) surrendered by such purchasers for
conversion, all as of immediately prior to the close of business on the last
day on which Securities of such series called for redemption may be converted
in accordance with this Indenture and the terms of such Securities, subject to
payment of the above amount as aforesaid. The Trustee shall hold and pay to
the Holders whose Securities are selected for redemption any such amount paid
to it in the same manner as it would moneys deposited with it by the Company
for the redemption of Securities. Without the Trustee's prior written consent,
no arrangement between the Company and such purchasers for the purchase and
conversion of any Securities shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture, and the Company agrees to indemnify the Trustee from, and hold
it harmless against, any loss, liability or expense arising out of or in
connection with any such arrangement for the purchase and conversion of any
Securities between the Company and such purchasers, including the costs and
expenses incurred by the Trustee in the defense of any claim or liability
arising out of or in connection with the exercise or performance of any of its
powers, duties, responsibilities or obligations under this Indenture.
ARTICLE FOUR
Covenants
Section 4.01. Payment of Securities.
The Company shall pay the principal of and any interest on the Securities of
each series in accordance with the terms of the Securities of such series and
this Indenture.
To the extent enforceable under applicable law, the Company shall pay
interest on overdue principal at the rate borne by the Securities of such
series (unless a different rate is specified as contemplated by Section 2.02
for Securities of such series).
Section 4.02. SEC Reports.
The Company shall file with the Trustee within 15 days after it files them
with the SEC copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the
SEC may by rules and regulations prescribe) which the Company is required to
file with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934. The Company also shall comply with the other provisions of TIA
(S) 314(a).
Section 4.03. Compliance Certificate.
The Company will, within 120 days after the close of each fiscal year of the
Company, commencing with the first fiscal year following the issuance of
Securities of any series under this Indenture, file with the Trustee a
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certificate of the principal executive officer, the principal financial
officer or the principal accounting officer of the Company, covering the
period from the date of issuance of such Securities to the end of the fiscal
year in which such Securities were issued, in the case of the first such
certificate, and covering the preceding fiscal year in the case of each
subsequent certificate, and stating whether or not, to the knowledge of the
signer, the Company has complied with all conditions and covenants on its part
contained in this Indenture, and, if the signer has obtained knowledge of any
default by the Company in the performance, observance or fulfillment of any
such condition or covenant specifying each such default and the nature
thereof. For the purpose of this Section 4.03, compliance shall be determined
without regard to any grace period or requirement of notice provided pursuant
to the terms of this Indenture. The certificate need not comply with Section
12.05.
Section 4.04. Corporate Existence.
Subject to the provisions of Section 5.01 hereof, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence.
ARTICLE FIVE
Successor Corporation
Section 5.01. When Company May Merge, etc.
The Company shall not consolidate with or merge into, or transfer its
properties and assets substantially as an entirety to, another corporation
unless (1) the successor corporation, which shall be a corporation organized
and existing under the laws of the United States or a State thereof, assumes
by supplemental indenture all the obligations of the Company under the
Securities and this Indenture, and (2) immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing. Thereafter, unless otherwise specified as contemplated by Section
2.02 for the Securities of any series, all such obligations of the predecessor
corporation shall terminate.
ARTICLE SIX
Defaults and Remedies
Section 6.01. Events of Default.
An "Event of Default" with respect to Securities of any series means each of
the events specified below in this Section 6.01, unless it is either
inapplicable to a particular series or is specifically deleted or modified as
contemplated by Section 2.02 for the Securities of such series, and any other
events as may be specified as contemplated by Section 2.02 for the Securities
of such series.
(1) the Company defaults in the payment of any interest on any Security
of that series when the same becomes due and payable and the default
continues for a period of 30 days;
(2) the Company defaults in the payment of the principal of any Security
of that series when the same becomes due and payable at maturity, upon
redemption (including default in the making of any mandatory sinking fund
payment), upon purchase by the Company at the option of the Holder pursuant
to the terms of such Security or otherwise;
(3) the Company fails to comply with any of its other agreements in
Securities of that series or this Indenture (other than an agreement which
has expressly been included in this Indenture solely for the benefit of
Securities of any series other than that series or is expressly made
inapplicable to the Securities of such series as contemplated by Section
2.02) and the default continues for the period and after the notice
specified below;
(4) the Company pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case, or consents to the commencement of a
case against it,
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(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors;
(5) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case or
adjudicates the Company insolvent or bankrupt,
(B) appoints a Custodian of the Company for all or substantially all
of its property, or
(C) orders the winding up or liquidation of the Company, and the
order or decree remains unstayed and in effect for 90 days; or
(6) any other Event of Default provided with respect to Securities of
that series occurs.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or State law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
A Default under clause (3) is not an Event of Default until the Trustee
notifies the Company or the Holders of at least 25% in aggregate principal
amount of the outstanding Securities of that series notify the Company and the
Trustee of the Default and the Company does not cure the Default within 30
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default."
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in Section
6.01(4) or (5)) occurs and is continuing with respect to Securities of any
series at the time outstanding, the Trustee by notice to the Company, or the
Holders of at least 25% in aggregate principal amount of the outstanding
Securities of that series by notice to the Company and the Trustee, may
declare to be due and payable immediately (1) the principal amount (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of the Securities of
that series) of all of the Securities of that series then outstanding and (2)
interest, if any, accrued to the date of acceleration. Upon such declaration,
such principal amount (or specified amount) and interest, if any, shall be due
and payable immediately. If an Event of Default specified in Section 6.01(4)
or (5) occurs and is continuing, (1) the principal amount (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of the Securities of
that series) of all of the Securities of that series then outstanding and (2)
interest, if any, accrued to the date of such acceleration shall become and be
immediately due and payable without any declaration or other act on the part
of the Trustee or Securityholders. The Holders of a majority in aggregate
principal amount of the outstanding Securities of the series with respect to
which an acceleration applies by notice to the Trustee may rescind an
acceleration and its consequences with respect to such series if all existing
Events of Default (other than the non-payment of the principal of and accrued
interest, if any, on Securities that have become due solely by such
acceleration) with respect to Securities of that series have been cured or
waived and if the rescission would not conflict with any judgment or decree.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 6.03. Other Remedies.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may pursue any available remedy by proceeding at
law or in equity to collect the payment of the whole amount which then shall
have become due and remain unpaid for principal or interest, if any, on the
Securities of that series or to enforce the performance of any provision of
the Securities of that series or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the
Securities of that series or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Securityholder in
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exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
Section 6.04. Waiver of Existing Defaults.
Subject to Section 9.02, the Holders of a majority in aggregate principal
amount of the outstanding securities of any series by notice to the Trustee
may waive on behalf of the Holders of all the Securities of such series an
existing Default or Event of Default and its consequences. When a Default or
Event of Default is waived, it is cured and stops continuing.
Section 6.05. Control by Majority.
The Holders of a majority in aggregate principal amount of the outstanding
Securities of any series may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it, with respect to the Securities of such series. The
Trustee, however, may refuse to follow any direction that conflicts with law
or this Indenture, that is unduly prejudicial to the rights of another
Securityholder or that would involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
No holder of any Security of any series shall have the right to pursue any
remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of a continuing Event
of Default with respect to the Securities of that series;
(2) the Holders of at least 25% in aggregate principal amount of the
outstanding Securities of that series make a written request to the Trustee
to pursue the remedy;
(3) such Holder or Holders offer and provide to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the outstanding Securities of such series.
A Securityholder of any series may not use this Indenture to prejudice the
rights of another Securityholder of such series or to obtain a preference or
priority over another Securityholder of such series, except in the manner
herein provided and for the equal and ratable benefit of all Securityholders
of such series.
Section 6.07. Rights of Holders to Receive Payment and to Convert.
Subject to Article Ten and notwithstanding any other provision of this
Indenture, the right of any Holder of a Security to receive payment of
principal of and (subject to Section 2.13) interest, if any, on the Security,
on or after the respective due dates with respect to such payments expressed
in such Security, and, if applicable, to convert such Security on the terms
and subject to the conditions applicable to Securities of such series, or to
bring suit for the enforcement of any such payment on or after such respective
dates or of such right to convert, if any, shall not be impaired or affected
without the consent of the Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2) occurs and is
continuing with respect to the Securities of any series, the Trustee may
recover judgment in its own name and as trustee of an express trust
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against the Company for the whole amount which then shall have become due and
remain unpaid for principal and interest, if any, on the Securities of such
series.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee and
the Securityholders allowed in any judicial proceedings relative to the
Company, its creditors or its property and to collect and receive money,
property or securities payable or deliverable on any such claims and
distribute the same.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay out
the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to holders of Senior Debt to the extent required by Article Ten;
Third: to the payment of amounts due and unpaid for principal and
interest, if any, on the Securities in respect of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts which then shall have become due and payable on such
Securities for principal and interest, respectively; and
Fourth: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section, notice of which shall be mailed to
each Securityholder by the Company at least 15 days before such record date.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
aggregate principal amount of the outstanding Securities of any series.
ARTICLE SEVEN
Trustee
Section 7.01. Duties of Trustee.
(a) If an Event of Default with respect to Securities of any series has
occurred and is continuing, the Trustee shall with respect to such series
exercise such of the rights and powers vested in it by this Indenture with
respect to such series and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(b) With respect to Securities of any series, except during the continuance
of an Event of Default with respect to Securities of such series:
(1) The Trustee need perform only those duties that are specifically set
forth in this Indenture or the TIA and no others.
(2) In the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to
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the Trustee and conforming to the requirements of this Indenture. The
Trustee, however, shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section.
(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the Trustee
is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money received by it
except as the Trustee may agree with the Company. Money held in trust by the
Trustee need not be segregated from other funds except to the extent required
by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult with
counsel or require an Officers' Certificate, an Opinion of Counsel, and/or an
accountant's certificate. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on the Certificate, Opinion
or accountant's certificate.
(c) The Trustee may act through agents and counsel and shall not be
responsible for the misconduct or negligence of any agent or counsel appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take
in good faith which it believes to be authorized or within its rights or
powers.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee, however, must comply with
Sections 7.10 and 7.11.
Section 7.04. Trustee's Disclaimer.
The Trustee makes no representations as to the validity or adequacy of this
Indenture or the Securities; it shall not be accountable for the Company's use
of the proceeds from the Securities; and it shall not be responsible for any
statement in the Indenture or the Securities other than its certificate of
authentication.
Section 7.05. Notice of Defaults.
If a Default occurs and is continuing with respect to Securities of any
series and if it is known to a Trust Officer of the Trustee, the Trustee shall
mail to each Securityholder of such series notice of the Default within 90
days after it occurs or as soon as reasonably practicable thereafter. Except
in the case of a default in payment
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of principal of or interest on any Security of such series (including default
in the making of any mandatory sinking fund or mandatory repurchase payment),
the Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of Securityholders of such series.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after each April 15 beginning with the April 15 following the
date on which Securities are originally issued under this Indenture, the
Trustee shall mail to each Securityholder a brief report dated as of such
April 15 that complies with TIA (S) 313(a), if required by said Section. The
Trustee also shall comply with TIA (S) 313(b).
A copy of each report at the time of its mailing to Securityholders shall be
filed by the Company with the SEC and each stock exchange on which the
Securities are listed.
The Company will notify the Trustee if and when the Securities are listed on
or delisted from any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred by it. Such expenses shall include the reasonable compensation and
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it arising out of or in connection with the acceptance or
administration of this trust and its duties hereunder. The Trustee shall
notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity. Failure of the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
have the right to elect to defend the claim and the Trustee shall cooperate in
the defense. The Trustee may have separate counsel and the Company shall pay
the reasonable fees and expenses of such counsel. The Company need not pay for
any settlement made without its written consent, which consent shall not be
unreasonably withheld. The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through negligence or
bad faith.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee, except that held in trust to pay principal of or
interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
The Trustee may resign at any time with respect to Securities of one or more
series by so notifying the Company. The Holders of a majority in aggregate
principal amount of the outstanding Securities of any series may remove the
Trustee with respect to the Securities of such series by so notifying the
removed Trustee and may appoint a successor Trustee with the Company's
consent. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
The Company may remove the Trustee at any time with respect to the
Securities of any series upon delivery to the Trustee of a resolution of the
Board of Directors to such effect, provided that contemporaneously therewith
no Default with respect to the Securities of such series shall have occurred
and be continuing.
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If the Trustee resigns or is removed, or if a vacancy exists in the office
of Trustee for any reason, with respect to the Securities of one or more
series, the Company shall promptly appoint a successor Trustee or Trustees (it
being understood that any such successor Trustee may be appointed with respect
to the Securities of one or more or all of such series and that at any time
there shall be only one Trustee with respect to the Securities of any
particular series).
A successor Trustee shall deliver a written acceptance of its appointment to
the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor
Trustee (subject to its lien, if any, provided for in Section 7.07), the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Securityholder.
If a successor Trustee with respect to Securities of any series does not
take office within 60 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Company or the Holders of a majority in aggregate
principal amount of the outstanding Securities of such series may petition, at
the expense of the Company, any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee
with respect to all Securities and the appointment of a successor Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust assets to, another corporation or
national banking association, the successor corporation or national banking
association without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the requirements of
TIA (S) 310(a). The Trustee shall always have a combined capital and surplus
of at least $50,000,000 as set forth in its most recent published annual
report of condition. With respect to the Securities of each series, the
Trustee shall comply with TIA (S) 310(b) and in determining whether the
Trustee has a conflicting interest as defined in TIA (S) 310(b) with respect
to the Securities of any series, there shall be excluded from such
determination this Indenture with respect to the Securities of any series
other than such series. Nothing herein shall prevent the Trustee from filing
with the SEC the application referred to in the second to last paragraph of
TIA (S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated.
ARTICLE EIGHT
Discharge of Indenture
Section 8.01. Termination of Company's Obligations.
The Company may terminate all of its obligations under the Securities of any
series and this Indenture with respect to the Securities of such series if
either (1) all Securities of such series previously authenticated and
delivered (other than destroyed, lost or stolen Securities which have been
replaced or paid or Securities for whose payment money (or, if permitted by
the terms of such Securities, securities) has theretofore been held in trust
and thereafter repaid to the Company, as provided in Section 8.03) have been
delivered to the Trustee for cancellation; or (2) the Company irrevocably
deposits in trust with the Trustee money or U.S. Government
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Obligations sufficient to pay the principal of and interest, if any, on all
Securities of such series not theretofore cancelled or delivered to the
Trustee for cancellation (other than destroyed, lost or stolen Securities
which have been replaced or paid or Securities for whose payment money (or, if
permitted by the terms of such Securities, securities) has theretofore been
held in trust and thereafter repaid to the Company, as provided in Section
8.03) to maturity or redemption, as the case may be.
The Company's obligations in Sections 2.05, 2.06, 2.07, 2.08, 2.09, 4.01,
7.07, 7.08, 8.01, 8.03 and Article Eleven of this Indenture, however, shall
survive until the Securities of such series are no longer outstanding.
Thereafter the Company's obligations in Sections 7.07 and 8.03 shall survive.
Notwithstanding the satisfaction and discharge of this Indenture with respect
to the Securities of any series, if money or U.S. Government Obligations shall
have been deposited with the Trustee pursuant to clause (2) of this Section,
the obligations of the Trustee under Section 8.02 and the second sentence of
Section 8.03 shall survive.
After a deposit and if all other conditions thereto are met, the Trustee for
the Securities of such series shall be required to execute an instrument
acknowledging satisfaction and discharge of this Indenture with respect to
such Securities, except for those surviving obligations specified above;
provided, however, that the Trustee shall not be required to execute such
instrument until the expiration of ninety days after the date of a deposit and
that such instrument may be made subject to the condition that such deposit
had been made prior to the happening of any event specified in Section 10.02.
In order to have money available on a payment date to pay the principal of
or interest, if any, on the Securities, the U.S. Government Obligations shall
be payable as to principal or interest on or before such payment date in such
amounts as will provide the necessary money. U.S. Government Obligations shall
not be callable at the issuer's option.
Section 8.02. Application of Trust Fund.
The Trustee shall hold in trust money and U.S. Government Obligations
deposited with it pursuant to Section 8.01. Subject to Section 10.07, it shall
apply the deposited money and the money from the U.S. Government Obligations
through the Paying Agent and in accordance with the provisions of the
Securities and this Indenture to the payment of principal of and interest, if
any, on the Securities for the payment of which such money or U.S. Government
Obligations has been deposited with the Trustee.
Section 8.03. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company upon
written request any excess money or securities held by them at any time. The
Trustee and the Paying Agent shall pay to the Company upon written request any
money or securities held by them for the payment of principal or interest, if
any, that remains unclaimed for two years. After that, Holders entitled to the
money or securities must look to the Company for payment unless an applicable
abandoned property law designates another person.
ARTICLE NINE
Amendments, Supplements and Waivers
Section 9.01. Without Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or the
Securities of any series without notice to or consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Sections 5.01 and 11.16;
(3) to establish the form or terms of Securities of any series as
permitted by Sections 2.01 and 2.02;
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(4) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company;
(5) to add any additional Events of Default (and if such Events of
Default are to be applicable to less than all series of Securities, stating
that such Events of Default are expressly being included solely to be
applicable to such series);
(6) to change or eliminate any of the provisions of this Indenture,
provided that, except as otherwise contemplated by Section 2.02(13), any
such change or elimination shall become effective only when there is no
Security outstanding of any series created prior thereto which is entitled
to the benefit of such provision;
(7) to add or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of
Securities in bearer form, registrable or not registrable as to principal,
and with or without interest coupons, or to provide for uncertificated
Securities in addition to certificated Securities (so long as any
"registration-required obligation" within the meaning of Section 163(f)(2)
of the Internal Revenue Code of 1986, as amended (the "Code") is in
registered form for purposes of the Code):
(8) to make any change that in the opinion of the Board of Directors,
does not materially adversely affect the rights of any Securityholder; or
(9) to comply with any requirement of the SEC in connection with the
qualification of this Indenture under the TIA.
Section 9.02. With Consent of Holders.
The Company and the Trustee may amend or supplement this Indenture or the
Securities of any series without notice to any Securityholder but with the
written consent of the Holders of a majority in aggregate principal amount of
the outstanding Securities of each series affected by such amendment or
supplement. The Holders of a majority in aggregate principal amount of the
outstanding Securities of any series may on behalf of the Holders of all
Securities of such series waive compliance by the Company with any provision
of this Indenture or of Securities of such series without notice to any
Securityholder. Without the consent of each Securityholder affected, however,
an amendment, supplement or waiver, including a waiver pursuant to Section
6.04. may not:
(1) reduce the amount of Securities of any series whose Holders must
consent to an amendment, supplement or waiver;
(2) reduce the rate of or extend the time for payment of interest on any
Security (or, in the case of an Original Issue Discount Security, reduce
the rate of accrual of original issue discount);
(3) reduce the principal of (or any premium payable upon the redemption
of) or extend the fixed maturity of any Security (or, in the case of an
Original Issue Discount Security, reduce the portion of the principal
amount that would be due and payable upon acceleration of the maturity
thereof pursuant to Section 6.02);
(4) change the amount or time of any payment required by any sinking fund
provisions of the Securities of any series;
(5) make any change that materially adversely affects the rights of a
Holder to require the Company to purchase a Security in accordance with the
terms thereof and this Indenture;
(6) waive a default in the payment of the principal of or interest, if
any, on any Security;
(7) make any Security payable in money or securities other than that
stated in the Security; or
(8) make any change that materially adversely affects the right to
convert any Security or that increases the conversion price or reduces the
conversion rate of any Security.
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It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed supplement, but it shall be
sufficient if such consent approves the substance thereof.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
A consent to an amendment, supplement, waiver or other action by a Holder of
a Security shall bind the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security. Any
such Holder or subsequent Holder, however, may revoke the consent as to his
Security or portion of a Security. Such revocation shall be effective only if
the Trustee receives the notice of revocation before the date the amendment,
supplement, waiver or other action becomes effective. An amendment,
supplement, waiver or other action shall become effective on receipt by the
Trustee of written consents from the Holders of the requisite percentage in
aggregate principal amount of the outstanding Securities of the relevant
series. After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder of each series of Securities so affected.
Section 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the
changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article if the amendment, supplement or waiver does not
adversely affect the rights, duties, immunities or liabilities of the Trustee.
If it does, the Trustee may but need not sign it. The Company may not sign an
amendment or supplement until the Board of Directors approves it.
ARTICLE TEN
Subordination
Section 10.01. Securities Subordinated to Senior Debt.
The Company agrees, and each holder of the Securities by his acceptance
thereof likewise agrees, that the payment of the principal of and interest, if
any, on the Securities is subordinated, to the extent and in the manner
provided in this Article, to the prior payment in full of all Senior Debt.
Senior Debt means the principal of and interest on Debt of the Company
outstanding at any time other than (i) the Securities, and (ii) Debt which by
its terms is not superior in right of payment to the Securities. "Debt" of any
person means:
(1) any indebtedness of such person (i) for borrowed money or (ii)
evidenced by a note, debenture or similar instrument (including a purchase
money obligation) given in connection with the acquisition of any property
or assets, including securities;
(2) any guarantee by such person of any indebtedness of others described
in the preceding clause (1); and
(3) any amendment, renewal, extension or refunding of any such
indebtedness or guarantee.
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This Article shall constitute a continuing offer to all persons who, in
reliance upon such provisions, become holders of, or continue to hold, Senior
Debt, and such provisions are made for the benefit of the holders of Senior
Debt, and such holders are made obligees hereunder and they and/or each of
them may enforce such provisions.
Section 10.02. Company Not to Make Payments with Respect to Securities in
Certain Circumstances.
(a) Upon the maturity of any Senior Debt by lapse of time, acceleration or
otherwise, all principal thereof and interest thereon shall first be paid in
full, or such payment duly provided for in cash or in a manner satisfactory to
the holders of such Senior Debt, before any payment is made on account of the
principal of or interest on the Securities or to acquire any of the Securities
or on account of any sinking fund provisions of the Securities (except
payments made in capital stock of the Company or in warrants, rights or
options to purchase or acquire capital stock of the Company, sinking fund
payments made in Securities acquired by the Company before the maturity of
such Senior Debt, and payments made through the exchange of other debt
obligations of the Company for such Securities in accordance with the terms of
such Securities, provided that such debt obligations are subordinated to
Senior Debt at least to the extent that the Securities for which they are
exchanged are so subordinated pursuant to this Article Ten).
(b) Upon the happening of any default in payment of the principal of or
interest on any Senior Debt when the same becomes due and payable, then,
unless and until such default shall have been cured or waived or shall have
ceased to exist, no payment shall be made by the Company with respect to the
principal of or interest on the Securities or to acquire any of the Securities
or on account of any sinking fund provisions of the Securities (except
payments made in capital stock of the Company or in warrants, rights or
options to purchase or acquire capital stock of the Company, sinking fund
payments made in Securities acquired by the Company before such default and
notice thereof, and payments made through the exchange of other debt
obligations of the Company for such Securities in accordance with the terms of
such Securities, provided that such debt obligations are subordinated to
Senior Debt at least to the extent that the Securities for which they are
exchanged are so subordinated pursuant to this Article Ten).
(c) In the event that notwithstanding the provisions of this Section 10.02
the Company shall make any payment to the Trustee on account of the principal
of or interest on the Securities, or on account of any sinking fund provisions
of the Securities, after the maturity of any Senior Debt as described in
Section 10.02(a) above or after the happening of a default in payment of the
principal of or interest on any Senior Debt as described in Section 10.02(b)
above, then, unless and until all Senior Debt which shall have matured, and
all interest thereon, shall have been paid in full (or the declaration of
acceleration thereof shall have been rescinded or annulled), or such default
shall have been cured or waived or shall have ceased to exist, such payment
(subject to the provisions of Sections 10.06 and 10.07) shall be held by the
Trustee, in trust for the benefit of, and shall be paid forthwith over and
delivered to, the holders of such Senior Debt (pro rata as to each of such
holders on the basis of the respective amounts of Senior Debt held by them) or
their representative or the trustee under the indenture or other agreement (if
any) pursuant to which such Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all such
Senior Debt remaining unpaid to the extent necessary to pay the same in full
in accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt. The Company shall give
prompt written notice to the Trustee of any default in the payment of
principal of or interest on any Senior Debt.
Section 10.03. Securities Subordinated to Prior Payment of All Senior Debt on
Dissolution, Liquidation or Reorganization of Company.
Upon any distribution of assets of the Company in any dissolution, winding
up, liquidation or reorganization of the Company (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit
of creditors or otherwise):
(a) the holders of all Senior Debt shall first be entitled to receive
payments in full of the principal thereof and interest due thereon before
the Holders of the Securities are entitled to receive any payment on
account of the principal of or interest on the Securities;
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(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than securities
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 subordinate, at least to the extent
provided in this Article Ten with respect to the Securities, to the payment
in full without diminution or modification by such plan of all Senior
Debt), to which the Holders of the Securities or the Trustee on behalf of
the Holders of the Securities would be entitled except for the provisions
of this Article Ten, shall be paid by the liquidating trustee or agent or
other person making such payment or distribution directly to the holders of
Senior Debt or their representative, or to the trustee under any indenture
under which Senior Debt may have been issued (pro rata as to each such
holder, representative or trustee on the basis of the respective amounts of
unpaid Senior Debt held or represented by each), to the extent necessary to
make payment in full of all Senior Debt remaining unpaid, after giving
effect to any concurrent payment or distribution or provision therefor to
the holders of such Senior Debt; and
(c) in the event that notwithstanding the foregoing provisions of this
Section 10.03, any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities (other than
securities 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 subordinate, at least to the extent
provided in this Article Ten with respect to the Securities, to the payment
in full without diminution or modification by such plan of all Senior
Debt), shall be received by the Trustee or the Holders of the Securities on
account of principal of or interest on the Securities before all Senior
Debt is paid in full, or effective provision made for its payment, such
payment or distribution (subject to the provisions of Sections 10.06 and
10.07) shall be received and held in trust for and shall be paid over to
the holders of the Senior Debt remaining unpaid or unprovided for or their
representative, or to the trustee under any indenture under which such
Senior Debt may have been issued (pro rata as provided in subsection (b)
above), for application to the payment of such Senior Debt until all such
Senior Debt shall have been paid in full, after giving effect to any
concurrent payment or distribution or provision therefor to the holders of
such Senior Debt.
The Company shall give prompt written notice to the Trustee of any
dissolution, winding up, liquidation or reorganization of the Company.
Section 10.04. Securityholders to be Subrogated to Right of Holders of Senior
Debt.
Subject to the payment in full of all Senior Debt, the Holders of the
Securities shall be subrogated equally and ratably to the rights of the
holders of Senior Debt to receive payments or distributions of assets of the
Company applicable to the Senior Debt until all amounts owing on the
Securities shall be paid in full, and for the purpose of such subrogation no
payments or distributions to the holders of the Senior Debt by or on behalf of
the Company or by or on behalf of the Holders of the Securities by virtue of
this Article Ten which otherwise would have been made to the Holders of the
Securities shall, as between the Company, its creditors other than holders of
Senior Debt and the Holders of the Securities, be deemed to be payment by the
Company to or on account of the Senior Debt, it being understood that the
provisions of this Article Ten are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities, on the one
hand, and the holders of the Senior Debt, on the other hand.
Section 10.05. Obligation of the Company Unconditional.
Nothing contained in this Article Ten or elsewhere in this Indenture or in
any Security is intended to or shall impair, as between the Company, its
creditors other than holders of Senior Debt and the Holders of the Securities,
the obligation of the Company, which is absolute and unconditional, to pay to
the holders of the Securities the principal of and interest on the Securities
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 Securities and creditors of the Company other than the holders of the
Senior Debt, nor shall anything herein or therein
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prevent the Trustee or the Holder of any Security from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the rights, if any, under this Article Ten of the holders of Senior
Debt 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 Ten, the Trustee and the Holders of
the Securities 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, subject to the
provisions of Sections 7.01 and 7.02, a certificate of the receiver, trustee
in bankruptcy, liquidating trustee or agent or other person making such
payment or distribution to the Trustee or the Holders of the Securities, for
the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior Debt 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
Ten.
Nothing contained in this Article Ten or elsewhere in this Indenture or in
any Security is intended to or shall affect the obligation of the Company to
make, or prevent the Company from making, at any time except during the
pendency of any dissolution, winding up, liquidation or reorganization
proceeding, and except as provided in subsections (a) and (b) of Section
10.02, payments at any time of the principal of or interest on the Securities.
Section 10.06. Trustee Entitled to Assume Payments Not Prohibited in Absence
of Notice.
The Trustee shall not at any time be charged with knowledge of the existence
of any facts which would prohibit the making of any payment to or by the
Trustee, unless at least two Business Days prior to the making of any such
payment, the Trustee shall have received written notice thereof from the
Company or from one or more holders of Senior Debt or from any representative
thereof or from any trustee therefor, together with proof satisfactory to the
Trustee of such holding of Senior Debt or of the authority of such
representative or trustee; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Sections 7.01 and 7.02 shall
be entitled to assume conclusively that no such facts exist. The Trustee 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 Debt (or a representative or
trustee on behalf of such holder) to establish that such notice has been given
by a holder of Senior Debt or a representative of or trustee on behalf of any
such holder. 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 Senior Debt to participate in any payments or distribution pursuant
to this Article Ten, the Trustee may request such person to furnish evidence
to the reasonable satisfaction of the Trustee as to the amount of Senior Debt
held by such person, as to the extent to which such person is entitled to
participate in such payment or distribution, and as to other facts pertinent
to the rights of such person under this Article Ten, 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.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and nothing in this Article Ten shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 7.07.
Section 10.07. Application by Trustee of Monies or U.S. Government Obligations
Deposited with It.
Money or U.S. Government Obligations deposited in trust with the Trustee
pursuant to and in accordance with Section 8.01 shall be for the sole benefit
of Securityholders and, to the extent allocated for the payment of Securities,
shall not be subject to the subordination provisions of this Article Ten, if
the same are deposited in trust prior to the happening of any event specified
in Section 10.02. Otherwise, any deposit of monies or U.S. Government
Obligations by the Company with the Trustee or any Paying Agent (whether or
not in trust) for the payment of the principal of or interest on any
Securities shall be subject to the provisions of Sections 10.01, 10.02 and
10.03 except that, if prior to the date on which by the terms of this
Indenture any such monies may become payable for any purpose (including,
without limitation, the payment of the principal of or the interest, if any,
on any Security) the Trustee shall not have received with respect to such
monies the notice provided for in Section 10.06, then the Trustee or the
Paying Agent shall have full power and authority to receive such monies and
U.S. Government Obligations and to apply the same to the purpose for which
they were received, and shall not be affected by any notice to the contrary
which may be received by it on or after such date. This Section
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10.07 shall be construed solely for the benefit of the Trustee and Paying
Agent and, as to the first sentence hereof, the Securityholders, and shall not
otherwise affect the rights of holders of Senior Debt.
Section 10.08. Subordination Rights Not Impaired by Acts or Omissions of
Company or Holders of Senior Debt.
No right of any present or future holders of any Senior Debt to enforce
subordination as provided herein 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 of this Indenture, regardless of any knowledge
thereof which any such holder may have or be otherwise charged with.
Section 10.09. Securityholders Authorize Trustee to Effectuate Subordination
of Securities.
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Ten and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of the
Company, the immediate filing of a claim for the unpaid balance of his
Securities in the form required in said proceedings and causing said claim to
be approved. If the Trustee does not file a proper claim or proof of debt in
the form required in such proceeding prior to 30 days before the expiration of
the time to file such claim or claims, then the holders of Senior Debt have
the right to file and are hereby authorized to file an appropriate claim for
and on behalf of the Holders of said Securities.
Section 10.10. Right of Trustee to Hold Senior Debt.
The Trustee shall be entitled to all of the rights set forth in this Article
Ten in respect of any Senior Debt at any time held by it to the same extent as
any other holder of Senior Debt, and nothing in this Indenture shall be
construed to deprive the Trustee of any of its rights as such holder.
Section 10.11. Article Ten Not to Prevent Events of Default.
The failure to make a payment on account of principal or interest by reason
of any provision in this Article Ten shall not be construed as preventing the
occurrence of an Event of Default under Section 6.01.
ARTICLE ELEVEN
Conversion
Section 11.01. Applicability of Article.
Securities of any series which are convertible into Parent Stock at the
option of the Holder shall be convertible in accordance with their terms and
(except as otherwise specified as contemplated by Section 2.02 for Securities
of any series) in accordance with this Article. Each reference in this Article
to "a Security" or "the Securities" refers to the Securities of the particular
series that is convertible into Parent Stock. If more than one series of
Securities with conversion privileges are outstanding at any time, the
provisions of this Article shall be applied separately to each such series.
Section 11.02. Conversion Privilege.
A Holder of a Security of any authorized denomination of any series may
convert it into Parent Stock, at any time during the period specified on the
Securities of that series, at the conversion price or conversion rate in
effect on the conversion date, except that, with respect to any to any
Security (or portion thereof) called for
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redemption, such right shall (except as otherwise provided in Section 3.08)
terminate at the close of business on the fifteenth day prior to the date
fixed for redemption of such Security (or portion thereof) (or such other day
as may be specified as contemplated by Section 2.02 for Securities of such
series), unless the Company shall default in payment of the amount due upon
redemption thereof.
The initial conversion price or conversion or rate in respect of a series of
Securities shall be as specified on the Securities of that series. The
conversion price or conversion rate will be subject to adjustment on the terms
set forth in Sections 11.07 through 11.13 or such other or different terms, if
any, as may be specified as contemplated by Section 2.02 for Securities of
such series.
A Holder may convert any Security in full and may convert a portion of a
Security if the portion to be converted and the remaining portion of such
Security are in denominations issuable for that series of Securities.
Provisions of this Indenture that apply to conversion of all of a Security
also apply to conversion of a portion of it.
Section 11.03. Conversion Procedure.
To convert a Security of any series, a Holder must satisfy the requirements
for conversion contained on the Securities of that series. The date on which
the Holder satisfies all those requirements is the conversion date. As soon as
practicable after the conversion date, the Company shall, or shall cause the
Parent to, deliver to the Holder through the Conversion Agent a certificate
for the number of shares of Parent Stock deliverable upon the conversion and
cash or its check in lieu of any fractional share. The person in whose name
the certificate is registered becomes a stockholder of record on the
conversion date and the rights of the Holder of the Securities so converted as
a Holder thereof cease as of such date.
If the Holder converts more than one Security of any series at the same
time, the number of full shares issuable upon the conversion shall be based on
the total principal amount of the Securities of such series so converted.
Upon surrender of a Security of any series that is converted in part, the
Trustee shall authenticate for the Holder a new Security of that series equal
in principal amount to the unconverted portion of the Security surrendered.
If the last day on which a Security may be converted is a Legal Holiday in a
place where a Conversion Agent is located, the Security may be surrendered to
that Conversion Agent on the next succeeding day that is not a Legal Holiday.
The Company will not be required to deliver, or cause the Parent to deliver,
certificates for shares of Parent Stock upon conversion while the Parent's
stock transfer books are closed for a meeting of stockholders or for the
payment of dividends or for any other purpose, but certificates for shares of
Parent Stock shall be delivered as soon as the stock transfer books shall
again be opened.
Securities of any series surrendered for conversion during the period from
the close of business of any Regular Record Date next preceding any Interest
Payment Date for such series to the opening of business on such Interest
Payment Date shall (except in the case of Securities or portions thereof which
have been called for redemption on a redemption date within such period) be
accompanied by payment in funds acceptable to the Company of an amount equal
to the interest payable in such Interest Payment Date on the principal amount
of Securities being surrendered for conversion; provided, that no such payment
need be made if there shall exist, at the time of conversion, a default in the
payment of interest on the Securities of such series. The funds so delivered
to the Conversion Agent shall be paid to the Company on or after such Interest
Payment Date unless the Company shall default on the payment of the interest
due on such Interest Payment Date, in which event such funds shall be paid to
the Holder who delivered the same. Except as provided in the preceding
sentence and subject to the last paragraph of Section 2.13, no payment or
adjustment shall be made upon any conversion on account of any interest
accrued on the Securities surrendered for conversion or on account of any
dividends on the Parent Stock issued upon conversion.
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Section 11.04. Fractional Shares.
No fractional share of Parent Stock shall be issued upon conversion of a
Security. Instead, the Company will deliver cash or its check for the current
market value of a fractional share. The current market value of a fractional
share is determined as follows: Multiply the current market price of a full
share on the last full trading day prior to the conversion date by the
fraction (rounded to the nearest 1/100 of a share) and round the result to the
nearest whole cent.
Section 11.05. Taxes on Conversion.
If a Holder of a Security converts it, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the delivery of
shares of Parent Stock upon the conversion. The Holder, however, shall pay any
such tax which is due because the shares are issued in a name other than the
Holder's name.
Section 11.06. Reservation of Parent Stock, Etc.
The Company shall cause the Parent to, from time to time as may be
necessary, reserve out of Parent's authorized but unissued Parent Stock or
Parent Stock held in treasury enough shares of the Parent Stock to permit the
conversion of all outstanding Securities.
All shares of Parent Stock which may be delivered upon conversion of the
Securities shall be validly issued, fully paid and non-assessable and shall be
free from any preemptive rights.
In order that shares of the Parent Stock may be validly delivered upon
conversion of the Securities, the Company will, and will cause the Parent to,
endeavor to comply with all applicable Federal and State securities laws and
will endeavor to cause such shares to be listed on each national securities
exchange or other stock market on which other shares of the Parent Stock is
listed.
If the taking of any action would cause an adjustment to the then prevailing
conversion price or conversion rate which would result in shares of Parent
Stock being issued upon conversion of the Securities at an effective
conversion price below the then par value, if any, of the Parent Stock, or
would raise the par value above the effective conversion price then in effect,
the Company will, and will cause Parent to, take such corporate action as may,
in the opinion of its counsel, be necessary in order that the Parent may
validly and legally issue, and the Company may deliver, fully paid and non-
assessable shares of Parent Stock at such adjusted conversion price or
conversion rate or the conversion price or conversion rate then in effect, as
the case may be.
Section 11.07. Adjustment for Change in Parent Capital Stock.
If the Parent:
(1) pays a dividend or makes a distribution in shares of Parent Stock;
(2) subdivides the outstanding shares of Parent Stock into a greater
number of shares;
(3) combines the outstanding shares of Parent Stock into a smaller number
of shares;
(4) pays a dividend or makes a distribution on the Parent Stock in shares
of its capital stock other than Parent Stock; or
(5) issues by reclassification of its shares of Parent Stock any shares
of its capital stock,
then the conversion privilege and the conversion price or conversion rate in
effect immediately prior to the opening of business on the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted so that the Holder of any
Security thereafter converted may receive the number of shares of capital
stock of the Parent which such Holder would have owned immediately following
such action if such Holder had converted the Security immediately prior to
such time. Such adjustment shall be made successively whenever any event
listed above shall occur.
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For a dividend or distribution, the adjustment shall become effective
immediately after the record date for the dividend or distribution. For a
subdivision, combination or reclassification, the adjustment shall become
effective immediately after the effective date of the subdivision, combination
or reclassification.
If after an adjustment a Holder of a Security upon conversion of it may
receive shares of two or more classes of capital stock of the Parent, the
conversion prices of the classes of capital stock (after giving effect to such
allocation of the adjusted conversion price between or among the classes of
capital stock as the Board of Directors shall determine to be appropriate) or
the conversion rate, as the case may be, shall thereafter be subject to
adjustment on terms comparable to those applicable to Parent Stock in this
Indenture.
Any shares of Parent Stock issuable in payment of a dividend shall be deemed
to have been issued immediately prior to the time of the record date for such
dividend for purposes of calculating the number of outstanding shares of
Parent Stock under Sections 11.08 and 11.09 below.
Section 11.08. Adjustment for Rights Issue.
If the Parent issues any rights or warrants to all holders of shares of
Parent Stock entitling them for a period expiring within 45 days after the
record date mentioned below to purchase shares of Parent Stock (or Convertible
Securities) at a price per share (or having a conversion price per share,
after adding thereto an allocable portion of the exercise price of the right
or warrant to purchase such Convertible Securities, computed on the basis of
the maximum number of shares of Parent Stock issuable upon conversion of such
Convertible Securities) less than the Average Market Price on the
Determination Date, the conversion price or rate shall be adjusted so that it
shall equal the price or rate determined by multiplying the conversion price
or dividing the conversion rate, as the case may be, in effect immediately
prior to the opening of business on that record date by a fraction, of which
the numerator shall be the number of shares of Parent Stock outstanding on
such record date plus the number of shares of Parent Stock which the aggregate
offering price of the total number of shares of Parent Stock so offered (or
the aggregate conversion price of the Convertible Securities to be so offered,
after adding thereto the aggregate exercise price of the rights or warrants to
purchase such Convertible Securities) would purchase at such Average Market
Price and of which the denominator shall be the number of shares of Parent
Stock outstanding on such record date plus the number of additional shares of
Parent Stock offered for subscription or purchase (or into which the
Convertible Securities so offered are convertible). Shares of Parent Stock
owned by or held for the account of the Parent shall not be deemed outstanding
for the purpose of any such adjustment.
For purposes of this Section 11.08, the number of shares of Parent Stock
outstanding on any record date shall be deemed to include (i) the maximum
number of shares of Parent Stock the issuance of which would be necessary to
effect the full exercise, exchange or conversion of all Convertible Securities
outstanding on such record date which are then exercisable, exchangeable or
convertible at a price equal to or less than the Average Market Price per
share of Parent Stock, if all of such Convertible Securities were deemed to
have been exercised, exchanged or converted immediately prior to the opening
of business on such record date and (ii) if the Series B Stock is convertible
into Parent Stock, the maximum number of shares of Parent Stock the issuance
of which would be necessary to effect the full conversion of all shares of
Series B Stock outstanding on such record date, if all of such shares of
Series B Stock were deemed to have been converted immediately prior to the
opening of business on such record date.
The adjustment shall be made successively whenever any such rights or
warrants are issued, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the rights or
warrants. If all of the shares of Parent Stock (or all of the Convertible
Securities) subject to such rights or warrants have not been issued when such
rights or warrants expire (or, in the case of rights or warrants to purchase
Convertible Securities which have been exercised, all of the shares of Parent
Stock issuable upon conversion of such Convertible Securities have not been
issued prior to the expiration of the conversion right thereof), then the
conversion price or conversion rate shall promptly be readjusted to the
conversion price or conversion rate which would then be in effect had the
adjustment upon the issuance of such rights or warrants
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been made on the basis of the actual number of shares of Parent Stock (or
Convertible Securities) issued upon the exercise of such rights or warrants
(or the conversion of such Convertible Securities).
No adjustment shall be made under this Section 11.08 if the adjusted
conversion price would be higher than, or the adjusted conversion rate would
be less than, the conversion price or conversion rate, as the case may be, in
effect prior to such adjustment.
Section 11.09. Adjustments for Other Distributions.
If the Parent distributes to all holders of shares of its Parent Stock any
assets of debt securities or any rights or warrants to purchase securities,
the conversion price or conversion rate shall be adjusted by multiplying the
conversion price or dividing the conversion rate, as the case may be, in
effect immediately prior to the opening of business on the record date
mentioned below by a fraction, of which the numerator shall be the total
number of shares of Parent Stock outstanding on such record date multiplied by
the Average Market Price on the Determination Date, less the fair market value
(as determined by the Board of Directors) on such record date of said assets
or debt securities or rights or warrants so distributed, and of which the
denomination shall be the total number of shares of Parent Stock outstanding
on such record date multiplied by such Average Market Price.
For purposes of this Section 11.09, the number of shares of Parent Stock
outstanding on any record date shall be deemed to include (i) the maximum
number of shares of Parent Stock the issuance of which would be necessary to
effect the full exercise, exchange or conversion of all Convertible Securities
outstanding on such record date which are then exercisable, exchangeable or
convertible at a price equal to or less than the Average Market Price, if all
of such Convertible Securities were deemed to have been exercised, exchanged
or converted immediately prior to the opening of business on such record date
and (ii) if the Series B Stock is convertible into Parent Stock, the maximum
number of shares of Parent Stock the issuance of which would be necessary to
effect the full conversion of all shares of Series B Stock outstanding on such
record date, if all of such shares of Series B Stock were deemed to have been
converted immediately prior to the opening of business on such record date.
The adjustment shall be made successively whenever any such distribution is
made, and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution. Shares of
Parent Stock owned by or held for the account of the Parent shall not be
deemed outstanding for the purpose of any such adjustment.
No adjustment shall be made under this Section 11.09 if the adjusted
conversion price would be higher than, or the adjusted conversion rate would
be less than, the conversion price or conversion rate, as the case may be, in
effect prior to such adjustment.
This Section does not apply to cash dividends or distributions. Also, this
Section does not apply to dividends or distributions referred to in Section
11.07 or to rights or warrants referred to in Section 11.08.
Section 11.10. Voluntary Adjustment.
The Company at any time may reduce the conversion price or increase the
conversion rate, temporarily or otherwise, by any amount but in no event shall
such adjusted conversion price or conversion rate result in shares of Parent
Stock being issuable upon conversion of the Securities if converted at the
time of such adjustment at an effective conversion price per share less than
the par value of the Parent Stock at the time such adjustment is made.
A voluntary adjustment of the conversion price or conversion rate pursuant
to this Section 11.10 does not change or adjust the conversion price or
conversion rate otherwise in effect for purposes of Section 11.07, 11.08 or
11.09. If an event requiring an adjustment to the conversion price or
conversion rate pursuant to Section 11.07, 11.08 or 11.09 occurs at any time
that a voluntary adjustment to the conversion price or conversion rate is in
effect pursuant to this Section 11.10, then the adjustment required by Section
11.07, 11.08 or 11.09, whichever
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is applicable, shall be made to the conversion price or conversion rate that
would otherwise have been in effect as of the relevant date specified in such
Section had no voluntary adjustment pursuant to this Section 11.10 been made,
and for purposes of applying such Section, any such voluntary adjustment shall
be disregarded. If such adjustment would result in a lower conversion price or
a higher conversion rate, as the case may be, than the conversion price or
conversion rate as voluntarily adjusted by the Company, then such lower
conversion price or higher conversion rate shall be the conversion price or
conversion rate, as the case may be.
Section 11.11. Certain Definitions.
For the purposes of this Article, the following terms have the following
meanings:
"Average Market Price" of a share of Parent Stock on the Determination
Date for any issuance of rights or warrants or any distribution in respect
of which the Average Market Price is being calculated means the average of
the daily current market prices of the Parent Stock for the shortest of:
(i) the period of 30 consecutive trading days commencing 45 trading
days before such Determination Date.
(ii) the period commencing on the date next succeeding the first
public announcement of the issuance of rights or warrants or the
distribution in respect of which the Average Market Price is being
calculated and ending on the last full trading day before such
Determination Date, and
(iii) the period, if any, commencing on the date next succeeding the
Ex-Dividend Date with respect to the next preceding issuance of rights
or warrants or distribution for which an adjustment is required by the
provisions of Section 11.07(4), 11.08 or 11.09, and ending on the last
full trading day before such Determination Date.
If the record date for an issuance of rights or warrants or a
distribution for which an adjustment is required by the provisions of
Section 11.07(4), 11.08 or 11.09 (the "preceding adjustment event")
precedes the record date for the issuance or distribution in respect of
which the Average Market price is being calculated and the Ex-Dividend Date
for such preceding adjustment event is on or after the Determination Date
for the issuance or distribution in respect of which the Average Market
Price is being calculated, then the Average Market Price shall be adjusted
by deducting therefrom the fair market value (on the record date for the
issuance or distributions in respect of which the Average Market Price is
being calculated), as determined by the Board of Directors, of the capital
stock, rights, warrants, assets or debt securities issued or distributed in
respect of each share of Parent Stock in such preceding adjustment event.
Further, in the event that the Ex-Dividend Date (or in the case of a
subdivision, combination or reclassification, the effective date with
respect thereto) with respect to a dividend, subdivision, combination or
reclassification to which Section 11.07(1), (2), (3) or (5) applies occurs
during the period applicable for calculating the Average Market Price, then
the Average Market Price shall be calculated for such period in a manner
determined by the Board of Directors to reflect the impact of such
dividend, subdivision, combination or reclassification on the current
market price of the Parent Stock during such period.
"current market price" of a share of Parent Stock on any day means the
last reported sale price, regular way (or, if no sale price is reported,
the average of the high and low bid prices), on such day on the Nasdaq
Stock Market or as quoted by the National Quotation Bureau Incorporated, or
if the Parent Stock is listed on an exchange, on the principal exchange on
which the Parent Stock is listed. In the event that no such quotation is
available for any day, the Board of Directors shall be entitled to
determine the current market price on the basis of such quotations as it
considers appropriate.
"Determination Date" for any issuance of rights of warrants or any
distribution to which Section 11.08 or 11.09 applies means the earlier of
(i) the record date for the determination of stockholders entitled to
receive the rights or warrants or the distribution to which such Section
applies and (ii) the Ex-Dividend Date for such rights, warrants or
distribution.
"Ex-Dividend Date" means the date on which "ex-dividend" trading
commences for a dividend, an issuance of rights or warrants or a
distribution to which any of Sections 11.07, 11.08 and 11.09 applies in the
over-the-counter market or on the principal exchange on which the Parent
Stock is then quoted or listed.
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Section 11.12. When Adjustment May Be Deferred.
In any case in which this Article shall require that an adjustment shall
become effective immediately after a record date for an event, the Company may
defer until the occurrence of such event (i) issuing to the Holder of any
Security converted after such record date and before the occurrence of such
event the additional shares of Parent Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the shares of
Parent Stock issuable upon such conversion before giving effect to such
adjustment and (ii) paying to such Holder cash or its check in lieu of any
fractional interest to which he is entitled pursuant to Section 11.04;
provided, however, that the Company shall deliver to such Holder a due bill or
other appropriate instrument evidencing such Holder's rights to receive such
additional shares of Parent Stock, and such cash, upon the occurrence of the
event requiring such adjustment.
Section 11.13 When Adjustment Is Not Required.
No adjustments in the conversion rate need be made unless the adjustment
would require an increase or decrease of at least one percent (1%) in the
initial conversion or conversion rate. Any adjustment which is not made shall
be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article shall be made to the nearest cent or to
the nearest 1/100 of a share, as the case may be.
No adjustment in the conversion price or the conversion rate shall be made
because the Parent issues, in exchange for cash, property or services, shares
of Parent Stock, or any securities convertible into or exchangeable for shares
of Parent Stock or securities carrying the right to purchase shares of Parent
Stock or such convertible exchangeable securities.
No adjustment in the conversion price or conversion rate need be made under
this Article for sales of shares of Parent Stock pursuant to a Parent plan
providing for reinvestment of dividends or interest or in the event the par
value of the Parent Stock is changed.
No adjustment in the conversion price or conversion rate need be made for a
transaction referred to in Section 11.07, 11.08 or 11.09 if Securityholders
are to participate in the transaction on a basis and with notice that the
Board of Directors determines to be fair and appropriate in light of the basis
and notice on which holders of Parent Stock participate in the transaction;
provided that the basis on which the Securityholders are to participate in the
transaction shall not be deemed to be fair if it would require the conversion
of Securities at any time prior to the expiration of the conversion period
specified for such Securities.
To the extent the Securities become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the cash.
Section 11.14. Notice of Adjustment.
Whenever the conversion price or conversion rate is adjusted, the Company
shall promptly mail to Securityholders a notice of the adjustment and file
with the Trustee an Officers' Certificate briefly stating the new conversion
price or conversion rate, the date it becomes effective, the facts requiring
the adjustment and the manner of computing it. The certificate shall be
conclusive evidence that the adjustment is correct.
Section 11.15. Notice of Certain Transactions.
If:
(a) the Parent takes any action which would require an adjustment in the
conversion price or conversion rate;
(2) the Parent consolidates or merges with, or transfers all or
substantially all of its assets to, another corporation, and stockholders
of the Parent must approve the transaction; or
(3) there is a dissolution or liquidation of the Parent,
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a Holder of a Security may want to convert it into shares of Parent Stock
prior to the record date for, or the effective date of, the transaction so
that he may receive the rights, warrants, securities or assets which a holder
of shares of Parent Stock on that date may receive. Therefore, the Company
shall mail to the Securityholders and the Trustee a notice stating the
proposed record or effective date, as the case may be. Failure to mail the
notice or any defect in it shall not affect the validity of any transaction
referred to in clause (1), (2) or (3) of this Section.
Section 11.16. Consolidation, Merger or Sale of the Parent.
If the Parent is a party to a transaction described in Section 5.01 or a
merger which reclassifies or changes its outstanding Parent Stock, the Company
shall take such actions as may be necessary, in the good faith opinion of the
Board of Directors, to ensure that (i) the Holder of a Security may convert it
into the kind and amount of securities or cash or other assets which he would
have owned immediately after the consolidation, merger or transfer if he had
converted the Security immediately before the effective date of such
transaction, assuming (to the extent applicable) that such Holder failed to
exercise any rights of election with respect thereto and received per share of
Parent Stock the kind and amount of securities, cash or assets received per
share by a plurality of the non-electing shares (ii) the kind and amount of
securities into which the Securities become convertible as a result of the
consolidation, merger or transfer are subject to adjustments which are as
nearly equivalent as may be practical to the adjustments provided for in this
Article. The Company shall give to each Securityholder in accordance with
Section 12.02 a notice describing the actions so taken.
If this Section applies, Sections 11.07, 11.08 and 11.09 shall not apply.
Section 11.17. Company Determination Final.
Any determination which the Board of Directors must make pursuant to
Sections 11.07, 11.09, 11.11, 11.13 or 11.16 is conclusive and binding on the
Holders.
Section 11.18. Trustee's Disclaimer.
Neither the Trustee nor any Conversion Agent has any duty to determine when
an adjustment under this Article should be made, how it should be made or what
it should be. Neither the Trustee nor the Conversion Agent has any duty to
determine whether any actions taken by the Company in accordance with Section
11.16 are sufficient. Neither the Trustee nor any Conversion Agent makes any
representation as to the validity or value of any securities or assets issued
upon conversion of Securities. Neither the Trustee nor any Conversion Agent
shall be responsible for the Company's failure to comply with this Article.
Section 11.19. Simultaneous Adjustments.
In the event that this Article Eleven requires adjustments to the conversion
price or conversion rate under more than one of Sections 11.07(4), 11.08 or
11.09, and the record dates for the distributions giving rise to such
adjustments shall occur on the same date, then such adjustments shall be made
by applying, first, the provisions of Section 11.07, second, the provisions of
Section 11.09 and, third, the provisions of Section 11.08.
ARTICLE TWELVE
Miscellaneous
Section 12.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of TIA (S)(S) 310 to 317, inclusive, through operation
of TIA (S) 318(e), such imposed duties shall control.
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Section 12.02. Notices.
Any notice or communication shall be sufficiently given if in writing and
delivered in person or mailed by first-class mail addressed as follows:
If to the Company:
TCI Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111
Attention: Bernard W. Schotters
Executive Vice President and Treasurer
If to the Trustee:
Attention:
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed to
him at his address as it appears on the registration books of the Registrar
and shall be sufficiently given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders.
Except for a notice to the Trustee, which is deemed given only when received,
if a notice or communication is mailed in the manner provided above, it is
duly given, whether or not the addressee receives it.
Section 12.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S) 312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the signers,
all conditions precedent (including any covenants compliance with which
constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent (including any covenants compliance with
which constitutes a condition precedent) have been complied with.
Section 12.05. Statements Required in Certificate or Opinion.
Each Officers' Certificate or Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture (other than
certificates provided pursuant to Section 4.03) shall include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
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(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such person, such
condition or covenant has been complied with.
Section 12.06. When Treasury Securities Disregarded.
In determining whether the Holders of the required aggregate principal
amount of Securities of any series have concurred in any direction, waiver or
consent, Securities of such series owned by the Company or by any Affiliate of
the Company shall be disregarded and treated as not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities of such
series which the Trustee knows are so owned shall be so disregarded.
Section 12.07. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a meeting of the
Securityholders of all series or any series. The Registrar, Paying Agent or
Conversion Agent may make reasonable rules for its functions.
Section 12.08. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday, or a day on which banking
institutions in the City of New York, New York, are not required to be open.
If a specified date (including a date for giving notice) or the last day to
convert a Security is a Legal Holiday, any action to be taken on such date
pursuant to this Indenture or the Securities (including such conversion) may
be taken on the next succeeding day that is not a Legal Holiday, and, to the
extent applicable, no interest, or original issue discount, as the case may
be, shall accrue for the intervening period.
Section 12.09. Governing Law.
The internal laws of the State of New York shall govern this indenture and
the Securities.
Section 12.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 12.11. No Recourse Against Others.
No past, present or future director, officer, employee or stockholder, as
such, of the Company or any successor thereof shall have any liability for any
obligations of the Company under the Securities or this Indenture 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 the Securities.
Section 12.12. Successors.
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
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Section 12.13. Duplicate Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 12.14. Table of Contents, Headings, Etc.
The table of contents and the titles and headings of the Articles and
Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
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Signatures
Dated: January , 1998
TCI Communications, Inc.
By __________________________________
(Seal)
Dated: January , 1998
, Trustee
By __________________________________
(Seal)
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Exhibit 4.4
State of Delaware
PAGE 1
Office of the Secretary of State
_______________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF
"TCI/LIBERTY HOLDING COMPANY". CHANGING ITS NAME FROM "TCI/LIBERTY HOLDING
COMPANY" TO "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE FOURTH DAY
OF AUGUST, A.D. 1994, AT 4:14 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
[SEAL]
/s/ EDWARD J. FREEL Edward J. Freel, Secretary of State
AUTHENTICATION: 7202362
DATE: 08-04-94
2371729 8100
944145668
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:14 PM 08/04/1994
944145668 -- 2371729
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
OF
TCI/LIBERTY HOLDING COMPANY
_______________
TCI/LIBERTY HOLDING COMPANY, a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
(1) The name of the Corporation is TCI/Liberty Holding Company. The
original Certificate of Incorporation of the Corporation was filed on January
24, 1994. The name under which the Corporation was originally incorporated is
TCI/Liberty Holding Company.
(2) This Restated Certificate of Incorporation restates and amends the
Certificate of Incorporation of the Corporation.
(3) Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, the text of the Certificate of Incorporation is hereby
restated to read in its entirety as follows:
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ARTICLE I
NAME
The name of the Corporation is Tele-Communications, Inc.
ARTICLE II
REGISTERED OFFICE
The location of the registered office of the Corporation in the State of
Delaware is the office of The Prentice-Hall Corporation System, Inc., 32
Loockerman Square, Suite L-100, Dover, Kent County, Delaware 19904, and the name
of the registered agent at such address is The Prentice-Hall Corporation System,
Inc.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Delaware General Corporation
Law.
ARTICLE IV
AUTHORIZED STOCK
The total number of shares of capital stock which the Corporation shall
have authority to issue is one billion two hundred sixty two million three
hundred seventy five thousand ninety six (1,262,375,096) shares, of which one
billion two hundred fifty million (1,250,000,000) shares shall be common stock
("Common Stock") and twelve million three hundred seventy five thousand ninety
six (12,375,096) shares shall be preferred stock ("Preferred Stock"). Said
shares of Common Stock and Preferred Stock shall be divided into the following
classes:
(a) One billion one hundred million (1,100,000,000) shares of Common Stock
shall be of a class designated as Class A Common Stock with a par value of $1.00
per share;
(b) One hundred fifty million (150,000,000) shares of Common Stock shall
be of class designated as Class B Common Stock with a par value of $1.00 per
share;
(c) Seven hundred thousand (700,000) shares of Preferred Stock shall be of
a class designated as Class A Preferred Stock with a par value of $.01 per
share;
(d) One million six hundred seventy five thousand and ninety six
(1,675,096) shares of Preferred Stock shall be of a class designated as Class B
6% Cumulative Redeemable Exchangeable Junior Preferred Stock with a par value of
$.01 per share; and
(e) Ten million (10,000,000) shares of Preferred Stock shall be of a class
designated as Series Preferred Stock with a par value of $.01 per share.
The description of the Common Stock and the Preferred Stock of the
Corporation, and the relative rights, preferences and limitations thereof, or
the method of fixing and establishing the same, are as hereinafter in this
Article IV set forth:
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SECTION A
CERTAIN DEFINITIONS
Unless the context otherwise requires, the terms defined in this Section A
shall have, for all purposes of this Article IV, the meanings herein specified:
"Board of Directors" shall mean the Board of Directors of the Corporation
and, unless the context indicates otherwise, shall also mean, to the extent
permitted by law, any committee thereof authorized, with respect to any
particular matter, to exercise the power of the Board of Directors of the
Corporation with respect to such matter.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in the City of New York, New York, are not required
to be open.
"capital stock" shall mean any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) corporate stock.
"Certificate" shall mean this Restated Certificate of Incorporation of the
Corporation, as it may from time to time hereafter be amended or restated.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or agency or political subdivision thereof, or other entity, whether
acting in an individual fiduciary or other capacity.
SECTION B
CLASS A PREFERRED STOCK
The Class A Preferred Stock shall have the following preferences,
limitations and relative rights:
1. Certain Definitions. Unless the context otherwise requires, the terms
defined in this paragraph 1 shall have, for all purposes of this Section B, the
meanings herein specified:
"Class A Common Stock" shall mean the Class A Common Stock, par value $1.00
per share, of the Corporation, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Class
A Common Stock, or in the case of a consolidation or merger of the Corporation
with or into another Person affecting the Class A Common Stock, such capital
stock to which a holder of Class A Common Stock shall be entitled upon the
occurrence of such event.
"Class A Preferred Stock" shall mean the Class A Preferred Stock, par value
$.01 per share, of the Corporation.
"Class B Common Stock" shall mean the Class B Common Stock, par value $1.00
per share, of the Corporation, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Class
B Common Stock, or in the case of a consolidation or merger of the Corporation
with or into another Person affecting the Class B Common Stock, such capital
stock to which a holder of Class B Common Stock shall be entitled upon the
occurrence of such event.
"Class B Preferred Stock" shall mean the Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock, par value $.01 per share, of the
Corporation.
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"Dividend Payment Date" shall mean, for any Dividend Period, the last day
of such Dividend Period which shall be the first day of March of each year,
commencing with March 1, 1995, or the next succeeding Business Day if any such
day is not a Business Day.
"Dividend Period" shall mean the period from the Issue Date to and
including the first Dividend Payment Date and each annual period between
consecutive Dividend Payment Dates.
"Issue Date" shall mean the date on which shares of Class A Preferred Stock
are first issued.
"Junior Stock" shall mean (i) the Class A Common Stock, (ii) the Class B
Common Stock, (iii) the Class B Preferred Stock, (iv) any other class or series
of capital stock, whether now existing or hereafter created, of the Corporation,
other than (A) the Class A Preferred Stock, (B) any class or series of Parity
Stock (except to the extent provided under clause (v) hereof) and (C) any Senior
Stock, and (v) any class or series of Parity Stock to the extent that it ranks
junior to the Class A Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation, as the case may be. For purposes of clause
(v) above, a class or series of Parity Stock shall rank junior to the Class A
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation if the holders of shares of Class A Preferred Stock shall be
entitled to dividend payment, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or series.
"Liquidation Preference" measured per share of the Class A Preferred Stock
as of any date in question (the "Determination Date") shall mean an amount equal
to the sum of (a) the Stated Liquidation Value of such share, plus (b) an amount
equal to all dividends accrued on such share which pursuant to paragraph 2(b) of
this Section B have been added to and remain a part of the Liquidation
Preference as of the Determination Date, plus (c) for purposes of determining
the amounts payable pursuant to paragraph 3 and paragraph 4 of this Section B
and the definition of Redemption Price, an amount equal to all unpaid dividends
accrued on such share during the period from the immediately preceding Dividend
Payment Date (or the Issue Date if the Determination Date is on or prior to the
first Dividend Payment Date) through and including the Determination Date, and,
in the case of clauses (b) and (c) hereof, whether or not such unpaid dividends
have been earned or declared or there are any unrestricted funds of the
Corporation legally available for the payment of dividends. In connection with
the determination of the Liquidation Preference of a share of Class A Preferred
Stock upon redemption or upon liquidation, dissolution or winding up of the
Corporation, the Determination Date shall be the applicable date of redemption
or the date of distribution of amounts payable to stockholders in connection
with any such liquidation, dissolution or winding up.
"Parity Stock" shall mean any class or series of capital stock, whether now
existing or hereafter created, of the Corporation ranking on a parity basis with
the Class A Preferred Stock as to dividend rights, rights of redemption or
rights on liquidation. Capital stock of any class or series shall rank on a
parity as to dividend rights, rights of redemption or rights on liquidation with
the Class A Preferred Stock, whether or not the dividend rates, dividend payment
dates, redemption or liquidation prices per share or sinking fund or mandatory
redemption provisions, if any, are different from those of the Class A Preferred
Stock, if the holders of shares of such class or series shall be entitled to
dividend payments, payments on redemption or payments of amounts distributable
upon dissolution, liquidation or winding up of the Corporation, as the case may
be, in proportion to their respective accumulated and accrued and unpaid
dividends, redemption prices or liquidations prices, respectively, without
preference or priority, one over the other, as between the holders of shares of
such class or series and the holders of Class A Preferred Stock. No class or
series of capital stock that ranks junior to the Class A Preferred Stock as to
rights on liquidation shall rank or be deemed to rank on a parity basis with the
Class A Preferred Stock as to dividend rights or rights of redemption, unless
the instrument creating or evidencing such class or series of capital stock
otherwise expressly provides.
"Record Date" for the dividends payable on any Dividend Payment Date means
the fifteenth day of the month preceding the month during which such Dividend
Payment Date shall occur, or if any such day is not a Business Day, then on the
next preceding Business Day, as and if designated by the Board of Directors.
"Redemption Date" as to any share of Class A Preferred Stock shall mean the
date fixed for redemption of such share pursuant to paragraph 4(a) or (b) of
this Section B, provided that no such date will be a Redemption Date unless the
applicable Redemption Price
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is actually paid in full on such date.
"Redemption Price" as to any share of Class A Preferred Stock which is to
be redeemed on any Redemption Date shall mean the Liquidation Preference thereof
on such Redemption Date.
"Senior Stock" shall mean any class or series of capital stock, whether now
existing or hereafter created, of the Corporation ranking prior to the Class A
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation. Capital stock of any class or series shall rank prior to the Class
A Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation if the holders of shares of such class or series shall be entitled
to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of Class A
Preferred Stock. No class or series of capital stock that ranks on a parity
basis with or junior to the Class A Preferred Stock as to rights on liquidation
shall rank or be deemed to rank prior to the Class A Preferred Stock as to
dividend rights or rights of redemption, notwithstanding that the dividend rate,
dividend payment dates, sinking fund provisions, if any, or mandatory redemption
provisions thereof are different from those of the Class A Preferred Stock,
unless the instrument creating or evidencing such class or series of capital
stock otherwise expressly provides.
"Special Record Date" has the meaning ascribed to such term in paragraph
2(b) of this Section B.
"Stated Liquidation Value" of a share of Class A Preferred Stock means
$322.84.
"Subsidiary" of any Person shall mean (i) a corporation a majority of the
capital stock of which, having voting power under ordinary circumstances to
elect directors, is at the time, directly or indirectly, owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any other Person (other
than a corporation) in which such Person and/or one or more Subsidiaries of such
Person, directly or indirectly, has (x) a majority ownership interest or (y) the
power to elect or direct the election of a majority of the members of the
governing body of such first-named Person.
2. Dividends.
(a) DIVIDEND RIGHTS; DIVIDEND PAYMENT DATES. Subject to the prior
preferences and other rights of any Senior Stock and the provisions of paragraph
5 hereof, the holders of Class A Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of unrestricted funds
legally available therefor, cumulative dividends, in preference to dividends on
any Junior Stock, that shall accrue on each share of Class A Preferred Stock at
the rate of 9 3/8% per annum of the Stated Liquidation Value of such share from
the Issue Date to and including the date on which the Liquidation Preference of
such share is made available (whether on liquidation, dissolution, or winding up
of the Corporation or, in the case of paragraph 4 of this Section B, upon the
applicable Redemption Date). Accrued dividends on the Class A Preferred Stock
will be payable, as provided in paragraph 2(c) below, annually on each Dividend
Payment Date to the holders of record of the Class A Preferred Stock as of the
close of business on the Record Date for such dividend payment. Dividends shall
be fully cumulative and shall accrue (without interest or compounding) on a
daily basis without regard to the occurrence of a Dividend Payment Date and
whether or not such dividends are declared and whether or not there are any
unrestricted funds of the Corporation legally available for the payment of
dividends. The amount of dividends "accrued" as of the first Dividend Payment
Date and as of any date that is not a Dividend Payment Date shall be calculated
on the basis of the foregoing rate per annum for the actual number of days
elapsed from the Issue Date (in the case of the first Dividend Payment Date and
any date prior to the first Dividend Payment Date) or the last preceding
Dividend Payment Date (in the case of any other date) to and including the date
as of which such determination is to be made, based on a 365- or 366-day year,
as the case may be.
(b) SPECIAL RECORD DATE. On each Dividend Payment Date, all dividends that
have accrued on each share of Class A Preferred Stock during the immediately
preceding Dividend Period shall, to the extent not paid as provided in paragraph
2(c) below on such Dividend Payment Date for any reason (whether or not such
unpaid dividends have been earned or declared or there are any unrestricted
funds of the Corporation legally available for the payment of dividends), be
added to the Liquidation Preference of such share and will remain a part thereof
until such dividends are paid as provided in paragraph 2(c) below. No interest
or additional dividends will accrue or be payable with respect to any dividend
payment on the Class A Preferred Stock that may be in arrears or
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with respect to that portion of any other payment on the Class A Preferred Stock
that is in arrears which consists of accumulated or accrued and unpaid
dividends. Such accumulated or accrued and unpaid dividends may be declared and
paid at any time (subject to the rights of any Senior Stock and, if applicable,
to the concurrent satisfaction of any dividend arrearages then existing with
respect to any Parity Stock which ranks on a parity basis with the Class A
Preferred Stock as to the payment of dividends) without reference to any regular
Dividend Payment Date, to holders of record as of the close of business on such
date, not more than 45 days nor less than 10 days preceding the payment date
thereof, as may be fixed by the Board of Directors (the "Special Record Date").
Notice of each Special Record Date shall be given, not more than 45 days nor
less than 10 days prior thereto, to the holders of record of the shares of Class
A Preferred Stock.
(c) METHOD OF PAYMENT. All dividends payable with respect to the shares of
Class A Preferred Stock shall be declared and paid in cash. All dividends paid
with respect to the shares of Class A Preferred Stock pursuant to this paragraph
2 shall be paid pro rata to all the holders of shares of Class A Preferred Stock
outstanding on the applicable Record Date or Special Record Date, as the case
may be.
3. Distributions Upon Liquidation, Dissolution or Winding Up.
Subject to the prior payment in full of the preferential amounts to which
any Senior Stock is entitled, in the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
Class A Preferred Stock shall be entitled to receive from the assets of the
Corporation available for distribution to stockholders, before any payment or
distribution shall be made to the holders of any Junior Stock, an amount in cash
or property at its fair market value, as determined by the Board of Directors in
good faith, or a combination thereof, per share, equal to the Liquidation
Preference of a share of Class A Preferred Stock as of the date of payment or
distribution, which payment or distribution shall be made pari passu with any
such payment or distribution made to the holders of any Parity Stock ranking on
a parity basis with the Class A Preferred Stock with respect to distributions
upon liquidation, dissolution or winding up of the Corporation. The holders of
Class A Preferred Stock shall be entitled to no other or further distribution of
or participation in any remaining assets of the Corporation after receiving the
Liquidation Preference per share. If, upon distribution of the Corporation's
assets in liquidation, dissolution or winding up, the assets of the Corporation
to be distributed among the holders of the Class A Preferred Stock and to all
holders of any Parity Stock ranking on a parity basis with the Class A Preferred
Stock with respect to distributions upon liquidation, dissolution or winding up
shall be insufficient to permit payment in full to such holders of the
respective preferential amounts to which they are entitled, then the entire
assets of the Corporation to be distributed to holders of the Class A Preferred
Stock and such Parity Stock shall be distributed pro rata to such holders based
upon the aggregate of the full preferential amounts to which the shares of Class
A Preferred Stock and such Parity Stock would otherwise respectively be
entitled. Neither the consolidation or merger of the Corporation with or into
any other corporation or corporations nor the sale, transfer or lease of all or
substantially all of the assets of the Corporation shall itself be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this paragraph 3. Notice of the liquidation, dissolution or winding up of the
Corporation shall be given, not less than 20 days prior to the date on which
such liquidation, dissolution or winding up is expected to take place or become
effective, to the holders or record of the shares of Class A Preferred Stock.
4. Redemption.
(a) MANDATORY REDEMPTION. Subject to the rights of any Senior Stock and
the provisions of paragraph 5 of this Section B, the Corporation shall redeem,
out of funds legally available therefor, on the twelfth anniversary of the Issue
Date (or, if such day is not a Business Day, on the first Business Day
thereafter), all shares of Class A Preferred Stock remaining outstanding at the
Redemption Price on the Redemption Date. If the funds of the Corporation legally
available for redemption of shares of the Class A Preferred Stock or Parity
Stock then required to be redeemed are insufficient to redeem the total number
of such shares remaining outstanding, those funds which are legally available
shall, subject to the rights of any Senior Stock and the provisions of paragraph
5, be used to redeem the maximum possible number of shares of Class A Preferred
Stock and Parity Stock. Subject to the rights of any Senior Stock and the
provisions of paragraph 5 hereof, at any time and from time to time thereafter
when additional funds of the Corporation are legally available for such purpose,
such funds shall immediately be used to redeem the shares of Class A Preferred
Stock and Parity Stock which are required to be redeemed that the Corporation
failed to redeem until the balance of such shares has been redeemed. The
selection of shares to be redeemed pursuant to the two immediately preceding
sentences shall be made on a pro
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rata basis as among the different classes or series and as among the holders of
shares of a particular class or series.
(b) OPTIONAL REDEMPTION. Subject to the rights of any Senior Stock and the
provisions of paragraph 5 of this Section B, the shares of Class A Preferred
Stock may be redeemed, at the option of the Corporation by the action of the
Board of Directors, in whole or from time to time in part, on any Business Day
occurring after the Issue Date, at the Redemption Price on the Redemption Date.
If less than all outstanding shares of Class A Preferred Stock are to be
redeemed on any Redemption Date, the shares of Class A Preferred Stock to be
redeemed shall be chosen pro rata among all holders of Class A Preferred Stock.
The Corporation shall not be required to register a transfer of (i) any shares
of Class A Preferred Stock for a period of 15 days next preceding any selection
of shares of Class A Preferred Stock to be redeemed or (ii) any shares of Class
A Preferred Stock selected or called for redemption.
(c) NOTICE OF REDEMPTION. Notice of redemption shall be given by or on
behalf of the Corporation, not more than 60 days nor less than 30 days prior to
the Redemption Date, to the holders of record of the shares of Class A Preferred
Stock to be redeemed; but no defect in such notice or in the mailing thereof
shall affect the validity of the proceedings for the redemption of any shares of
Class A Preferred Stock. In addition to any information required by law or by
the applicable rules of any national securities exchange or national interdealer
quotation system on which the Class A preferred Stock may be listed or admitted
to trading or quoted, such notice shall set forth the Redemption Price, the
Redemption Date, the number of shares to be redeemed and the place at which the
shares called for redemption will, upon presentation and surrender of the stock
certificates evidencing such shares, be redeemed. In the event that fewer than
the total number of shares of Class A Preferred Stock represented by a
certificate are redeemed, a new certificate representing the number of
unredeemed shares will be issued to the holder thereof without cost to such
holder.
(d) DEPOSIT OF REDEMPTION PRICE. If notice of any redemption by the
Corporation pursuant to this paragraph 4 shall have been given as provided in
paragraph 4(c) above, and if on or before the Redemption Date specified in such
notice an amount in cash sufficient to redeem in full on the Redemption Date at
the Redemption Price all shares of Class A Preferred Stock called for redemption
shall have been set apart so as to be available for such purpose and only for
such purpose, then effective as of the close of business on the Redemption Date,
the shares of Class A Preferred Stock called for redemption, notwithstanding
that any certificate therefor shall not have been surrendered for cancellation,
shall no longer be deemed outstanding, and the holders thereof shall cease to be
stockholders with respect to such shares and all rights with respect to such
shares shall forthwith cease and terminate, except the right of the holders
thereof to receive the Redemption Price of such shares, without interest, upon
the surrender of certificates representing the same.
(e) STATUS OF REDEEMED SHARES. All shares of Class A Preferred Stock
redeemed, exchanged, purchased or otherwise acquired by the Corporation shall be
retired and shall not be reissued.
5. Limitations on Dividends and Redemptions.
If at any time the Corporation shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends for all
prior dividends periods on any Parity Stock which by the terms of the instrument
creating or evidencing such Parity Stock is entitled to the payment of such
cumulative dividends prior to the redemption, exchange, purchase or other
acquisition of the Class A Preferred Stock, and until full cumulative dividends
on such Parity Stock for all prior dividend periods are paid, or declared and
the consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, neither the Corporation nor any
Subsidiary thereof shall redeem, exchange, purchase or otherwise acquire any
shares of Class A Preferred Stock, Parity Stock or Junior Stock, or set aside
any money or assets for any such purpose, pursuant to paragraph 4 hereof, a
sinking fund or otherwise, unless all then outstanding shares of Class A
Preferred Stock, of such Parity Stock and of any other class of series of Parity
Stock that by the terms of the instrument creating or evidencing such Parity
Stock is required to be redeemed under such circumstances are redeemed or
exchanged pursuant to the terms hereof and thereof.
If at any time the Corporation shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends on the
Class A Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Class A Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, neither the Corporation nor any
Subsidiary thereof shall redeem, exchange, purchase
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or otherwise acquire any shares of Class A Preferred Stock, Parity Stock or
Junior Stock, or set aside any money or assets for any such purpose, pursuant to
paragraph 4 hereof, a sinking fund or otherwise, unless all then outstanding
shares of Class A Preferred Stock and of any other class or series of Parity
Stock that by the terms of the instrument creating or evidencing such Parity
Stock is required to be redeemed under such circumstances are redeemed or
exchanged pursuant to the terms hereof and thereof.
If at any time the Corporation shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends on the
Class A Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Class A Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside for such purpose
and no other purpose, the Corporation shall not declare or pay any dividend on
or make any distribution with respect to any Junior Stock or Parity Stock or set
aside any money or assets for any such purpose, except that the Corporation may
declare and pay a dividend on any Parity Stock ranking on a parity basis with
the Class A Preferred Stock with respect to the right to receive dividend
payments, contemporaneously with the declaration and payment of a dividend on
the Class A Preferred Stock, provided that such dividends are declared and paid
pro rata so that the amount of dividends declared and paid per share of the
Class A Preferred Stock and such Parity Stock shall in all cases bear to each
other the same ratio that accumulated and accrued and unpaid dividends per share
on the Class A Preferred Stock and such Parity Stock bear to each other.
If the Corporation shall fail to redeem on any date fixed for redemption or
exchange pursuant to paragraph 4 hereof any shares of Class A Preferred Stock
called for redemption on such date, and until such shares are redeemed in full,
the Corporation shall not redeem or exchange any Parity Stock or Junior Stock or
declare or pay any dividend on or make any distribution with respect to any
Junior Stock, or set aside any money or assets for any such purpose, and neither
the Corporation nor any Subsidiary thereof shall purchase or otherwise acquire
any Class A Preferred Stock, Parity Stock or Junior Stock, or set aside any
money or assets for any such purpose.
Neither the Corporation nor any Subsidiary thereof shall redeem, exchange,
purchase or otherwise acquire any Parity Stock or Junior Stock, or set aside any
money or assets for any such purpose, if after giving effect to such redemption,
exchange, purchase or other acquisition, the amount (as determined by the Board
of Directors in good faith) that would be available for distribution to the
holders of the Class A Preferred Stock upon liquidation, dissolution or winding
up of the Corporation if such liquidation, dissolution or winding up were to
occur on the date fixed for such redemption, exchange, purchase or other
acquisition of such Parity Stock or Junior Stock would be less than the
aggregate Liquidation Preference as of such date of all shares of Class A
Preferred Stock then outstanding.
Nothing contained in the first, fourth or fifth paragraph of this paragraph
5 shall prevent (i) the payment of dividends on any Junior Stock solely in
shares of Junior Stock or the redemption, purchase or other acquisition of
Junior Stock solely in exchange for (together with a cash adjustment for
fractional shares, if any), or (but only in the case of the first and fifth
paragraphs hereof) through the application of the proceeds from the sale of,
shares of Junior Stock; or (ii) the payment of dividends on any Parity Stock
solely in shares of Parity Stock and/or Junior Stock or the redemption,
exchange, purchase or other acquisition of Class A Preferred Stock or Parity
Stock solely in exchange for (together with a cash adjustment for fractional
shares, if any), or (but only in the case of the first and fifth paragraphs
hereof) through the application of the proceeds from the sale of, shares of
Parity Stock and/or Junior Stock.
The provisions of the first paragraph of this paragraph 5 are for the sole
benefit of the holders of Class A Preferred Stock and Parity Stock having the
terms described therein and accordingly, at any time when there are no shares of
any such class or series of Parity Stock outstanding or if the holders of each
such class or series of Parity Stock have, by such vote or consent of the
holders thereof as may be provided for in the instrument creating or evidencing
such class or series, waived in whole or in part the benefit of such provisions
(either generally or in the specific instance), then the provisions of the first
paragraph of this paragraph 5 shall not (to the extent waived, in the case of
any partial waiver) restrict the redemption, exchange, purchase or other
acquisition of any shares of Class A Preferred Stock, Parity Stock or Junior
Stock. All other provisions of this paragraph 5 are for the sole benefit of the
holders of Class A Preferred Stock and accordingly, if the holders of shares of
Class A Preferred Stock shall have waived (as provided in paragraph 7 of this
Section B) in whole or in part the benefit of the applicable provisions, either
generally or in the specific instance, such provision shall not (to the extent
of such waiver, in the case of a partial waiver) restrict the redemption,
exchange, purchase or other acquisition of, or declaration, payment or making of
any dividends or distributions on the Class A Preferred Stock, any Parity
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Stock or any Junior Stock.
6. Voting.
(a) VOTING RIGHTS. The holders of Class A Preferred Stock shall have no
voting rights whatsoever, except as required by law and except for the voting
rights described in this paragraph 6; provided, however, that the number of
authorized shares of Class A Preferred Stock may be increased or decreased (but
not below the number of shares of Class A preferred Stock then outstanding) by
the affirmative vote of the holders of at least 66 2/3 of the total voting power
of the then outstanding Voting Securities (as defined in Section C of Article V
of this Certificate), voting together as a single class as provided in Article
IX of this Certificate. Without limiting the generality of the foregoing, no
vote or consent of the holders of Class A Preferred Stock shall be required for
(a) the creation of any indebtedness of any kind of the Corporation, (b) the
creation or designation of any class or series of Senior Stock, Parity Stock or
Junior Stock, or (c) any amendment to this Certificate that would increase the
number of authorized shares of Preferred Stock or the number of authorized
shares of Class A Preferred Stock or that would decrease the number of
authorized shares of Class A Preferred Stock or the number of authorized shares
of Class A Preferred Stock (but not below the number of shares of Preferred
Stock or Class A Preferred Stock, as the case may be, then outstanding).
(b) ELECTION OF DIRECTORS. The holders of the Class A Preferred Stock
shall have the right to vote at any annual or special meeting of stockholders
for the purpose of electing directors. Each share of Class A Preferred Stock
shall have one vote for such purpose, and shall vote as a single class with any
other class or series of capital stock of the Corporation entitled to vote in
any general election of directors, unless the instrument creating or evidencing
such class or series of capital stock otherwise expressly provides.
7. Waiver.
Any provision of this Section B which, for the benefit of the holders of
Class A Preferred Stock, prohibits, limits or restricts actions by the
Corporation, or imposes obligations on the Corporation, may be waived in whole
or in part, or the application of all or any part of such provision in any
particular circumstance or generally may be waived, in each case with the
consent of the holders of at least a majority of the number of shares of Class A
Preferred Stock then outstanding (or such greater percentage thereof as may be
required by applicable law or any applicable rules of any national securities
exchange or national interdealer quotation system), either in writing or writing
or by vote at an annual meeting or a meeting called for such purpose at which
the holders of Class A Preferred Stock shall vote as a separate class.
8. Method of Giving Notices.
Any notice required or permitted by the provisions of this Section B to be
given to the holders of share of Class A Preferred Stock shall be deemed duly
given if deposited in the United States mail, first class mail, postage prepaid,
and addressed to each holder of record at his address appearing on the books of
the Corporation or supplied by him in writing to the Corporation for the purpose
of such notice.
9. Exclusion of Other Rights.
Except as may otherwise be required by law and except for the equitable
rights and remedies which may otherwise be available to holders of Class A
Preferred Stock, the shares of Class A Preferred Stock shall not have any
designations, preferences, limitations or relative rights other than those
specifically set forth in this Certificate.
10. Heading of Subdivisions.
The headings of the various subdivisions of this Section are for
convenience of reference only and shall not affect the interpretation of any of
the provisions of this Section.
SECTION C
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CLASS B 6% CUMULATIVE REDEEMABLE EXCHANGEABLE
JUNIOR PREFERRED STOCK
The Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock
shall have the following preferences, limitations and relative rights:
1. Certain Definitions. Unless the context otherwise requires, the terms
defined in this paragraph 1 shall have, for all purposes of this Section C, the
meanings herein specified:
"Average Market Price" as of any Record Date or Special Record Date for a
dividend payment declared by the Board of Directors means the average of the
daily Current Market Prices of the Class A Common Stock for a period of 20
consecutive trading days ending on the tenth trading day prior to such Record
Date or Special Record Date, appropriately adjusted to take into account any
stock dividends on the Class A Common Stock, or any stock splits,
reclassifications or combinations of the Class A Common Stock, during the period
following the first of such 20 trading days and ending on the last full trading
day immediately preceding the Dividend Payment Date or other date fixed for the
payment of dividends to which such Record Date or Special Record Date, as the
case may be, relates.
"Class A Common Stock" shall mean the Class A Common Stock, par value $1.00
per share, of the Corporation, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Class
A Common Stock, or in the case of a consolidation or merger of the Corporation
with or into another Person affecting the Class A Common Stock, such capital
stock to which a holder of Class A Common Stock shall be entitled upon the
occurrence of such event.
"Class A Preferred Stock" shall mean the Class A Preferred Stock, par value
$.01 per share, of the Corporation.
"Class B Common Stock" shall mean the Class B Common Stock, par value $1.00
per share, of the Corporation, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Class
B Common Stock, or in the case of a consolidation or merger of the Corporation
with or into another Person affecting the Class B Common Stock, such capital
stock to which a holder of Class B Common Stock shall be entitled upon the
occurrence of such event.
"Class B Preferred Stock" shall mean the Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock, par value $.01 per share, of the
Corporation.
"Current Market Price" of a share of Class A Common Stock on any day means
the last reported per share sale price (or, if no sale price is reported, the
average of the high and low bid prices) of the Class A Common Stock on such day
on the Nasdaq National Market or as quoted by the National Quotation Bureau
Incorporated, or if the Class A Common Stock is listed on an exchange, on the
principal exchange on which the Class A Common Stock is listed. In the event
that no such quotation is available for any day, the Board of Directors shall be
entitled to determine the Current Market Price on the basis of such quotations
as it considers appropriate.
"Dividend Payment Date" shall mean, for any Dividend Period, the last day
of such Dividend Period which shall be the first day of March of each year,
commencing with March 1, 1995, or the next succeeding Business Day if any such
day is not a Business Day.
"Dividend Period" shall mean the period from the Initial Accrual Date to
and including the first Dividend Payment Date and each annual period between
consecutive Dividend Payment Dates.
"Initial Accrual Date", when used with respect to the shares of Class B
Preferred Stock, shall mean March 2, 1994.
"Issue Date" shall mean the date on which shares of Class B Preferred Stock
are first issued.
"Junior Exchange Notes" shall mean junior subordinated debt securities of
the Corporation of a series to be issued under the Junior Exchange Note
Indenture in exchange for shares of Class B Preferred Stock as contemplated by
paragraphs 4(d) and (f) of this Section C.
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"Junior Exchange Note Indenture" shall mean an indenture substantially in
the form annexed as Exhibit 4.5 to the S-4 Registration Statement, as
supplemented by a supplemental indenture substantially in the form annexed as
Exhibit 1 to such form of indenture, as said indenture and supplemental
indenture may be amended or further supplemented from time to time (subject to
any applicable restrictions of this Certificate) and, unless the context
indicates otherwise, shall include the form and terms of the Junior Exchange
Notes established as contemplated thereunder.
"Junior Stock" shall mean (i) the Class A Common Stock, (ii) the Class B
Common Stock, (iii) any other class or series of capital stock, whether now
existing or hereafter created, of the Corporation, other than (A) the Class B
Preferred Stock, (B) the Class A Preferred Stock, (C) any class or series of
Parity Stock (except to the extent provided under clause (iv) hereof) and (D)
any Senior Stock, and (iv) any class or series of Parity Stock to the extent
that it ranks junior to the Class B Preferred Stock as to dividend rights,
rights of redemption or rights on liquidation, as the case may be. For purposes
of clause (iv) above, a class or series of Parity Stock shall rank junior to the
Class B Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation if the holders of shares of Class B Preferred Stock shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or series.
"Liquidation Preference" measured per share of the Class B Preferred Stock
as of any date in question (the "Determination Date") shall mean an amount equal
to the sum of (a) the Stated Liquidation Value of such share, plus (b) an amount
equal to all dividends accrued on such share which pursuant to paragraph 2(b) of
this Section C have been added to and remain a part of the Liquidation
Preference as of the Determination Date, plus (c) for purposes of determining
the amounts payable pursuant to paragraph 3 and paragraph 4 of this Section C
and the definition of Redemption Price, an amount equal to all unpaid dividends
accrued on such share during the period from the immediately preceding Dividend
Payment Date (or the Initial Accrual Date if the Determination Date is on or
prior to the first Dividend Payment Date) through and including the
Determination Date, and, in the case of clauses (b) and (c) hereof, whether or
not such unpaid dividends have been earned or declared or there are any
unrestricted funds of the Corporation legally available for the payment of
dividends. In connection with the determination of the Liquidation Preference of
a share of Class B Preferred Stock upon redemption or upon liquidation,
dissolution or winding up of the Corporation, the Determination Date shall be
the applicable date of redemption or the date of distribution of amounts payable
to stockholders in connection with any such liquidation, dissolution or winding
up.
"1933 Act" shall mean the Securities Act of 1933, as amended from time to
time, or any successor statute, and the rules and regulations promulgated
thereunder.
"Optional Exchange Date" shall mean the date fixed for the exchange of
shares of Class Be Preferred Stock pursuant to paragraph 4(d) of this Section C,
provided that such date will not be the Optional Exchange Date unless on or
before such date all conditions to the issuance and delivery of Junior Exchange
Notes upon such exchange contained in paragraph 4(f) of this Section C have been
satisfied.
"Parity Stock" shall mean any class or series of capital stock, whether now
existing or hereafter created, of the Corporation ranking on a parity basis with
the Class B Preferred Stock as to dividend rights, rights of redemption or
rights on liquidation. Capital stock of any class or series shall rank on a
parity as to dividend rights, rights of redemption or rights on liquidation with
the Class B Preferred Stock, whether or not the dividend rates, dividend payment
dates, redemption or liquidation prices per share or sinking fund or mandatory
redemption provisions, if any, are different from those of the Class B Preferred
Stock, if the holders of shares of such class or series shall be entitled to
dividend payments, payments on redemption or payments of amounts distributable
upon dissolution, liquidation or winding up of the Corporation, as the case may
be, in proportion to their respective accumulated and accrued and unpaid
dividends, redemption prices or liquidations prices, respectively, without
preference or priority, one over the other, as between the holders of shares of
such class or series and the holders of Class B Preferred Stock. No class or
series of capital stock that ranks junior to the Class B Preferred Stock as to
rights on liquidation shall rank or be deemed to rank on a parity basis with the
Class B Preferred Stock as to dividend rights of redemption, unless the
instrument creating or evidencing such class or series of capital stock
otherwise expressly provides.
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"Record Date" for the dividends payable on any Dividend Payment Date means
the fifteen day of the month preceding the month during which such Dividend
Payment Date shall occur, or if any such day is not a Business Day, then on the
next preceding Business Day, as and if designated by the Board of Directors.
"Redemption Agent" has the meaning ascribed to such term in paragraph 4(c)
of this Section C.
"Redemption Date" as to any share of Class B Preferred Stock shall mean the
date fixed for redemption of such share pursuant to paragraph 4(a) of this
Section C, provided that no such date will be a Redemption Date unless the
applicable Redemption Price is actually paid in full on such date or the
consideration sufficient for the payment thereof, and for no purpose, has been
set apart or deposited in trust as contemplated by paragraph 4(c) of this
Section C.
"Redemption Price" as to any share of Class B Preferred Stock which is to
be redeemed on any Redemption Date shall mean the Liquidation Preference thereof
on such Redemption Date.
"S-4 Registration Statement" shall mean the Corporation's Registration
Statement on Form S-4 (Reg. No. 33-54263) filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 and declared effective on June
28, 1994.
"Senior Stock" shall mean (i) the Class A Preferred Stock and (ii) any
other class or series of capital stock, whether now existing or hereafter
created, of the Corporation ranking prior to the Class B Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation. Capital stock of
any class or series shall rank prior to the Class B Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation if the holders of
shares of such class or series shall be entitled to dividend payments, payments
on redemption or payments of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or priority
to the holders of shares of Class B Preferred Stock. No class or series of
capital stock that ranks on a parity basis with or junior to the Class B
Preferred Stock as to rights on liquidation shall rank or be deemed to rank
prior to the Class B Preferred Stock as to dividend rights or rights of
redemption, notwithstanding that the dividend rate, dividend payment dates,
sinking fund provisions, if any, or mandatory redemption provisions thereof are
different from those of the Class B Preferred Stock, unless the instrument
creating or evidencing such class or series of capital stock otherwise expressly
provides.
"Special Record Date" has the meaning ascribed to such term in paragraph
2(b) of this Section C.
"Stated Liquidation Value" of a share of Class B Preferred Stock means
$100.
"Subsidiary" of any Person shall mean (i) a corporation a majority of the
capital stock of which, having voting power under ordinary circumstances to
elect directors, is at the time, directly or indirectly, owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any other Person (other
than a corporation) in which such Person and/or one or more Subsidiaries of such
Person, directly or indirectly, has (x) a majority ownership interest or (y) the
power to elect or direct the election of a majority of the members of the
governing body of such first-named Person.
"TIA" shall mean the Trust Indenture Act of 1939 (or any successor statute)
as in effect on the date the Junior Exchange Note Indenture is or is required to
be qualified thereunder in accordance with paragraph 4 of this Section C.
2. Dividends.
(a) DIVIDEND RIGHTS; DIVIDEND PAYMENT DATES. Subject to the prior
preferences and other rights of any Senior Stock and the provisions of paragraph
5 hereof, the holders of Class B Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of unrestricted funds
legally available therefor, cumulative dividends, in preference to dividends on
any Junior Stock, that shall accrue on each share of Class B Preferred Stock at
the rate of 6.0% per annum of the Stated Liquidation Value of such share from
the Initial Accrual Date to and including the date on which the Liquidation
Preference of such share is made available (whether on liquidation, dissolution,
or winding up of the Corporation or, in the case of paragraph 4 of this Section
C, upon the applicable Redemption Date or Optional Exchange Date. Accrued
dividends on the Class B Preferred Stock will be payable, as provided in
paragraph 2(c) below, annually on each Dividend Payment Date to the holders of
record of the Class B Preferred Stock as
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of the close of business on the Record Date for such dividend payment. Dividends
shall be fully cumulative and shall accrue (without interest or compounding) on
a daily basis without regard to the occurrence of a Dividend Payment Date and
whether or not such dividends are declared and whether or not there are any
unrestricted funds of the Corporation legally available for the payment of
dividends. The amount of dividends "accrued" as of the first Dividend Payment
Date and as of any date that is not a Dividend Payment Date shall be calculated
on the basis of the foregoing rate per annum for the actual number of days
elapsed from the Initial Accrual Date (in the case of the first Dividend Payment
Date and any date prior to the first Dividend Payment Date) or the last
preceding Dividend Payment Date (in the case of any other date) to and including
the date as of which such determination is to be made, based on a 365- or 366-
day year, as the case may be.
(b) SPECIAL RECORD DATE. On each Dividend Payment Date, all dividends that
have accrued on each share of Class B Preferred Stock during the immediately
preceding Dividend Period shall, to the extent not paid as provided in paragraph
2(c) below on such Dividend Payment Date for any reason (whether or not such
unpaid dividends have been earned or declared or there are any unrestricted
funds of the Corporation legally available for the payment of dividends), be
added to the Liquidation Preference of such share and will remain a part thereof
until such dividends are paid as provided in paragraph 2(c) below. No interest
or additional dividends will accrue or be payable (whether in cash, shares of
Class A Common Stock or otherwise) with respect to any dividend payment on the
Class B Preferred Stock that may be in arrears or with respect to that portion
of any other payment on the Class B Preferred Stock that is in arrears which
consists of accumulated or accrued and unpaid dividends. Such accumulated or
accrued and unpaid dividends may be declared and paid at any time (subject to
the rights of any Senior Stock and, if applicable, to the concurrent
satisfaction of any dividend arrearages then existing with respect to any Parity
Stock which ranks on a parity basis with the Class B Preferred Stock as to the
payment of dividends) without reference to any regular Dividend Payment Date, to
holders of record as of the close of business on such date, not more than 45
days nor less than 10 days preceding the payment date thereof, as may be fixed
by the Board of Directors (the "Special Record Date"). Notice of each Special
Record Date shall be given, not more than 45 days nor less than 10 days prior
thereto, to the holders of record of the shares of Class B Preferred Stock.
(c) METHOD OF PAYMENT. All dividends payable with respect to the shares of
Class B Preferred Stock may be declared and paid, in the sole discretion of the
Board of Directors, in cash, through the issuance of shares of Class A Common
Stock or in any combination of the foregoing, provided, however, that if on any
Dividend Payment Date or other date fixed for the payment of dividends declared
by the Board of Directors, the Corporation pursuant to applicable law or
otherwise is prohibited or restricted from paying in cash the full amount of
dividends declared payable to the holders of Class B Preferred Stock on such
date, then the portion of such dividends the payment of which in cash is so
prohibited or restricted (or such greater portion of such dividends as the Board
of Directors may determine) shall be paid through the issuance of shares of
Class A Common Stock. If any dividend payment declared by the Board of Directors
with respect to the shares of Class B Preferred Stock is to be paid in whole or
in part through the issuance of shares of Class A Common Stock, the amount of
such dividend payment to be paid per share of Class B Preferred Stock in shares
of Class A Common Stock (the "Stock Dividend Amount") shall be satisfied and
paid by the delivery to the holders of record of such shares of Class B
Preferred Stock on the Record Date or Special Record Date, as the case may be,
for such dividend payment, of a number of shares of Class A Common Stock
determined by dividing the Stock Dividend Amount by the Average Market Price of
a share of Class A Common Stock as of such Record Date or Special Record Date.
The Corporation shall not be required to issue any fractional share of Class A
Common Stock to which any holder of Class B Preferred Stock may become entitled
pursuant to this paragraph 2(c). The Board of Directors may elect to settle any
final fraction of a share of Class A Common Stock which a holder of one or more
shares of Class B Preferred Stock would otherwise be entitled to receive
pursuant to this paragraph 2(c) by having the Corporation pay to such holder, in
lieu of issuing such fractional share, cash in an amount (rounded upward to the
nearest whole cent) equal to the same fraction of the Average Market Price of a
share of Class A Common Stock as of the Record Date or Special Record Date, as
the case may be, for the dividend payment with respect to which such shares of
Class A Common Stock are being delivered. Such election, if made, shall be made
as to all holders of Class B Preferred Stock who would otherwise be entitled to
receive a fractional share of Class A Common Stock on the Dividend Payment Date
or other date fixed for the payment of such dividend.
All dividends paid with respect to the shares of Class B Preferred Stock
pursuant to this paragraph 2 shall be paid pro rata to all the holders of shares
of Class B Preferred Stock outstanding on the applicable Record Date or Special
Record Date, as the case may be.
3. Distributions Upon Liquidation, Dissolution or Winding Up.
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Subject to the prior payment in full of the preferential amounts to which
any Senior Stock is entitled, in the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
Class B Preferred Stock shall be entitled to receive from the assets of the
Corporation available for distribution to stockholders, before any payment or
distribution shall be made to the holders of any Junior Stock, an amount in cash
or property at its fair market value, as determined by the Board of Directors in
good faith, or a combination thereof, per share, equal to the Liquidation
Preference of a share of Class B Preferred Stock of the date of payment or
distribution, which payment or distribution shall be made pari passu with any
such payment or distribution made to the holders of any Parity Stock ranking on
a parity basis with the Class B Preferred Stock with respect to distributions
upon liquidation, dissolution or winding up of the Corporation. The holders of
Class B Preferred Stock shall be entitled to no other or further distribution of
or participation in any remaining assets of the Corporation's assets in
liquidation, dissolution or winding up, the assets of the Corporation to be
distributed among the holders of the Class B Preferred Stock and to all holders
of any Parity Stock ranking on a parity basis with the Class B Preferred Stock
with respect to distributions upon liquidation, dissolution or winding up shall
be insufficient to permit payment in full to such holders of the respective
preferential amounts to which they are entitled, then the entire assets of the
Corporation to be distributed to holders of the Class B Preferred Stock and such
Parity Stock shall be distributed pro rata to such holders based upon the
aggregate of the full preferential amounts to which the shares of Class B
Preferred Stock and such Parity Stock would otherwise respectively be entitled.
Neither the consolidation or merger of the Corporation with or into any other
corporation or corporations nor the sale, transfer or lease of all or
substantially all of the assets of the Corporation shall itself be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this paragraph 3. Notice of the liquidation, dissolution or winding up of the
Corporation shall be given, not less than 20 days prior to the date on which
such liquidation, dissolution or winding up is expected to take place or become
effective, to the holders of record of the shares of Class B Preferred Stock.
4. Redemption or Exchange.
(a) OPTIONAL REDEMPTION. Subject to the rights of any Senior Stock and the
provisions of paragraph 5 of this Section C, the shares of Class B Preferred
Stock may be redeemed, at the option of the Corporation by the action of the
Board of Directors, in whole or from time to time in part, on any Business Day
occurring after the Issue Date, at the Redemption Price on the Redemption Date.
If less than all outstanding shares of Class B Preferred Stock are to be
redeemed on any Redemption Date, the shares of Class B Preferred Stock to be
redeemed shall be chosen by lot or by such other method as the Board of
Directors considers fair and appropriate (and which complies with the
requirements, if any, of any national securities exchange or national
interdealer quotation system on which the Class B Preferred Stock may be listed
or admitted to trading or quoted). The Corporation shall not be required to
register a transfer of (i) any shares of Class B Preferred Stock for a period of
15 days next preceding any selection of shares of Class B Preferred Stock to be
redeemed or (ii) any shares of Class B Preferred Stock selected or called for
redemption.
(b) NOTICE OF REDEMPTION. Notice of redemption shall be given by or on
behalf of the Corporation, not more than 60 days nor less than 30 days prior to
the Redemption Date, to the holders of record of the shares of Class B Preferred
Stock to be redeemed; but no defect in such notice or in the mailing thereof
shall affect the validity of the proceedings for the redemption of any shares of
Class B Preferred Stock. In addition to any information required by law or by
the applicable rules of any national securities exchange or national interdealer
quotation system on which the Class B Preferred Stock may be listed or admitted
to trading or quoted, such notice shall set forth the Redemption Price, the
Redemption Date, the number of shares to be redeemed and the place at which the
shares called for redemption will, upon presentation and surrender of the stock
certificates evidencing such shares, be redeemed, and if the Corporation has
elected to deposit the Redemption Price with a Redemption Agent in accordance
with paragraph 4(c) below, shall state the name and address of the Redemption
Agent and the date on which such deposit was or will be made. In the event that
fewer than the total number of shares of Class B Preferred Stock represented by
a certificate are redeemed, a new certificate representing the number of
unredeemed shares will be issued to the holder thereof without cost to such
holder.
(c) DEPOSIT OF REDEMPTION PRICE. If notice of any redemption by the
Corporation pursuant to this paragraph 4 shall have been given as provided in
paragraph 4(b) above, and if on or before the Redemption Date specified in such
notice an amount in cash sufficient to redeem in full on the Redemption Date at
the Redemption Price all shares of Class B Preferred Stock called for redemption
shall have been set apart so as to be available for such purpose and only for
such purpose, then effective as of the close of business on the Redemption Date,
the shares of Class B Preferred Stock called for redemption, notwithstanding
that any certificate
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therefor shall not have been surrendered for cancellation, shall no longer be
deemed outstanding, and the holders thereof shall cease to be stockholders with
respect to such shares and all rights with respect to such shares shall
forthwith cease and terminate, except the right of the holders thereof to
receive the Redemption Price of such shares, without interest, upon the
surrender of certificates representing the same.
At its election, the Corporation on or prior to the Redemption Date (but no
more than 60 days prior to the Redemption Date) may deposit immediately
available funds in an amount equal to the aggregate Redemption Price of the
shares of Class B Preferred Stock called for redemption in trust for the holders
thereof with any bank or trust company organized under the laws of the United
States of America or any state thereof having capital, undivided profits and
surplus aggregating at least $50 million (the "Redemption Agent"), with
irrevocable instructions and authority to the Redemption Agent, on behalf and at
the expense of the Corporation, to mail the notice of redemption as soon as
practicable after receipt of such irrevocable instructions (or to complete such
mailing previously commenced, if it has not already been completed) and to pay,
on and after the Redemption Date or prior thereto, the Redemption Price of the
shares of Class B Preferred Stock to be redeemed to their respective holders
upon the surrender of the certificates therefor. A deposit made in compliance
with the immediately preceding sentence shall be deemed to constitute full
payment for the shares of Class B Preferred Stock to be redeemed and from and
after the close of business on the date of such deposit (although prior to the
Redemption Date), the shares of Class B Preferred Stock to be redeemed shall no
longer be deemed outstanding and the holders thereof shall cease to be
stockholders with respect to such shares and shall have no rights with respect
to such shares except the right of the holders thereof to receive the Redemption
Price of such shares (calculated through the Redemption Date), without interest,
upon surrender of the certificates therefor. Any interest accrued on the funds
so deposited shall be paid to the Corporation from time to time. Any funds so
deposited with the Redemption Agent which shall remain unclaimed by the holders
of such shares of Class B Preferred Stock at the end of one year after the
Redemption Date shall be returned by the Redemption Agent to the Corporation,
after which repayment the holders of such shares of Class B Preferred Stock
called for redemption shall look only to the Corporation for the payment
thereof, without interest, unless an applicable escheat or abandoned property
law designates another Person.
(d) OPTIONAL EXCHANGE FOR JUNIOR EXCHANGE NOTES. Subject to the rights of
any Senior Stock and the provisions of paragraph 5 of this Section C, the shares
of Class B Preferred Stock may be exchanged, out of funds legally available
therefor, at the option of the Corporation by action of the Board of Directors,
in whole but not in part, on any Business Day occurring after the Issue Date,
for Junior Exchange Notes. Each holder of outstanding shares of Class B
Preferred Stock shall be entitled to receive, in exchange for his shares of
Class B Preferred Stock pursuant to this paragraph 4(d), newly issued Junior
Exchange Notes of a series authorized and established for the purpose of such
exchange, the aggregate principal amount of which shall be equal to the
aggregate Liquidation Preference on the Optional Exchange Date of the shares of
Class B Preferred Stock so exchanged by such holder, provided that the Junior
Exchange Notes will be issuable only in principal amounts of $100 or any
integral multiple thereof and an adjustment will be paid by the Corporation, in
cash or by its check, in an amount equal to any excess principal amount
otherwise issuable.
(e) NOTICE OF EXCHANGE. Notice of the Corporation's election to exercise
its optional exchange right pursuant to paragraph 4(d) (an "Optional Exchange
Notice") shall be given by or on behalf of the Corporation, not more than 60
days nor less than 30 days prior to the Optional Exchange Date, to the holders
of record of the shares of Class B Preferred Stock; but no defect in such notice
or in the mailing thereof shall affect the validity of the proceedings for the
exchange of any shares of Class B Preferred Stock. In addition to any
information required by law or by the applicable rules of any national
securities exchange or national interdealer quotation system on which the shares
of Class B Preferred Stock may be listed or admitted to trading or quoted, such
notice shall set forth the Optional Exchange Date, the place at which shares of
Class B Preferred Stock will, upon presentation and surrender of the stock
certificates evidencing such shares, be exchanged for Junior Exchange Notes, and
the material terms (or, as to the rate per annum at which the Junior Exchange
Notes will bear interest, and, if applicable, as to any other of such terms, the
method of determining the same), consistent with the provisions hereof and of
the Junior Exchange Note Indenture, of the series of Junior Exchange Notes to be
issued upon such exchange.
Upon determination of the rate per annum at which the Junior Exchange Notes
to be issued upon such exchange will bear interest and any other terms of such
Junior Exchange Notes, the method of determining which was set forth in the
Optional Exchange Notice, the Corporation shall promptly give notice of such
determination to the holders of shares of Class B Preferred Stock, which notice
may be given by (or, if required by applicable law, shall be given by)
publication of such determination in a daily newspaper of
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national circulation.
(f) CONDITIONS TO EXCHANGE FOR JUNIOR EXCHANGE NOTE. Prior to the giving
of an Optional Exchange Notice, the Corporation shall execute and deliver, with
a bank or trust company selected by the Corporation, the Junior Exchange Note
Indenture, substantially in the form annexed to the S-4 Registration Statement
with only such changes as (i) are necessary to comply with law, any applicable
rules of any securities exchange or usage, (ii) are requested by the Corporation
and which would make any provisions of the Junior Exchange Note Indenture, or of
the Junior Exchange Notes of the series established thereunder for the purpose
of such exchange, more restrictive to the Corporation or beneficial to the
holders of the Junior Exchange Notes of such series, as determined by the Board
of Directors in good faith, such determination to be conclusive, (iii) are
requested by the Corporation to add to the covenants and agreements of the
Corporation contained in the Junior Exchange Note Indenture or to remove any
right or power therein reserved to or conferred upon the Corporation, (iv) are
requested by the Corporation in the event of any amendment to this Certificate
that effects a change in the terms of the Class B Preferred Stock, to conform
(as nearly as may be taking into account the differences between debt securities
and equity securities) the provisions of the Junior Exchange Note Indenture
(including, without limitation, the provisions relating to the establishment of
the terms of any series of Junior Exchange Notes authorized to be issued
thereunder) to the terms of the Class B Preferred Stock as so changed, (v) are
consented to by the holders of at least a majority of the number of shares of
Class B Preferred Stock then outstanding (or such greater percentage thereof as
may be required by applicable law or any applicable rules of any national
securities exchange or national interdealer quotation system), either in writing
or by vote at a meeting called for that purpose at which the holders of Class B
Preferred Stock shall vote as a separate class, or (vi) would not adversely
affect the rights of the holders of Junior Exchange Notes of such series
issuable thereunder.
Prior to the Optional Exchange Date, the Corporation shall (i) establish in
the manner contemplated by the Junior Exchange Note Indenture the terms of the
series of Junior Exchange Notes to be issued thereunder on the Optional Exchange
Date, and (ii) file at the office of the exchange agent for the Class B
Preferred Stock (or with the books of the Corporation if there is no exchange
agent) an opinion of counsel to the effect that (A) the Junior Exchange Note
Indenture has been duly authorized, executed and delivered by the Corporation,
and constitutes a valid and binding instrument enforceable against the
Corporation in accordance with its terms (subject, as to enforceability, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general principles of equity
and except that the Corporation may be prohibited from making payments on the
Junior Exchange Notes of the series to be issued if and to the extent it would
at the time be prohibited from redeeming capital stock and subject to other
qualifications as are then customarily contained in opinions of counsel
experienced in such matters); (B) that the Junior Exchange Notes of such series
have been duly authorized and, when executed and authenticated in accordance
with the provisions of the Junior Exchange Note Indenture and delivered in
exchange for the shares of Class B Preferred Stock, will constitute valid and
binding obligations of the Corporation entitled to the benefits of the Junior
Exchange Note Indenture (subject as aforesaid); (C) that the issuance and
delivery of the Junior Exchange Notes of such series in exchange for the shares
of Class B Preferred Stock will not violate the laws of the state of
incorporation of the Corporation; and (D) that (x) the Junior Exchange Note
Indenture has been duly qualified under the TIA (or that such qualification is
not necessary) and (y) that the issuance and delivery of the Junior Exchange
Notes of such series in exchange for the shares of Class B Preferred Stock is
exempt from the registration or qualification requirements of the 1933 Act and
applicable state securities laws or, if no such exemption is available, that the
Junior Exchange Notes of such series have been duly registered or qualified for
such exchange under the 1933 Act and such applicable state securities laws.
(g) METHOD OF EXCHANGE. If an Optional Exchange Notice shall have been
given by the Corporation pursuant to paragraph 4(e) of this Section C, and if
the Corporation shall have satisfied the conditions to such exchange contained
in paragraph 4(f), then effective as of the close of business on the Optional
Exchange Date, the shares of Class B Preferred Stock, notwithstanding that any
certificate therefor shall not have been surrendered for cancellation, shall no
longer be deemed outstanding, and the holders thereof shall cease to be
stockholders with respect to such shares and all rights with respect to such
shares shall forthwith cease and terminate, except the right of the holders
thereof upon the surrender of certificates evidencing the same to receive the
Junior Exchange Notes exchangeable therefor, and the cash adjustment, if any, in
lieu of Junior Exchange Notes in other than authorized denominations, without
interest.
Before any holder of shares of Class B Preferred Stock called for exchange
shall be entitled to receive the Junior Exchange Notes deliverable in exchange
therefor, such holder shall surrender the certificate or certificates
representing the shares to be exchanged at such place as the Corporation shall
have specified in the Optional Exchange Notice, which certificate or
certificates shall be duly
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endorsed to the Corporation or in blank (or accompanied by duly executed
instruments to transfer to the Corporation or in blank) with signatures
guaranteed (such endorsements or instruments of transfer to be in form
satisfactory to the Corporation), together with a written notice to the
Corporation, specifying the name or names (with addresses) in which the Junior
Exchange Notes are to be issued. If any transfer is involved in the issuance or
delivery of any Junior Exchange Notes in a name other than that of the
registered holder of the shares of Class B Preferred Stock surrendered for
exchange, such holder shall also deliver to the Corporation a sum sufficient for
all taxes payable in respect of such transfer or evidence satisfactory to the
Corporation that such taxes have been paid. Except as provided in the
immediately preceding sentence, the Corporation shall pay any issue, stamp or
other similar tax in respect of such issuance or delivery.
As soon as practicable after the later of the Optional Exchange Date and
the proper surrender of the certificate(s) for such shares of Class B Preferred
Stock as provided above, the Corporation shall deliver at the place specified in
the Optional Exchange Notice, to the holder of the shares of Class B Preferred
Stock so surrendered, or to his nominee(s) or, subject to compliance with
applicable law, transferee(s), a Junior Exchange Note or Notes (of authorized
denominations) in the principal amount to which he shall be entitled upon such
exchange, together with a check in the amount of any cash adjustment as provided
in paragraph 4(d). The Person in whose name any Junior Exchange Note is issued
upon an exchange pursuant to paragraph 4(d) shall be treated for all purposes as
the holder of record thereof as of the close of business on the Optional
Exchange Date.
(h) STATUS OF REDEEMED SHARES. All shares of Class B Preferred Stock
redeemed, exchanged, purchased or otherwise acquired by the Corporation shall be
retired and shall not be reissued.
5. Limitations on Dividends and Redemptions.
If at any time the Corporation shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends for all
prior dividend periods on any Parity Stock which by the terms of the instrument
creating or evidencing such Parity Stock is entitled to the payment of such
cumulative dividends prior to the redemption, exchange, purchase or other
acquisition of the Class B Preferred Stock, and until full cumulative dividends
on such Parity Stock for all prior dividend periods are paid, or declared and
the consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, neither the Corporation nor any
Subsidiary thereof shall redeem, exchange, purchase or otherwise acquire any
shares of Class B Preferred Stock, Parity Stock or Junior Stock, or set aside
any money or assets for any such purpose, pursuant to paragraph 4 hereof, a
sinking fund or otherwise, unless all then outstanding shares of Class B
Preferred Stock, of such Parity Stock and of any other class of series of Parity
Stock that by the terms of the instrument creating or evidencing such Parity
Stock is required to be redeemed under such circumstances are redeemed or
exchanged pursuant to the terms hereof and thereof.
If at any time the Corporation shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends on the
Class B Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Class B Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, neither the Corporation nor any
Subsidiary thereof shall redeem, exchange, purchase or otherwise acquire any
shares of Class B Preferred Stock, Parity Stock or Junior Stock, or set aside
any money or assets for any such purpose, pursuant to paragraph 4 hereof, a
sinking fund or otherwise, unless all then outstanding shares of Class B
Preferred Stock and of any other class or series of Parity Stock that by the
terms of the instrument creating or evidencing such Parity Stock is required to
be redeemed under such circumstances are redeemed or exchanged pursuant to the
terms hereof and thereof.
If at any time the Corporation shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends on the
Class B Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until the full cumulative
dividends on the Class B Preferred Stock for all Dividend Periods ending on or
before the immediately preceding Dividend Payment Date are paid, or declared and
the consideration sufficient to pay the same in full is set aside for such
purpose and no other purpose, the Corporation shall not declare or pay any
dividend on or make any distribution with respect to any Junior Stock or Parity
Stock or set aside any money or assets for any such purpose, except that the
Corporation may declare and pay a dividend on any Parity Stock ranking on a
parity basis with the Class B Preferred Stock with respect to the right to
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receive dividend payments, contemporaneously with the declaration and payment of
a dividend on the Class B Preferred Stock, provided that such dividends are
declared and paid pro rata so that the amount of dividends declared and paid per
share of the Class B Preferred Stock and such Parity Stock shall in all cases
bear to each other the same ratio that accumulated and accrued and unpaid
dividends per share on the Class B Preferred Stock and such Parity Stock bear to
each other.
If the Corporation shall fail to redeem or exchange on any date fixed for
redemption or exchange pursuant to paragraph 4(a) or 4(d) hereof any shares of
Class B Preferred Stock called for redemption or exchange on such date, and
until such shares are redeemed or exchanged in full, the Corporation shall not
redeem or exchange any Parity Stock or Junior Stock or declare or pay any
dividend on or make any distribution with respect to any Junior Stock, or set
aside any money or assets for any such purpose, and neither the Corporation nor
any Subsidiary thereof shall purchase or otherwise acquire any Class B Preferred
Stock, Parity Stock or Junior Stock, or set aside any money or assets for any
such purpose.
Neither the Corporation nor any Subsidiary thereof shall redeem, exchange,
purchase or otherwise acquire any Parity Stock or Junior Stock, or set aside any
money or assets for any such purpose, if after giving effect to such redemption,
exchange, purchase or other acquisition, the amount (as determined by the Board
or Directors in good faith) that would be available for distribution to the
holders of the Class B Preferred Stock upon liquidation, dissolution or winding
up of the Corporation if such liquidation, dissolution or winding up were to
occur on the date fixed for such redemption, exchange, purchase or other
acquisition of such Parity Stock or Junior Stock would be less than the
aggregate Liquidation Preference as of such date of all shares of Class B
Preferred Stock then outstanding.
Nothing contained in the first, fourth or fifth paragraph of this paragraph
5 shall prevent (i) the payment of dividends on any Junior Stock solely in
shares of Junior Stock or the redemption, purchase or other acquisition of
Junior Stock solely in exchange for (together with a cash adjustment for
fractional shares, if any), or (but only in the case of the first and fifth
paragraphs hereof) through the application of the proceeds from the sale of,
shares of Junior Stock; or (ii) the payment of dividends on any Parity Stock
solely in shares of Parity Stock and/or Junior Stock or the redemption,
exchange, purchase or other acquisition of Class B Preferred Stock or Parity
Stock solely in exchange for (together with a cash adjustment for fractional
shares, if any), or (but only in the case of the first and fifth paragraphs
hereof) through the application of the proceeds from the sale of, shares of
Parity Stock and/or Junior Stock.
The provisions of the first paragraph of this paragraph 5 are for the sole
benefit of the holders of Class B Preferred Stock and Parity Stock having the
terms described therein and accordingly, at any time when there are no shares of
any such class or series of Parity Stock outstanding or if the holders of each
such class or series of Parity Stock have, by such vote or consent of the
holders thereof as may be provided for in the instrument creating or evidencing
such class or series, waived in whole or in part the benefit of such provisions
(either generally or in the specific instance), then the provisions of the first
paragraph of this paragraph 5 shall not (to the extent waived, in the case of
any partial waiver) restrict the redemption, exchange, purchase or other
acquisition of any shares of Class B Preferred Stock, Parity Stock or Junior
Stock. All other provisions of this paragraph 5 are for the sole benefit of the
holders of Class B Preferred Stock and accordingly, if the holders of shares of
Class B Preferred Stock shall have waived (as provided in paragraph 7 of this
Section C) in whole or in part the benefit of the applicable provisions, either
generally or in the specific instance, such provision shall not (to the extent
of such waiver, in the case of a partial waiver) restrict the redemption,
exchange, purchase or other acquisition of, or declaration, payment or making of
any dividends or distributions on the Class B Preferred Stock, any Parity Stock
or any Junior Stock.
6. Voting
(a) VOTING RIGHTS. The holders of Class B preferred Stock shall have no
voting rights whatsoever, except as required by law and except for the voting
rights described in this paragraph 6; provided, however, that the number of
authorized shares of Class B Preferred Stock may be increased or decreased (but
not below the number of shares of Class B Preferred Stock then outstanding) by
the affirmative vote of the holders of at least 66 2/3% of the total voting
power of the then outstanding Voting Securities (as defined in Section C of
Article V of this Certificate), voting together as a single class as provided in
Article IX of this Certificate. Without limiting the generality of the
foregoing, no vote or consent of the holders of Class B Preferred Stock shall be
required for (a) the creation of any indebtedness of any kind of the
Corporation, (b) the creation or designation of any class or series of Senior
Stock, Parity Stock or Junior Stock, or (c) any amendment to this Certificate
that would increase the number of authorized shares of
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Preferred Stock or the number of authorized shares of Class B Preferred Stock or
that would decrease the number of authorized shares of Preferred Stock or the
number of authorized shares of Class B Preferred Stock (but not below the number
of shares of Preferred Stock or Class B Preferred Stock, as the case may be,
then outstanding).
(b) ELECTION OF DIRECTORS. The holders of the Class B Preferred Stock
shall have the right to vote at any annual or special meeting of stockholders
for the purpose of electing directors. Each share of Class B Preferred Stock
shall have one vote for such purpose, and shall vote as a single class with any
other class or series of capital stock of the Corporation entitled to vote in
any general election of directors, unless the instrument creating or evidencing
such class or series of capital stock otherwise expressly provides.
7. Waiver.
Any provision of this Section C which, for the benefit of the holders of
Class B Preferred Stock, prohibits, limits or restricts actions by the
Corporation, or imposes obligations on the Corporation, may be waived in whole
or in part, or the application of all or any part of such provision in any
particular circumstance or generally may be waived, in each case with the
consent of the holders of at least a majority of the number of shares of Class B
Preferred Stock then outstanding (or such greater percentage thereof as may be
required by applicable law or any applicable rules of any national securities
exchange or national interdealer quotation system), either in writing or by vote
at an annual meeting or a meeting called for such purpose at which the holders
of Class B Preferred Stock shall vote as a separate class.
8. Method of Giving Notices.
Any notice required or permitted by the provisions of this Section C to be
given to the holders of shares of Class B Preferred Stock shall be deemed duly
given if deposited in the United States mail, first class mail, postage prepaid,
and addressed to each holder of record at his address appearing on the books of
the Corporation or supplied by him in writing to the Corporation for the purpose
of such notice.
9. Exclusion of Other Rights.
Except as may otherwise be required by law and except for the equitable
rights and remedies which may otherwise be available to holders of Class B
Preferred Stock, the shares of Class B Preferred Stock shall not have any
designations, preferences, limitations or relative rights other than those
specifically set forth in this Certificate.
10. Heading of Subdivisions.
The headings of the various subdivisions of this Section C are for
convenience of reference only and shall not affect the interpretation of any of
the provisions of this Section C.
SECTION D
SERIES PREFERRED STOCK
The Series Preferred Stock may be issued, from time to time, in one or more
series, with such designations, preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, as shall be stated and expressed in a resolution or
resolutions providing for the issue of such series adopted by the Board of
Directors. The Board of Directors, in such resolution or resolutions (a copy of
which shall be filed and recorded as required by law), is also expressly
authorized to fix:
(i) the distinctive serial designations and the division of such
shares into series and the number of shares of a particular series, which
may be increased or decreased, but not below the number of shares thereof
then outstanding, by a certificate made, signed, filed and recorded as
required by law;
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(ii) the annual dividend rate, if any, for the particular series, and
the date or dates from which dividends on all shares of such series shall
be cumulative, if dividends on stock of the particular series shall be
cumulative:
(iii) the redemption price or prices for the particular series:
(iv) the right, if any, of the holders of a particular series to
convert or exchange such stock into or for other classes of stock or
indebtedness of the Corporation, and the terms and conditions of such
conversion;
(v) the voting rights, if any, of the holders of a particular
series; and
(vi) the obligation, if any, of the Corporation to purchase and
retire and redeem shares of a particular series as a sinking fund or
redemption or purchase account, the terms thereof and the redemption price
or prices per share for such series redeemed pursuant to the sinking fund
or redemption account.
All shares of any one series of the Series Preferred Stock shall be alike
in every particular and all series shall rank equally and be identical in all
respects except insofar as they may vary with respect to the matters which the
Board of Directors is hereby expressly authorized to determine in the resolution
or resolutions providing for the issue of any series of the Series Preferred
Stock.
SECTION E
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
Each share of the Class A Common Stock, par value $1.00 per share (the
"Class A Common Stock"), and each share of the Class B Preferred Stock, par
value $1.00 per share (the "Class B Common Stock"), of the Corporation shall,
except as otherwise provided in this Section E, be identical in all respects and
shall have equal rights and privileges.
1. Voting Rights.
Holders of Class A Common Stock shall be entitled to one vote for each
share of such stock held, and holders of Class B Preferred Stock shall be
entitled to ten votes for each share of such stock held, on all matters
presented to such stockholders. Except as may otherwise be required by the laws
of the State of Delaware or in the instrument creating or evidencing any class
or series of Preferred Stock the holders of shares of Class A Common Stock and
the holders of shares of Class B Common Stock shall vote with the holders of
Preferred Stock, if any, as one class with respect to the election of directors
and with respect to all other matters to be voted on by stockholders of the
Corporation (including, without limitations, any proposed amendment to this
Certificate that would increase the number of authorized shares of Class A
Common Stock, of Class B Common Stock or of any class or series of Preferred
Stock or decrease the number of authorized shares of any such class or series of
stock (but not below the number of shares thereof then outstanding)), and no
separate vote or consent of the holders of shares of Class A Common Stock, the
holders of shares of Class B Common Stock or the holders of shares of Preferred
Stock shall be required for the approval of any such matter.
2. Conversion Rights.
Each share of Class B Common Stock shall be convertible, at the option of
the holder thereof, into one share of Class A Common Stock. Any such conversion
may be effected by any holder of Class B Common Stock by surrendering such
holder's certificate or certificates for the Class B Common Stock to be
converted, duly endorsed, at the office of the Corporation or any transfer agent
for the Class B Common Stock, together with a written notice to the Corporation
at such office that such holder elects to convert all or a specified number of
shares of Class B Common Stock represented by such certificate and stating the
name or names in which such holder desires the certificate or certificates for
Class A Common Stock to be issued. If so required by the Corporation, any
certificate for shares surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder of such shares or the duly authorized representative of such
holder. Promptly thereafter, the Corporation shall issue and deliver to such
holder or such holder's nominee or nominees, a certificate or certificates for
the number of shares of Class A Common Stock to which such holder shall be
entitled as herein provided. Such conversion shall be deemed to have been made
at the
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close of business on the date of receipt by the Corporation or any such transfer
agent of the certificate or certificates, notice and, if required, instruments
of transfer referred to above, and the person or persons entitled to receive the
Class A Common Stock issuable on such conversion shall be treated for all
purposes as the record holder or holders of such Class A Common Stock on that
date. A number of shares of Class A Common Stock equal to the number of shares
of Class B Common Stock outstanding from time to time shall be set aside and
reserved for issuance upon conversion of shares of Class B Common Stock. Shares
of Class B Common Stock that have been converted hereunder shall remain treasury
shares to be disposed of by resolution of the Board of Directors. Shares of
Class A Common Stock shall not be convertible into shares of Class B Common
Stock.
3. Dividends. Subject to paragraph 4 of this Section E, whenever a
dividend is paid to the holders of Class A Common Stock, the Corporation also
shall pay to the holders of Class B Common Stock a dividend per share at least
equal to the dividend per share paid to the holders of the Class A Common Stock.
Subject to paragraph 4 of this Section E, whenever a dividend is paid to the
holders of Class B Common Stock, the Corporation shall also pay to the holders
of the Class A Common Stock a dividend per share at least equal to the dividend
per share paid to the holders of the Class B Common Stock. Dividends shall be
payable only as and when declared by the Board of Directors.
4. Share Distributions. If at any time a distribution on the Class A
Common Stock or Class B Common Stock is to be paid in Class A Common Stock,
Class B Common Stock or any other securities of the Corporation (hereinafter
sometimes called a "share distribution"), such share distribution may be
declared and paid only as follows:
(a) a share distribution consisting of Class A Common Stock to holders of
Class A Common Stock and Class B Common Stock, on an equal per share basis; or
to holders of Class A Common Stock only, but in such event there shall also be a
simultaneous share distribution to holders of Class B Common Stock consisting of
shares of Class B Common Stock on an equal per share basis:
(b) a share distribution consisting of Class B Common Stock to holders of
Class B Common Stock and Class A Common Stock, on an equal per share basis; or
to holders of Class B Common Stock only, but in such event there shall also be a
simultaneous share distribution to holders of Class A Common Stock consisting of
shares of Class A Common Stock on an equal per share basis; and
(c) a share distribution consisting of any class of securities of the
Corporation other than Common Stock, to the holders of Class A Common Stock and
the holders of Class B Common Stock on an equal per share basis.
The Corporation shall not reclassify, subdivide or combine one class of its
Common Stock without reclassifying, subdividing or combining the other class of
Common Stock, on an equal per share basis.
5. Liquidation and Mergers. Subject to the prior payment in full of the
preferential amounts to which any Preferred Stock is entitled, the holders of
Class A Common Stock and the holders of Class B Common Stock shall share
equally, on a share for share basis, in any distribution of the Corporation's
assets upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, after payment or provisions for payment of the
debts and other liabilities of the Corporation. Neither the consolidation or
merger of the Corporation with or into any other corporation or corporations nor
the sale, transfer or lease of all or substantially all of the assets of the
Corporation shall itself be deemed to be a liquidation, dissolution or winding
up of the Corporation within the meaning of this paragraph 5.
SECTION F
UNCLAIMED DIVIDENDS
Any and all right, title, interest and claim in or to any dividends
declared by the Corporation, whether in cash, stock or otherwise, which are
unclaimed for a period of four years after the close of business on the payment
date, shall be and be deemed extinguished and abandoned; and such unclaimed
dividends in the possession of the Corporation, its transfer agent or other
agents or depositories, shall at such time become the absolute property of the
Corporation, free and clear of any and all claims of any Persons whatsoever.
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ARTICLE V
DIRECTORS
SECTION A
NUMBER OF DIRECTORS
The governing body of the Corporation shall be a Board of Directors.
Subject to any rights of the holders of any class or series of Preferred Stock
to elect additional directors, the number of directors shall not be less than
three (3) and the exact number of directors shall be fixed by the Board of
Directors by resolution. Election of directors need not be by written ballot.
SECTION B
CLASSIFICATION OF THE BOARD
Except as otherwise fixed by or pursuant to the provisions of Article IV
hereof relating to the rights of the holders of any class or series of Preferred
Stock to separately elect additional directors, which additional directors are
not required to be classified pursuant to the terms of such class or series of
Preferred Stock, the Board of Directors of the Corporation shall be divided into
three classes: Class I, Class II and Class III. Each class shall consist, as
nearly as possible, of a number of directors equal to one-third (33 1/3%) of the
then authorized number of members of the Board of Directors. The term of office
of the initial Class I directors shall expire at the annual meeting of
stockholders in 1995; the term of office of the initial Class II directors shall
expire at the annual meeting of stockholders in 1996; and term of office of the
initial Class III directors shall expire at the annual meeting of stockholders
in 1997. At each annual meeting of stockholders of the Corporation the
successors of that class of directors whose term expires at that meeting shall
be elected to hold office for a term expiring at the annual meeting of
stockholders held in the third year following the year of their election. The
directors of each class will hold office until their respective successors are
elected and qualified.
SECTION C
REMOVAL OF DIRECTORS
Subject to the rights of the holders of any class or series of Preferred
Stock, directors may be removed from office only for cause (as hereinafter
defined) upon the affirmative vote of the holders of at least 66 2/3% of the
total voting power of the then outstanding Voting Securities (as hereinafter
defined), voting together as a single class. Except as may otherwise to provided
by law, "cause" for removal, for purposes of this Section C, shall exist only
if: (i) the director whose removal is proposed has been convicted of a felony,
or has been granted immunity to testify in an action where another has been
convicted of a felony, by a court of competent jurisdiction and such conviction
is no longer subject to direct appeal; (ii) such director has become mentally
incompetent, whether or not so adjudicated, which mental incompetence directly
affects his ability as a director of the Corporation, as determined by at least
66 2/3% of the members of the Board of Directors then in office (other than such
director); or (iii) such director's actions or failure to act have been
determined by at least 66 2/3% of the members of the Board of Directors then in
office (other than such director) to be in derogation of the director's duties.
The term "Voting Securities" shall include the Class A Common Stock, the Class B
Common Stock and any class or series of Preferred Stock entitled to vote with
the holders of Common Stock generally upon all matters which may be submitted to
a vote of stockholders at any annual meeting or special meeting thereof.
SECTION D
NEWLY CREATED DIRECTORSHIPS AND VACANCIES
Subject to the rights of the holders of any class or series of Preferred
Stock, vacancies on the Board of Directors resulting from death, resignation,
removal, disqualification or other cause, and newly created directorships
resulting from any increase in the number of directors on the Board of
Directors, shall be filled by the affirmative vote of a majority of the
remaining directors then in office
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(even though less than a quorum) or by the sole remaining director. Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the vacancy
occurred or to which the new directorship is apportioned, and until such
director's successor shall have been elected and qualified. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director, except as may be provided in the terms of any class
or series of Preferred Stock with respect to any additional director elected by
the holders of such class or series of Preferred Stock.
SECTION E
LIMITATION ON LIABILITY AND INDEMNIFICATION
1. Limitation On Liability.
To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or may hereafter be amended, a director of the Corporation shall
not be liable to the Corporation or any of its stockholders for monetary damages
for breach of fiduciary duty as a director. Any repeal or modification of this
paragraph 1 shall be prospective only and shall not adversely affect any
limitation, right or protection of a director of the Corporation existing at the
time of such repeal or modification.
2. Indemnification.
(a) RIGHT TO INDEMNIFICATION. The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he, or a person for whom he is the
legal representative, is or was a director or officer of the Corporation or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
(including attorneys' fees) reasonably incurred by such person. Such right of
indemnification shall inure whether or not the claim asserted is based on
matters which antedate the adoption of this Section E. The Corporation shall be
required to indemnify a person in connection with a proceeding (or part thereof)
initiated by such person only if the proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation.
(b) PREPAYMENT OF EXPENSES. The Corporation shall pay the expenses
(including attorneys' fees) incurred in defending any proceeding in advance of
its final disposition, provided, however, that the payment of expenses incurred
by a director or officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the director or officer to
repay all amounts advanced if it should be ultimately determined that the
director or officer is not entitled to be indemnified under this paragraph or
otherwise.
(c) CLAIMS. If a claim for indemnification or payment of expenses under
this paragraph is not paid in full within 60 days after a written claim therefor
has been received by the Corporation, the claimant may file suit to recover the
unpaid amount of such claim and, if successful in whole or in part, shall be
entitled to be paid the expense of prosecuting such claim. In any such action
the Corporation shall have the burden of proving that the claimant was not
entitled to the requested indemnification or payment of expenses under
applicable law.
(d) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by this
paragraph shall not be exclusive of any other rights which such person may or
hereafter acquire under any statute, provision of this Certificate, the Bylaws,
agreement, vote of stockholders or disinterested directors or otherwise.
(e) OTHER INDEMNIFICATION. The Corporation's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, enterprise or nonprofit entity shall be reduced by any amount such person
may collect as indemnification from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit entity.
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3. Amendment or Repeal.
Any repeal or modification of the foregoing provisions of this Section E
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
SECTION F
AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers conferred by the laws of
the State of Delaware, the Board of Directors, by action taken by the
affirmative vote of not less than 75% of the members of the Board of Directors
then in office, is hereby expressly authorized and empowered to adopt, amend or
repeal any provision of the Bylaws of this Corporation.
ARTICLE VI
TERM
The term of existence of this Corporation shall be perpetual.
ARTICLE VII
STOCK NOT ASSESSABLE
The capital stock of this Corporation shall not be assessable. It shall be
issued as fully paid, and the private property of the stockholders shall not be
liable for the debts, obligations or liabilities of this Corporation. This
Certificate shall not be subject to amendment in this respect.
ARTICLE VIII
MEETINGS OF STOCKHOLDERS
SECTION A
ANNUAL AND SPECIAL MEETINGS
Subject to the rights of the holders of any class or series of Preferred
Stock, stockholder action may be taken only at an annual or special meeting.
Except as otherwise provided in the terms of any class or series of Preferred
Stock or unless otherwise prescribed by law or by another provision of this
Certificate, special meetings of the stockholders of the Corporation, for any
purpose or purposes, shall be called by the Secretary of the Corporation (i)
upon the written request of the holders of not less than 66 2/3% of the total
voting power of the outstanding Voting Securities (as defined in Section C of
Article V of this Certificate) or (ii) at the request of at least 75% of the
members of the Board of Directors then in office.
SECTION B
ANNUAL AND SPECIAL MEETINGS
Except as otherwise provided in the terms of any class or series of
Preferred Stock, no action required to be taken or which may be taken at any
annual meeting or special meeting of stockholders may be taken without a
meeting, and the power of stockholders to consent in writing, without a meeting,
is specifically denied.
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ARTICLE IX
ACTIONS REQUIRING SUPERMAJORITY STOCKHOLDER VOTE
Subject to the rights of the holders of any class or series of Preferred
Stock, the affirmative vote of the holders of at least 66 2/3% of the total
voting power of the then outstanding Voting Securities (as defined in Section C
of Article V of this Certificate), voting together as a single class at a
meeting specifically called for such purpose, shall be required in order for the
Corporation to take any action to authorize:
(a) the amendment, alteration or repeal of any provision of this
Certificate or the addition or insertion of other provisions herein;
(b) the adoption, amendment or repeal of any provision of the Bylaws of
the Corporation; provided, however, that this clause (b) shall not apply to, and
no vote of the stockholders of the Corporation shall be required to authorize,
the adoption, amendment or repeal of any provision of the Bylaws of the
Corporation by the Board of Directors in accordance with the power conferred
upon it pursuant to Section F of Article V of this Certificate;
(c) the merger or consolidation of this Corporation with or into any other
corporation; provided, however, that this clause (c) shall not apply to any
merger or consolidation (i) as to which the laws of the State of Delaware, as
then in effect, do not require the consent of this Corporation's stockholders,
or (ii) which at least 75% of the members of the Board of Directors then in
office have approved;
(d) the sale, lease or exchange of all, or substantially all, of the
property and assets of the Corporation; or
(e) the dissolution of the Corporation.
All rights at any time conferred upon the stockholders of the Corporation
pursuant to this Certificate are granted subject to the provisions of this
Article IX.
# # # #
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IN WITNESS WHEREOF, the undersigned has signed this Restated Certificate of
Incorporation this 4th DAY OF August, 1994.
TCI/LIBERTY HOLDING COMPANY
By: /s/ Brendan R. Clouston
Brendan R. Clouston
Title: Executive Vice President
ATTEST:
By: /s/ Stephen M. Brett
Stephen M. Brett
Title: Secretary
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STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
PAGE 1
_______________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE FOURTH
DAY OF AUGUST, A.D. 1994, AT 4:18 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
[SEAL]
/s/ EDWARD J. FREEL
EDWARD J. FREEL, SECRETARY OF STATE
AUTHENTICATION: 7202383
DATE: 08-04-94
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TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION
_______________
SETTING FORTH A COPY OF A RESOLUTION CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED AS "CONVERTIBLE PREFERRED STOCK,
SERIES C" ADOPTED BY THE BOARD OF DIRECTORS OF TELE-COMMUNICATIONS, INC.
_______________
The undersigned Executive Vice President of Tele-Communications, Inc.,
a Delaware corporation (the "Corporation"), hereby certifies that the Board of
Directors duly adopted the following resolutions creating a series of preferred
stock designated as "Convertible Preferred Stock, SERIES C":
"BE IT RESOLVED, that, pursuant to authority expressly granted by the
provisions of the Restated Certificate of Incorporation of this Corporation, the
Board of Directors hereby creates and authorizes the issuance of a series of
preferred stock, par value $1.00 per share, of this Corporation, to consist of
80,000 shares, and hereby fixes the designations, dividend rights, voting
powers, rights on liquidation and other preferences and relative, participating,
optional or other special rights and the qualifications, limitations or
restrictions thereof of the shares of such series (in addition to the
designations, preferences and relative, participating, limitations or
restrictions thereof set forth in the Restated Certificate of Incorporation that
are applicable to preferred stock of all series) as follows:
1. Designation. The designation of the series of preferred stock, par
value $1.00 per share, of this Corporation authorized hereby is "Convertible
Preferred Stock, Series C" (the "Convertible Preferred Stock").
2. Certain Definitions. Unless the context otherwise requires, the terms
defined in this Section 2 shall have the meanings herein specified:
Affiliate: As defined in Section 7(b).
Board of Directors: The Board of Directors of this Corporation and any
authorized committee thereof.
Capital Stock: Any and all shares, interests, participations or other
equivalents (however designated) of corporate stock of this Corporation.
Class A Common Stock: The Class A Common Stock, par value $1.00 per share,
of this Corporation as such exists on the date of this Certificate of
Designations, and Capital Stock of any other class into which such Class A
Common Stock may thereafter have been changed.
Class B Common Stock: The Class B Common Stock, par value $1.00 per share,
of this Corporation as such exists on the date of this Certificate of
Designations, and Capital Stock of any other class into which such Class B
Common Stock may thereafter have been changed.
Conversion Rate: As defined in Section 5(b).
Convertible Preferred Holder: As defined in Section 7(a).
Convertible Securities: Securities, other than the Class B Common Stock,
that are convertible into Class A Common Stock.
Debt Instrument: Any bond, debenture, note, indenture, guarantee or other
instrument or agreement evidencing any Indebtedness,
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whether existing at the Issue Date or thereafter created, incurred, assumed or
guaranteed.
Dividend Payment Date: As defined in Section 3(b).
Dividend Period: The period from but excluding the First Accrual Date to
and including the first Dividend Payment Date and each three-month period from
but excluding the Dividend Payment Date for the preceding Dividend Period to and
including the Dividend Payment Date for such Dividend Period.
First Accrual Date: August 8, 1994.
Indebtedness: Any (i) liability, contingent or otherwise, of this
Corporation (x) for borrowed money whether or not the recourse of the lender is
to the whole of the assets of this Corporation or only to a portion thereof),
(y) evidenced by a note, debenture or similar instrument (including a purchase
money obligation) given other than in connection with the acquisition of
inventory or similar property in the ordinary course of business, or (z) for the
payment of money relating to an obligation under a lease that is required to be
capitalized for financial accounting purposes in accordance with generally
accepted accounting principles; (ii) liability of others described in the
preceding clause (i) which this Corporation has guaranteed or which is otherwise
its legal liability; (iii) obligations secured by a mortgage, pledge, lien,
charge or other encumbrance to which the property or assets of this Corporation
are subject whether or not the obligations secured thereby shall have been
assumed by or shall otherwise be this Corporation's legal liability; and (iv)
any amendment, renewal, extension or refunding of any liability of the types
referred to in clauses (i), (ii) and (iii) above.
Issue Date: The first date on which any shares of the Convertible Preferred
Stock are first issued or deemed to have been issued.
Junior Securities: All shares of Class A Common Stock, Class B Common
Stock, and any other class or series of stock of this Corporation not entitled
to receive any dividends unless all dividends required to have been paid or
declared and set apart for payment on the Convertible Preferred Stock shall have
been so paid or declared and set apart for payment and, for purposes of Section
4 hereof. any class or series of stock of this Corporation not entitled to
receive any assets upon liquidation, dissolution or winding up of the affairs of
this Corporation until the Convertible Preferred Stock shall have received the
entire amount to which such stock is entitled upon such liquidation, dissolution
or winding up.
Liquidation Value: Measured per Share of the Convertible Preferred Stock as
of any particular date, the sum of(i) $2.375 plus an amount equal to all
dividends accrued on such Share through the Dividend Payment Date immediately
preceding the date on which the Liquidation Value is being determined, which
pursuant to Section 3(c) have been added to and remain a part of the Liquidation
Value as of such date, plus (iii), for purposes of determining amounts payable
pursuant to Sections 4 and 6 hereof, an amount equal to all unpaid dividends
accrued on the sum of the amounts specified in clauses (i) and (ii) above to the
date as of which the Liquidation Value is being determined.
Original Holder: As defined in Section 7(a).
Parity Securities: Any class or series of stock of this Corporation
entitled to receive payment of dividends on a parity with the Convertible
Preferred Stock or entitled to receive assets upon liquidation, dissolution or
winding up of the affairs of this Corporation on a parity with the Convertible
Preferred Stock.
Permitted Transferee: As defined in Section 7(a).
Record Date: For dividends payable on any Dividend Payment Date, the
fifteenth day of the month preceding the month during which such Dividend
Payment Date shall occur.
Redemption Date: As to any Share, the date fixed for redemption of such
Share as specified in the notice of redemption given in accordance with Section
6(c), provided that no such date will be a Redemption Date unless the applicable
Redemption Price is actually paid on such date or the consideration sufficient
for the payment thereof, and for no other purpose, has been set apart, and if
the Redemption Price is not so paid in full or the consideration sufficient
therefor so set apart then the Redemption Date will be the
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date on which such Redemption Price is fully paid or the consideration
sufficient for the payment thereof, and for no other purpose, has been set
apart.
Redemption Price: As to any Share that is to be redeemed on any Redemption
Date, the Liquidation Value as in effect on such Redemption Date.
Senior Securities: Any class or series of stock of this Corporation ranking
senior to the Convertible Preferred Stock in respect of the right to receive
payment of dividends or the right to participate in any distribution upon
liquidation, dissolution or winding up of the affairs of this Corporation.
Share: As defined in Section 3(a).
Special Record Date: As defined in Section 3(C).
3. Dividends.
(a) Subject to the rights of any Parity Securities with respect to
dividends, the holders of the Convertible Preferred Stock shall be entitled to
receive, and, subject to any prohibition or restriction contained in any Debt
Instrument, this Corporation shall be obligated to pay, but only out of funds
legally available therefor, preferential cumulative cash dividends which shall
accrue as provided herein. Except as otherwise provided in Sections 3(c) or 3(d)
hereof, dividends on each share of Convertible Preferred Stock (hereinafter
referred to as a "Share") shall accrue on a daily basis at the rate of 5 1/2%
per annum of the Liquidation Value to and including the date of conversion
thereof pursuant to Section 5 or the date on which the Liquidation Value or
Redemption Price of such Share is made available pursuant to Section 4 or 6
hereof, respectively. Dividends on the Convertible Preferred Stock shall accrue
as provided herein, whether or not such dividends have been declared and whether
or not there are profits, surplus or other funds of the Corporation legally or
contractually available for the payment of dividends.
(b) Accrued dividends on the Convertible Preferred Stock shall be payable
quarterly on the first day of each January, April, July and October, or the
immediately preceding business day if such first day is a Saturday, Sunday or
legal holiday (each such payment date being hereinafter referred to as a
"Dividend Payment Date"), commencing on October 1, 1994 to the holders of record
of the Convertible Preferred Stock as of the close of business on the applicable
Record Date. For purposes of determining the amount of dividends "accrued" as of
any date that is not a Dividend Payment Date, such amount shall be calculated on
the basis of the rate per annum specified in Section 3(a) for actual days
elapsed from but excluding the First Accrual Date (in the case of any date prior
to the first Dividend Payment Date) or the last preceding Dividend Payment Date
(in the case of any other date) to and including the date as of which such
determination is to be made, based on a 365-day year.
(c) If on any Dividend Payment Date this Corporation pursuant to
applicable law or the terms of any Debt Instrument shall be prohibited or
restricted from paying in cash the full dividends to which holders of the
Convertible Preferred Stock and any Parity Securities shall be entitled, the
amount available for such payment pursuant to applicable law and which is not
restricted by the terms of any Debt instrument shall be distributed among the
holders of the Convertible Preferred Stock and such Parity Securities ratably in
proportion to the full amounts to which they would otherwise be entitled. To the
extent not paid on each Dividend Payment Date, all dividends which have accrued
on each Share during the Dividend Period ending on such Dividend Payment Date
will be added cumulatively to the Liquidation Value of such Share and will
remain a part thereof until such dividends are paid. In the event that dividends
are not paid in full on two consecutive Dividend Payment Dates, dividends on
that portion of the Liquidation Value of each Share which consists of accrued
dividends that have theretofore been or thereafter are added to, and remain a
part of, the Liquidation Value in accordance with the preceding sentence shall
accrue cumulatively on a daily basis at the rate of fifteen percent (15%) per
annum, from and after such second consecutive Dividend Payment Date to and
including the date of conversion of such Share pursuant to Section 5 or the date
on which the Liquidation Value or Redemption Price of such Share is made
available pursuant to Section 4 or 6 hereof, respectively, unless such portion
of the Liquidation Value that consists of accrued unpaid dividends shall be
earlier paid in full. Such portion of the Liquidation Value as consists of
accrued unpaid dividends, may be declared and paid at any time without reference
to any regular Dividend Payment Date, to holders of record as of the close of
business on such date, not more than 50 days nor less than 10 days preceding the
payment date thereof, as may be fixed by the Board of Directors of this
Corporation
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(the "Special Record Date").
(d) In the event that on any date fixed for redemption of Shares pursuant
to Section 6 (other than on any date fixed for a redemption of Shares pursuant
to Section 6(a)), this Corporation shall fail to pay the Redemption Price due
and payable upon presentation and surrender of the stock certificates evidencing
Shares to be redeemed, then dividends on such Shares shall accrue cumulatively
on a daily basis at the rate of fifteen percent (15%) per annum of the
Liquidation Value thereof from and after such Redemption date to and including
the date of conversion of such Shares pursuant to Section 5 or the date on which
the Liquidation Value or Redemption Price of such Shares is made available
pursuant to Section 4 or 6 hereof, respectively.
(e) Notice of each Special Record Date shall be mailed, in the manner
provided in Section 6(c), to the holders of record of the Convertible Preferred
Stock not less than 15 days prior thereto.
(f) As long as any Convertible Preferred Stock shall be outstanding, no
dividend, whether in cash or property, shall be paid or declared, nor shall any
other distribution be made, on any Junior Security, nor shall any shares of any
Junior Security be purchased, redeemed, or otherwise acquired for value by the
Corporation, unless the holders of the Convertible Preferred Stock shall have
received all dividends to which they are entitled pursuant to Section 3(a)
hereof for all the Dividend Periods preceding the date on which such dividend on
the Junior Securities is to occur, or such dividends shall have been declared
and the consideration sufficient for the payment thereof set apart so as to be
available for the payment in full thereof and for no other purpose. The
provisions of this Section 3(f) shall not apply (i) to a dividend payable in any
Junior Security, or (ii) to the repurchase, redemption or other acquisition of
shares of any Junior Security solely through the issuance of Junior Securities
(together with a cash adjustment for tractional shares, if any) or through the
application of the proceeds from the sale of Junior Securities.
4. Liquidation. Upon any liquidation, dissolution or winding up of this
Corporation, whether voluntary or involuntary, the holders of Convertible
Preferred Stock shall be entitled to be paid an amount in cash equal to the
aggregate Liquidation Value at the date fixed for liquidation of all Shares
outstanding before any distribution or payment is made upon any Junior
Securities, which payment shall be made pari passu with any such payment made to
the holders of any Parity Securities. The holders of Convertible Preferred Stock
shall be entitled to no other or further distribution of or participation in any
remaining assets of this Corporation after receiving the Liquidation Value per
Share. If upon such liquidation, dissolution or winding up, the assets of this
Corporation to be distributed among the holders of Convertible Preferred Stock
and to all holders of Parity Securities are insufficient to permit payment in
full to such holders of the aggregate preferential amounts which they are
entitled to be paid, then the entire assets of this Corporation to be
distributed to such holders shall be distributed ratably among them based upon
the full preferential amounts to which the shares of Convertible Preferred Stock
and such Parity Securities would otherwise respectively be entitled. Upon any
such liquidation, dissolution or winding up, after the holders of Convertible
Preferred Stock and Parity Securities have been paid in full the amounts to
which they are entitled, the remaining assets of this Corporation may be
distributed to the holders of Junior Securities. This Corporation shall mail
written notice of such liquidation, dissolution or winding up to each record
holder of Convertible Preferred Stock not less than 30 days prior to the payment
date stated in such written notice. Neither the consolidation or merger of this
Corporation into or with any other corporation or corporations, nor the sale,
transfer or lease by this Corporation of all or any part of its assets, shall be
deemed to be a liquidation, dissolution or winding up of this Corporation within
the meaning of this Section 4.
5. Conversion.
(a) Unless previously called for redemption as provided in Section 6
hereof, the Convertible Preferred Stock may be converted at any time or from
time to time, in such manner and upon such terms and conditions as hereinafter
provided in this Section 5 into fully paid and nonassessable full shares of
Class A Common Stock. In the case of Shares called for redemption by this
Corporation pursuant to Section 6(a) hereof, the conversion right provided by
this Section 5 shall terminate at the close of business on the fifteenth day
preceding the date fixed for redemption. In the case of Shares required to be
redeemed pursuant to Section 6(b), the conversion right provided by this Section
5 shall terminate immediately upon receipt by this Corporation of a notice given
pursuant to said Section. In case cash, securities or property other than Class
A Common Stock shall be payable, deliverable or issuable upon conversion as
provided herein, then all references to Class A Common Stock in this Section 5
shall be deemed to apply, so far as appropriate and as nearly as may be, to such
cash, property or other securities.
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(b) Subject to the provisions for adjustment hereinafter set forth in this
Section 5, the Convertible Preferred Stock may be convened into Class A Common
Stock at the initial conversion rate of 100 fully paid and non-assessable shares
of Class A Common Stock for one share of the Convertible Preferred Stock. (This
conversion rate as from time to time adjusted cumulatively pursuant to the
provisions of this Section is hereinafter referred to as the "Conversion Rate").
(c) In case this Corporation shall (i) pay a dividend or make a
distribution on its outstanding shares of Class A Common Stock in shares of its
Capital Stock, (ii) subdivide the then outstanding shares of Class A Common
Stock into a greater number of shares of Class A Common Stock, (iii) combine the
then outstanding shares of Class A Common Stock into a smaller number of shares
of Class A Common Stock, or (iv) issue by reclassification of its shares of
Class Common Stock any shares of any other class of Capital Stock of this
Corporation (including any such reclassification in connection with a merger in
which this Corporation is the continuing corporation), then the Conversation
Rate in effect immediately prior to the opening of business on the record date
for such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted so that the holder of each
share of the Convertible Preferred Stock thereafter surrendered for conversion
shall be entitled to receive the number and kind of shares of Capital Stock of
this Corporation that such holder would have owned or been entitled to receive
immediately following such action had such shares of Convertible Preferred Stock
been converted immediately prior to such time. An adjustment made pursuant to
this Section 5(c) for a dividend or distribution shall become effective
immediately after the record date for the dividend or distribution and an
adjustment made pursuant to this Section 5(c) for a subdivision, combination or
reclassification shall become effective immediately after the effective date of
the subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any action listed above shall be taken.
(d) In case this Corporation shall issue any rights or warrants to all
holders of shares of Class A Common Stock entitling them (for a period expiring
within 45 days after the record date for the determination of stockholders
entitled to receive such rights or warrants) to subscribe for or purchase shares
of Class A Common Stock (or Convertible Securities) at a price per share of
Class A Common Stock (or having an initial exercise price or conversion price
per share of Class A Common Stock) less than the then current market price per
share of Class A Common Stock (as determined in accordance with the provisions
of Section 5(f) below) on such record date, the number of shares of Class A
Common Stock into which each Share shall thereafter be convertible shall be
determined by multiplying the number of shares of Class A Common Stock into
which such Share was theretofore convertible immediately prior to such record
date by a fraction of which the numerator shall be the number of shares of Class
A Common Stock outstanding on such record date plus the number of additional
shares of Class A Common Stock offered for subscription or purchase (or into
which the Convertible Securities so offered are initially convertible) and of
which the denominator shall be the number of shares of Class A Common Stock
outstanding on such record date plus the number of shares of Class A Common
Stock which the aggregate offering price of the total number of shares of Class
A Common Stock so offered (or the aggregate initial conversion or exercise price
of the Convertible Securities so offered) would purchase at the then current
market price per share of Class A Common Stock (as determined in accordance with
the provisions of Section 5(f) below) on such record date. Such adjustment shall
be made successively whenever any such rights or warrants are issued and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. In the event that all
of the shares of Class A Common Stock (or all of the Convertible Securities)
subject to such rights or warrants have not been issued when such rights or
warrants expire (or, in the case of rights or warrants to purchase Convertible
Securities which have been exercised, all of the shares of Class A Common Stock
issuable upon conversion of such Convertible Securities have not been issued
prior to the expiration of the conversion right thereof), then the Conversion
Rate shall be readjusted retroactively to be the Conversion Rate which would
then be in effect had the adjustment upon the issuance of such rights or
warrants been made on the basis of the actual number of shares of Class A Common
Stock (or Convertible Securities) issued upon the exercise of such rights or
warrants (or the conversion of such Convertible Securities); but such subsequent
adjustment shall not affect the number of shares of Class A Common Stock issued
upon the conversion of any Share prior to the date such subsequent adjustment is
made.
(e) In case this Corporation shall distribute to all holders of shares of
Class A Common Stock (including any such distribution made in connection with a
merger in which this Corporation is the continuing corporation, other than a
merger to which Section 5(g) is applicable) any evidences of its indebtedness or
assets (other than cash dividends or Capital Stock) or rights or warrants to
purchase shares of Class A Common Stock or Class B Common Stock or securities
convertible into shares of Class A Common Stock or Class B Common Stock
(excluding those referred to in Section 5(d) above), then in each such case the
number of shares of Class A Common Stock into which each Share shall thereafter
be convertible shall be determined by multiplying the number of shares of
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Class A Common Stock into which such Share was theretofore convertible
immediately prior to the record date for the determination of stockholders
entitled to receive the distribution by a fraction of which the numerator shall
be the then current market price per share of Class A Common Stock (as
determined accordance with the provisions of Section 5(f) below) on such record
date and of which the denominator shall be such current market price per share
of Class A Common Stock less the fair market value on such record date (as
determined by the Board of Directors of this Corporation, whose determination
shall be conclusive) of the portion of the assets or evidences of indebtedness
or rights and warrants so to be distributed applicable to one share of Class A
Common Stock. Such adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
distribution.
(f) For the purpose of any computation under Section 5(d), (e) or (k), the
current market price per share of Class A Common Stock at any date shall be
deemed to be the average of the daily closing prices for a share of Class A
Common Stock for the ten (10) consecutive trading days before the day in
question. The closing price or each day shall be the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either case
on the composite tape, or if the shares of Class A Common Stock are not quoted
on the composite tape, on the principal United States securities exchange
registered under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on which the shares of Class A Common Stock are listed or admitted to
trading, or if they are not listed or admitted to trading on any such exchange,
the last reported sale price (or the average of the quoted closing bid and asked
prices if there were no reported sales) as reported by the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") or any comparable
system, or if the Class A Common Stock is not quoted on NASDAQ or any comparable
system, the average of the closing bid and asked prices as furnished by any
member of the National Association of Securities Dealers, Inc. selected from
time to time by this Corporation for that purpose or, in the absence of such
quotations, such other method of determining market value as the Board of
Directors shall from time to time deem to be fair.
(g) In case of any reclassification or change in the Class A Common Stock
(other than any reclassification or change referred to in Section 5(c) and other
than a change in par value) or in case of any consolidation of this Corporation
with any other corporation or any merger of this Corporation into another
corporation or of another corporation into this Corporation (other than a merger
in which this Corporation is the continuing corporation and which does not
result in any reclassification or change (other than a change in par value or
any reclassification or change to which Section 5(c) is applicable) in the
outstanding Class A Common Stock), or in case of any sale or transfer to another
corporation or entity (other than by mortgage or pledge) of all or substantially
all of the properties and assets of this Corporation, this Corporation (or its
successor in such consolidation or merger) or the purchaser of such properties
and assets shall make appropriate provision so that the holder of a Share shall
have the right thereafter to convert such Share into the kind and amount of
shares of stock and other securities and property that such holder would have
owned immediately after such reclassification, change, consolidation, merger,
sale or transfer if such holder had converted such Share into Class A Common
Stock immediately prior to the effective date of such reclassification, change,
consolidation, merger, sale or transfer (assuming for this purpose (to the
extent applicable) that such holder failed to exercise any rights of election
and received per share of Class A Common Stock the kind and amount of shares of
stock and other securities and property received per share by a plurality of the
non-electing shares), and the holders of the Convertible Preferred Stock shall
have no other conversion rights under these provisions; provided, that effective
provision shall be made, in the Articles or Certificate of Incorporation of the
resulting or surviving corporation or otherwise or in any contracts of sale or
transfer, so that the provisions set forth herein for the protection of the
conversion rights of the Convertible Preferred Stock shall thereafter be made
applicable, as nearly as reasonably may be to any such other shares of stock and
other securities and property deliverable upon conversion of the Convertible
Preferred Stock remaining outstanding or other convertible preferred stock or
other Convertible Securities received by the holders of Convertible Preferred
Stock in place thereof; and provided, further, that any such resulting or
surviving corporation or purchaser shall expressly assume the obligation to
deliver, upon the exercise of the conversion privilege, such shares, securities
or property as the holders of the Convertible Preferred Stock remaining
outstanding, or other convertible preferred stock or other convertible
securities received by the holders in place thereof, shall be entitled to
receive pursuant to the provisions hereof, and to make provisions for the
protection of the conversion rights as above provided.
(h) Whenever the Conversion Rate or the conversion privilege shall be
adjusted as provided in Sections 5(c), (d), (e) or(g), this Corporation shall
promptly cause a notice to be mailed to the holders of record of the Convertible
Preferred Stock describing the nature of the event requiring such adjustment,
the Conversion Rate in effect immediately thereafter and the kind and amount of
stock
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or other securities or property into which the Convertible Preferred Stock shall
be convertible after such event. Where appropriate, such notice may be given in
advance and included as a part of a notice required to be mailed under the
provisions of Section 5(j).
(i) This Corporation may, but shall not be required to, make any
adjustment of the Conversion Rate if such adjustment would require an increase
or decrease of less than 1% in such Conversion Rate; provided, however, that any
adjustments which by reason of this Section 5(i) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 5 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. In any case in which this
Section 5(i) shall require that an adjustment shall become effective immediately
after a record date for such event, the Corporation may defer until the
occurrence of such event (x) issuing to the holder of any shares of Convertible
Preferred Stock converted after such record date and before the occurrence of
such event the additional shares of Class A Common Stock or other Capital Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the shares of Class A Common Stock, or other Capital Stock
issuable upon such conversion before giving effect to such adjustment and (y)
paying to such holder cash in lieu of any fractional interest to which such
holder is entitled pursuant to Section 5(n); provided, however, that, if
requested by such holder, this Corporation shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to receive
such additional shares of Class A Common Stock or other Capital Stock, and such
cash, upon the occurrence of the event requiring such adjustment.
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(j) In case at any time:
(i) this Corporation shall take any action which would require an
adjustment in the Conversion Rate pursuant to this Section;
(ii) there shall be any capital reorganization or reclassification of
the Class A Common Stock (other than a change in par value), or any
consolidation or merger to which the Corporation is a party and for which
approval of any shareholders of this Corporation is required, or any sale,
transfer or lease of all or substantially all of the properties and assets
of the Corporation, or a tender offer for shares of Class A Common Stock
representing, together with any shares of Class B Common Stock tendered for
in such tender offer, at least a majority of the total voting power
represented by the outstanding shares of Class A Common Stock and Class B
Common Stock which has been recommended by the Board of Directors as being
in the best interests of the holders of Class A Common Stock; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of this Corporation;
then, in any such event, this Corporation shall give written notice, in the
manner provided in Section 6(c) hereof, to the holders of the Convertible
preferred Stock at their respective addresses as the same appear on the books of
the Corporation, at least twenty days (or ten days in the case of a recommended
tender offer as specified in clause (ii) above) prior to any record date for
such action, dividend or distribution or the date as of which it is expected
that holders of Class A Common Stock of record shall be entitled to exchange
their shares of Class A Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, transfer, lease, tender offer, dissolution, liquidation or winding up;
provided, however, that any notice required by any event described in clause
(ii) of this Section 5(j) shall be given in the manner and at the time that such
notice is given to the holders of Class A Common Stock. Without limiting the
obligations of this Corporation to provide notice of corporate actions
hereunder, the failure to give the notice required by this Section 5(j) or any
defect therein shall not affect the legality or validity of any such corporate
action of the Corporation or the vote upon such action.
(k) Before any holder of Convertible Preferred Stock shall be entitled to
convert the same into Class A Common Stock, such holder shall surrender the
certificate or certificates for such Convertible Preferred Stock at the office
of this Corporation or at the office of the transfer agent for the Convertible
Preferred Stock, which certificate or certificates, if this Corporation shall so
request, shall be duly endorsed to this Corporation or in blank or accompanied
by proper instruments of transfer to this Corporation or in blank (such
endorsements or instruments of transfer to be in form satisfactory to this
Corporation), and shall given written notice to this Corporation at said office
that it elects to convert all or a part of the Shares represented by said
certificate or certificates in accordance with the terms of this Section 5, and
shall state in writing therein the name or names in which such holder wishes the
certificates for Class A Common Stock to be issued. Every such notice of
election to convert shall constitute a contract between the holder of such
Convertible Preferred Stock and the Corporation, whereby the holder of such
Convertible Preferred Stock shall be deemed to subscribe for the amount of Class
A Common Stock which such holder shall be entitled to receive upon conversion of
the number of shares of Convertible Preferred Stock to be converted, and, in
satisfaction of such subscription, to deposit the shares of Convertible
Preferred Stock to be converted, and thereby this Corporation shall be deemed to
agree that the surrender of the shares of Convertible Preferred Stock to be
converted shall constitute full payment of such subscription for Class A Common
Stock to be issued upon such conversion. This Corporation will as soon as
practicable after such deposit of a certificate or certificates for Convertible
Preferred Stock, accompanied by the written notice and the statement above
prescribed, issue and deliver at the office of this Corporation or of said
transfer agent to the person for whose account such Convertible Preferred Stock
was so surrendered, or to his nominee(s) or, subject to compliance with
applicable law, transferee(s), a certificate or certificates for the number of
full shares of Class A Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share as hereinafter provided.
If surrendered certificates for Convertible Preferred Stock are converted only
in part, this Corporation will issue and deliver to the holder, or to his
nominee(s) without charge therefor, a new certificate or certificates
representing the aggregate of the unconverted Shares. Such conversion shall be
deemed to have been made as of the date of such surrender of the Convertible
Preferred Stock to be converted; and the person or persons entitled to receive
the Class A Common Stock issuable upon conversion of such Convertible Preferred
Stock shall be treated for all purposes as the record holder or holders of such
Class A Common Stock on such date.
Upon the conversion of any Share, this Corporation shall pay, to the holder
of record of such Share on the immediately preceding
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Record Date, all accrued but unpaid dividends on such Share to the date of the
surrender of such Share for conversion. Such payment shall be made in cash or,
at the election of this Corporation, the issuance of certificates representing
such number of shares of Class A Common Stock as have an aggregate current
market price (as determined in accordance with Section 5(f)) on the date of
issuance equal to the amount of such accrued but unpaid dividends. Upon the
making of such payment to the person entitled thereto as determined pursuant to
the first sentence of this paragraph, no further dividends shall accrue on such
Share or be payable to any other person.
The issuance of certificates for shares of Class A Common Stock upon
conversion of shares of Convertible Preferred Stock shall be made without charge
for any issue, stamp or other similar tax in respect of such issuance, provided,
however, if any such certificate is to be issued in a name other than that of
the registered holder of the share or shares of Convertible Preferred Stock
converted, the person or persons requesting the issuance thereof shall pay to
this Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of
this Corporation that such tax has been paid.
This Corporation shall not be required to convert any shares of Convertible
Preferred Stock, and no surrender of Convertible Preferred Stock shall be
effective for that purpose, while the stock transfer books of this Corporation
are closed for any purpose; but the surrender of Convertible Preferred Stock for
conversion during any period while such books are so closed shall become
effective for conversion immediately upon the reopening of such books, as if the
conversion had been made on the date such Convertible Preferred Stock was
surrendered.
(l) This Corporation shall at all times reserve and keep available, solely
for the purpose of issuance upon conversion of the outstanding shares of
Convertible Preferred Stock, such number of shares of Class A Common Stock as
shall be issuable upon the conversion of all outstanding Shares, provided that
nothing contained herein shall be construed to preclude this Corporation from
satisfying its obligations in respect of the conversion of the outstanding
shares of Convertible Preferred Stock by delivery of shares of Class A Common
Stock which are held in the treasury of this Corporation. This Corporation shall
take all such corporate and other actions as from time to time may be necessary
to insure that all shares of Class A Common Stock issuable upon conversion of
shares of Convertible Preferred Stock at the Conversion Rate in effect from time
to time will, upon issue, be duly and validly authorized and issued, fully paid
and nonassessable and free of any preemptive or similar rights.
(m) All shares of Convertible Preferred Stock received by this Corporation
upon conversion thereof into Class A Common Stock shall be retired and shall be
restored to the status of authorized and issued shares of preferred stock (and
may be reissued as part of another series of the preferred stock of this
Corporation, but such shares shall not be reissued as Convertible Preferred
Stock).
(n) This Corporation shall not be required to issue fractional shares of
Class A Common Stock or scrip upon conversion of the Convertible Preferred
Stock. As to any final fraction of a share of Class A Common Stock which a
holder of one or more Shares would otherwise be entitled to receive upon
conversion of such Shares in the same transaction, this Corporation shall pay a
cash adjustment in respect of such final fraction in an amount equal to the same
fraction of the market value of a full share of Class A Common Stock. For
purposes of this Section 5(n), the market value of a share of Class A Common
Stock shall be the last reported sale price regular way on the business day
immediately preceding the date of conversion, or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices regular way on such day, in either case on the composite tape, or if the
shares of Class A Common Stock are not quoted on the composite tape, on the
principal United States securities exchange registered under the Exchange Act on
which the shares of Class A Common Stock are listed or admitted to trading, or
if the shares of Class A Common Stock are not listed or admitted to trading on
any such exchange, the last reported sale price (or the average of the quoted
last reported bid and asked prices if there were no reported sales) as reported
by NASDAQ or any comparable system, or if the Class A Common Stock is not quoted
on NASDAQ or any comparable system, the average of the closing bid and asked
prices as furnished by any member of the National Association of Securities
Dealers, Inc. selected from time to time by this Corporation for that purpose
or, in the absence of such quotations, such other method of determining market
value as the Board of Directors shall from time to time deem to be fair.
6. Redemption.
(a) Subject to the provisions of Section 6(f), the shares of Convertible
Preferred Stock may be redeemed out of funds legally
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available therefor, at the option of this Corporation by action of the Board of
Directors, in whole or from time to time in part, at any time after August 8.
2001 at the Redemption Price per share as of the applicable Redemption Date. If
less than all outstanding Shares are to be redeemed, Shares shall be redeemed
ratably among the holders thereof.
13(b) Subject to the rights of any Parity Securities and the
provisions of Section 6(f) and subject to any prohibitions or restrictions
contained in any Debt Instrument, at any time on or after August 8,2001,
any holder shall have the right, at such holder's option, to require
redemption by this Corporation at the Redemption Price per Share as of the
applicable Redemption Date of all or any portion of his Shares having an
aggregate Liquidation Value in excess of $1,000,000, by written notice to
this Corporation stating the number of Shares to be redeemed. This
Corporation shall redeem, out of funds legally available therefor and not
restricted in accordance with the first sentence of this Section 6(b), the
Shares so requested to be redeemed on such date within 60 days following
this Corporation's receipt of such notice as this Corporation shall state
in its notice given pursuant to Section 6(c). If the funds of this
Corporation legally available for redemption of Shares and not restricted
in accordance with the first sentence of this Section 6(b) are insufficient
to redeem the total number of shares required to be redeemed pursuant to
this Section 6(b), those funds which are legally available for redemption
of such Shares and not so restricted will be used to redeem the maximum
possible number of such Shares ratably among the holders who have required
Shares to be redeemed under this Section 6(b). At any time thereafter when
additional funds of this Corporation are legally available and not so
restricted for such purpose, such funds will immediately be used to redeem
the Shares this Corporation failed to redeem on such Redemption Date until
the balance of such Shares are redeemed.
(c) Notice of any redemption pursuant to this Section shall be mailed,
first class, postage prepaid, not less than 30 days nor more than 60 days prior
to the Redemption Date, to the holders of record of the shares of Convertible
Preferred Stock to be redeemed, at their respective addresses as the same appear
upon the books of this Corporation or are supplied by them in writing to this
Corporation for the purpose of such notice (with telephonic or facsimile
confirmation of notice to Bill Daniels so long as he is a holder of record); but
no failure to mail such notice or any defect therein or in the mailing thereof
shall affect the validity of the proceedings for the redemption of any shares of
the Convertible Preferred Stock. Such notice shall set forth the Redemption
Price, the Redemption Date, the number of Shares to be redeemed and the place at
which the Shares called for redemption will, upon presentation and surrender of
the stock certificates evidencing such Shares, be redeemed. In case fewer than
the total number of shares of Convertible Preferred Stock represented by any
certificate are redeemed, a new certificate representing the number of
unredeemed Shares will be issued to the holder thereof without cost to such
holder.
(d) If notice of any redemption by this Corporation pursuant to this
Section 6 shall have been mailed as provided in Section 6(c) and if on or before
the Redemption Date specified in such notice the consideration necessary for
such redemption shall have been set apart so as to be available therefor and
only therefor, then on and after the close of business on the Redemption Date,
the Shares called for redemption, notwithstanding that any certificate therefor
shall not have been surrendered for cancellation, shall no longer be deemed
outstanding, and all rights with respect to such Shares shall forthwith cease
and terminate, except the right of the holders thereof to receive upon surrender
of their certificates the consideration payable upon redemption thereof.
(e) All shares of Convertible Preferred Stock redeemed, retired, purchased
or otherwise acquired by this Corporation shall be retired and shall be restored
to the status of authorized and unissued shares of preferred stock (and may be
reissued as part of another series of the preferred stock of this Corporation,
but such shares shall not be reissued as Convertible Preferred Stock).
(f) If at any time this Corporation shall have failed to pay, or declare
and set apart the consideration sufficient to pay, all dividends accrued up to
and including the immediately preceding Dividend Payment Date on the Convertible
Preferred Stock, and until all dividends accrued up to and including the
immediately preceding Dividend Payment Date on the Convertible Preferred Stock
shall have been paid or declared and set apart so as to be available for the
payment in full thereof and for no other purpose, this Corporation shall not
redeem, pursuant to a sinking fund or otherwise, any shares of Convertible
Preferred Stock or Junior Securities, unless all then outstanding shares of
Convertible Preferred Stock are redeemed, and shall not purchase or otherwise
acquire any shares of Convertible Preferred Stock or Junior Securities. If and
so long as this Corporation shall fail to redeem on a Redemption Date pursuant
to Section 6(b) all shares of Convertible Preferred Stock required to be
redeemed on such date, this Corporation shall not redeem, or discharge any
sinking fund obligation with respect to, any Junior Securities, unless all then
outstanding shares of Convertible Preferred Stock are redeemed, and shall not
purchase or otherwise acquire any shares of Convertible Preferred Stock or
37
<PAGE>
Junior Securities. Nothing contained in this Section 6(f) shall prevent the
purchase or acquisition of shares of Convertible Preferred Stock pursuant to a
purchase or exchange offer or offers made to holders of all outstanding shares
of Convertible Preferred Stock, provided that as to holders of all outstanding
shares of Convertible Preferred Stock, the terms of the purchase or exchange
offer for all such shares are identical. The provisions of this Section 6(f) are
for the benefit of holders of Convertible Preferred Stock and accordingly the
provisions of this Section 6(f) shall not restrict any redemption by this
Corporation of Shares held by any holder, provided that all other holders of
Shares shall have waived in writing the benefits of this provision with respect
to such redemption.
7. Transfer.
(a) Without the prior written consent of this Corporation, no person
holding shares of Convertible Preferred Stock of record (hereinafter called a
"Convertible Preferred Holder") may transfer, and this Corporation shall not
register the transfer of, such shares of Convertible Preferred Stock, whether by
sale, assignment, or otherwise, except to a Permitted Transferee.
(i) In the case of a Convertible Preferred Holder acquiring record
and beneficial ownership of the shares of Convertible Preferred Stock in
question upon initial issuance by this Corporation (an "Original Holder"),
a "Permitted Transferee" shall mean:
(x) any Affiliate (as defined in Section 7(b)) of such
Original Holder.
(y) any other Original Holder (or any Affiliate of any such
other Original Holder), or
(z) any person or entity to whom Shares are transferred by
an Original Holder pursuant to a gift or bequest or pursuant
to the laws of intestacy.
(ii) In the case of a Convertible Preferred Holder which is a
Permitted Transferee of an Original Holder, a "Permitted Transferee" shall
mean:
(x) any Original Holder,
(y) any Permitted Transferee of an Original Holder, except
any transferee referred to in clause (i)(z) above, or
(z) any person or entity to whom Shares are transferred by
a Permitted Transferee pursuant to a gift or bequest or
pursuant to the laws of intestacy.
(b) For purposes of this Section 7, the term "Affiliate" shall mean (i)
any person or corporation that owns beneficially and of record at least a
majority of the outstanding securities representing the right, other than as
affected by events of default, to vote for the election of directors ("voting
securities") of an Original Holder or (ii) any person or corporation at least a
majority of the voting securities of which are owned beneficially and of record
by an Original Holder, where in the case of both (i) and (ii), voting securities
will be deemed "owned" by a person or corporation if either owned directly or if
owned indirectly through one or more intermediary corporations at least a
majority of the voting securities of which are owned beneficially and of record
by that person or corporation or by an intermediary corporation in such a
majority or more chain of ownership.
(c) This Corporation may, in connection with preparing a list of
stockholders entitled to vote at any meeting of stockholders, or as a condition
to the transfer or the registration of shares of Convertible Preferred Stock on
this Corporation's books, require the furnishing of such affidavits or other
proof as it deems necessary to establish that any person is the beneficial owner
of shares of Convertible Preferred Stock or is a Permitted Transferee.
(d) Shares of Convertible Preferred Stock shall be registered in the names
of the beneficial owners thereof and not in "street" or "nominee" name. For this
purpose, a "beneficial owner" of any shares of Convertible Preferred Stock shall
mean a person who, or any entity which, possesses the power, either singly or
jointly, to direct the voting or disposition of such shares. Certificates for
shares of Convertible Preferred Stock shall bear a legend referencing the
restrictions on transfer imposed by this Section 7.
38
<PAGE>
8. Voting Rights. The holders of the Convertible Preferred Stock shall be
entitled to vote on all matters submitted to a vote of the holders of the
Capital Stock of this Corporation which is entitled to vote generally on the
election of directors. Each Share shall entitle the registered holder thereof to
such number of votes as is equal to the number of shares of Class A Common Stock
into which such Share is then convertible. Holders of Convertible Preferred
Stock shall vote together with holders of common stock and shall not be entitled
to vote as a class except as otherwise required by law or this Corporation's
Restated Certificate of Incorporation.
9. Amendment. No amendment or modification of the designation, rights,
preferences, and limitations of the Shares set forth herein shall be binding or
effective without the prior consent of the holders of record of Shares
representing 66 2/3% of the Liquidation Value of all Shares outstanding at the
time such action is taken.
10. Preemptive RightS. The holders of the Convertible Preferred Stock will
not have any preemptive right to subscribe for or purchase any shares of stock
or any other securities which may be issued by this Corporation.
11. Senior Securities. The Convertible Preferred Stock shall not rank
junior to any other classes or series of stock of this Corporation in respect of
the right to receive dividends or the right to participate in any distribution
upon liquidation, dissolution or winding up of this Corporation. Without the
prior consent of the holders of record of Shares representing 66 2/3% of the
Liquidation Value of all Shares then outstanding, this Corporation shall not
issue any Senior Securities.
12. Exclusion of Other Rights. Except as may otherwise be required by law
and for the equitable rights and remedies that may otherwise be available to
holders of Convertible Preferred Stock, the shares of Convertible Preferred
Stock shall not have any designations, preferences, limitations or relative
rights, other than those specifically set forth in these resolutions (as such
resolutions may, subject to Section 9, be amended from time to time) and in the
Restated Certificate of Incorporation of this Corporation.
13. Headings. The headings of the various sections and subsections hereof
are for convenience of reference only and shall not affect the interpretation of
any of the provisions hereof.
FURTHER RESOLVED, that the appropriate officers of this Corporation are
hereby authorized to execute and acknowledge a certificate setting forth these
resolutions and to cause such certificate to be filed and recorded, in
accordance with the requirements of Section 151(g) of the General Corporation
Law of the State of Delaware."
/s/ FRED A VIERRA
Fred A. Vierra
Executive Vice President
39
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE PAGE 1
_______________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF CORRECTION
OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE TWENTY-SECOND DAY OF
AUGUST, A.D. 1994, AT 9 O'CLOCK A.M.
[SEAL]
/s/ Edward J. Freel
Edward J. Freel, Secretary Of State
AUTHENTICATION: 7278684
DATE: 10-24-94
2371729 8100
944202094
40
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 08/22/1994
944156379 - 2371729
CERTIFICATE OF CORRECTION
Filed pursuant to Section 103(f)
of the Delaware General Corporation Law
with respect to a
CERTIFICATE OF DESIGNATION
of
TELE-COMMUNICATIONS, INC.
Whereas, on August 4, 1994, Tele-Communications, Inc. (the "Corporation")
filed with the Delaware Secretary of State a Certificate of Designation (the
"Certificate of Designation") authorizing the issuance of a series of preferred
stock of the Corporation designated "Convertible Preferred Stock, Series C;"
Whereas, such Certificate of Designation inaccurately stated that the par
value of the Convertible Preferred Stock, Series C, is $1.00 per share, when in
fact the par value of the Convertible Preferred Stock, Series C, is S.01 per
share;
Therefore, the Certificate of Designation is hereby corrected in accordance
with the provisions of Section 103(f) of the Delaware General Corporation Law as
follows:
1. The words "par value $l.00 per share" shall be deleted from the third
line of the second (unnumbered) paragraph of the Certificate of Designation and
the words "par value $.01 per share" shall be substituted in their place.
2. The words "par value $1.00 per share" shall be deleted from paragraph
number 1 of the Certificate of Designation and the words "par value $.O1 per
share" shall be substituted in their place.
Executed on the date set forth below by the undersigned duly authorized
officer of the Corporation.
Date: August 16, 1994
Signature: /s/ Stephen M. Brett
Stephen M. Brett
Title: Executive Vice President
41
<PAGE>
State of Delaware
Office of the Secretary of State PAGE 1
________________________________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE ELEVENTH
DAY OF OCTOBER, A.D. 1994, AT 4 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
(SEAL)
/s/ Edward J. Freel
--------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7265951
2371729 8100 DATE: 10-12-94
944192934
42
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:00 PM 10/11/1994
944192934 - 2371729
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION
_______________
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED
AS "REDEEMABLE CONVERTIBLE PREFERRED STOCK,
SERIES E" ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
_______________
The undersigned Executive Vice President of Tele-Communications, Inc., a
Delaware corporation (the "Corporation"), hereby certifies that the Board of
Directors duly adopted the following resolutions creating a series of preferred
stock designated as "Redeemable Convertible Preferred Stock, Series E":
BE IT RESOLVED, that pursuant to authority expressly granted by the
provisions of Article IV, Section D of the Restated Certificate of Incorporation
of the Corporation, the Board of Directors hereby creates and authorizes the
issuance of a series of preferred stock, par value $.01 per share, of the
Corporation, to consist of 400,000 shares, and hereby fixes the designations,
dividend rights, voting powers, rights on liquidation, conversion rights,
redemption rights and other preferences and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions of the
shares of such series (in addition to the designations, preferences and
relative, participating, limitations or restrictions thereof set forth in the
Restated Certificate of Incorporation that are applicable to preferred stock of
all series) as follows:
1. Designation. The designation of the series of preferred stock, par
value $1.00 per share, of the Corporation authorized hereby is "Redeemable
Convertible Preferred Stock, Series E" (the "Series E Preferred Stock").
2. Certain Definitions. Unless the context otherwise requires, the terms
defined in this paragraph 2 shall have, for all purposes, the meanings herein
specified;
"Amendment Date" shall mean the date of the effectiveness under applicable
law of a duly approved amendment to the Corporation's Restated Certificate of
Incorporation increasing the number of shares of capital stock and the number of
shares of capital stock designated as "Class A Common Stock" to an amount which,
after giving effect to the exercise, exchange or conversion of all Convertible
Securities then outstanding and the conversion of all shares of Class B Common
Stock then outstanding into shares of Class A Common Stock, would be sufficient
to permit the conversion, at the then applicable Conversion Rate, of all shares
of Series E Preferred Stock then outstanding into shares of Class A Common
Stock.
"Average Quoted Price", when used with respect to the Class A Common Stock,
shall mean the average of the Quoted Prices of the Class A Common Stock for the
most recent period of five trading days on which shares of such class trade
ending three Business Days prior to the Redemption Date, appropriately adjusted
to take into account the actual occurrence, during the period following the
first of such five trading days and ending on the Business Day immediately
preceding such Special Redemption Date, of any event of
43
<PAGE>
a type described in paragraph 7. The "Quoted Price" of a share of Class A Common
Stock on any day means the last sale price (or, if no sale price is reported,
the average of the high and low bid prices) of the Class A Common Stock, on such
day as reported on the National Association of Securities Dealers, Inc.
Automated Quotation System, or if the Class A Common Stock is listed on an
exchange, as reported in the composite transactions for the principal exchange
on which such stock is listed.
"Board of Directors" shall mean the Board of Directors of the Corporation
and, unless the context indicates otherwise, shall also mean, to the extent
permitted by law, any committee thereof authorized, with respect to any
particular matter, to exercise the power of the Board of Directors of the
Corporation with respect to such matter.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in Denver, Colorado are not required to be open.
"Capital stock shall mean any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) corporate stock.
"Certificate" shall mean the Restated Certificate of Incorporation of the
Corporation, as it may from time to time hereafter be amended or restated.
"Class A Common Stock" shall mean the Class A Common Stock, par value $1.00
per share, of the Corporation, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Class
A Common Stock, or in the case of a consolidation or merger of the Corporation
with or into another Person affecting the Class A Common Stock, such capital
stock to which a holder of Class A Common Stock shall be entitled upon the
occurrence of such event.
"Class A Preferred Stock shall mean the Class A Preferred Stock, par value
$.01 per share, of the Corporation.
"Class B Common Stock" shall mean the Class B Common Stock, par value $1.00
per share, of the Corporation, which term shall include, where appropriate, in
the case of any reclassification, recapitalization or other change in the Class
B Common Stock, or in the case of a consolidation or merger of the Corporation
with or into another Person affecting the Class B Common Stock, such capital
stock to which a holder of Class B Common Stock shall be entitled upon the
occurrence of such event.
"Class B Preferred Stock" shall mean the Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock, par value $.O1 per share, of the
Corporation.
"Convertible Securities" shall mean securities, other than the Class B
Common Stock, that are convertible into or exchangeable for Class A Common
Stock.
"Dividend Payment Date" shall mean, for any Dividend Period, the last day
of such Dividend Period which shall be the first day of March of each year,
commencing with March 1, 1995, or the next succeeding Business Day if any such
day is not a Business Day.
"Dividend Period" shall mean the period from the Issue Date to and
including the first Dividend Payment Date and each annual period between
consecutive Dividend Payment Dates.
"Issue Date" shall mean the date on which shares of Series E Preferred
Stock are first issued.
"Junior Stock" shall mean (i) the Class A Common Stock, (ii) the Class B
Common Stock, (iii) the Class B Preferred Stock, (iv) any other class or series
of capital stock, whether now existing or hereafter created, of the Corporation,
other than (A) the Series E Preferred Stock, (B) any class or series of Parity
Stock (except to the extent provided under clause (v) hereof) and (C) any Senior
Stock, and (v) any class or series of Parity Stock to the extent that it ranks
junior to the Series E Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation, as the case may be. For purposes of clause
(v) above, a class or series of Parity Stock shall rank junior to the Series E
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation if the holders of shares of Series E Preferred Stock shall be
entitled to dividend payments, payments on redemption or payments of amounts
44
<PAGE>
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of such
class or series.
"Liquidation Preference" measured per share of the Series E Preferred Stock
as of any date in question (the "Determination Date") shall mean an amount equal
to the sum of (a) the Stated Liquidation Value of such share, plus (b) an amount
equal to all dividends accrued on such share which pursuant to paragraph 3(b)
have been added to and remain a part of the Liquidation Preference as of the
Determination Date, plus (c) for purposes of determining the amounts payable
pursuant to paragraph 4 and paragraph 5 and the definition of Redemption Price,
an amount equal to all unpaid dividends accrued on such share during the period
from the immediately preceding Dividend Payment Date (or the Issue Date if the
Determination Date is on or prior to the first Dividend Payment Date) through
and including the Determination Date, and, in the case of clauses (b) and (c)
hereof, whether or not such unpaid dividends have been earned or declared or
there are any unrestricted funds of the Corporation legally available for the
payment of dividends. In connection with the determination of the Liquidation
Preference of a share of Series E Preferred Stock upon redemption or upon
liquidation, dissolution or winding up of the Corporation, the Determination
Date shall be the applicable date of redemption or the date of distribution of
amounts payable to stockholders in connection with any such liquidation,
dissolution or winding up.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"Officers' Certificate" shall mean a certificate signed by the Chairman of
the Board or the President of the Corporation and by the Treasurer of the
Corporation.
"Opinion of Counsel" shall mean a written opinion from legal counsel
selected by the Corporation. The counsel may be an employee of or counsel to the
Corporation.
"Parity Stock" shall mean any class or series of capital stock, whether now
existing or hereafter created, of the Corporation ranking on a parity basis with
the Series E Preferred Stock as to dividend rights, rights of redemption or
rights on liquidation. Capital stock of any class or series shall rank on a
parity as to dividend rights, rights of redemption or rights on liquidation with
the Series E Preferred Stock, whether or not the dividend rates, dividend
payment dates, redemption or liquidation prices per share or sinking fund or
mandatory redemption provisions, if any, are different from those of the Series
E Preferred Stock, if the holders of shares of such class or series shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in proportion to their respective accumulated and accrued and
unpaid dividends, redemption prices or liquidations prices, respectively,
without preference or priority, one over the other, as between the holders of
shares of such class or series and the holders of Series E Preferred Stock. No
class or series of capital stock that ranks junior to the Series E Preferred
Stock as to rights on liquidation shall rank or be deemed to rank on a parity
basis with the Series E Preferred Stock as to dividend rights or rights of
redemption, unless the instrument creating or evidencing such class or series of
capital stock otherwise expressly provides.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or agency or political subdivision thereof, or other entity, whether
acting in an individual, fiduciary, or other capacity.
"Record Date" for the dividends payable on any Dividend Payment Date means
the fifteenth day of the month preceding the month during which such Dividend
Payment Date shall occur, or if any such day is not a Business Day, then on the
next preceding Business Day, as and if designated by the Board of Directors.
"Redemption Date" as to any share of Series E Preferred Stock shall mean
the date fixed for redemption of such share pursuant to paragraph 5(a), provided
that no such date will be a Redemption Date unless the applicable Redemption
Price is actually paid in full on such date.
"Redemption Price" as to any share of Series E Preferred Stock which is to
be redeemed on any Redemption Date shall mean the Liquidation Preference thereof
on such Redemption Date.
45
<PAGE>
"Senior Stock" shall mean any class or series of capital stock, whether now
existing or hereafter created, of the Corporation ranking prior to the Series E
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation. Capital stock of any class or series shall rank prior to the
Series E Preferred Stock as to dividend rights, rights of redemption or rights
on liquidation if the holders of shares of such class or series shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of Series E
Preferred Stock. No class or series of capital stock that ranks on a parity
basis with or junior to the Series E Preferred Stock as to rights on liquidation
shall rank or be deemed to rank prior to the Series E Preferred Stock as to
dividend rights or rights of redemption, notwithstanding that the dividend rate,
dividend payment dates, sinking fund provisions, if any, or mandatory redemption
provisions thereof are different from those of the Series E Preferred Stock,
unless the instrument creating or evidencing such class or series of capital
stock otherwise expressly provides.
"Share" shall mean one share of Series E Preferred Stock of the
Corporation.
"Special Record Date" has the meaning ascribed to such term in paragraph
3(b).
"Stated Liquidation Value" of a share of Series E Preferred Stock means
$22,303.
"Subsidiary" of any Person shall mean (i) a corporation a majority of the
capital stock of which, having voting power under ordinary circumstances to
elect directors, is at the time, directly or indirectly, owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any other Person (other
than a corporation) in which such Person and/or one or more Subsidiaries of such
Person, directly or indirectly, has (x) a majority ownership interest or (y) the
power to elect or direct the election of a majority of the members of the
governing body of such first-named Person.
"TCI Holder" shall mean the Corporation and each Subsidiary of the
Corporation.
3. Dividends.
(a) Dividends Rights; Dividend Payment Dates. Subject to the prior
preferences and other rights of any Senior Stock and the provisions of Paragraph
6 hereof, the holders of Series E Preferred Stock shall be entitled to receive,
when and as declared by the Board of Directors, out of unrestricted funds
legally available therefor, cumulative dividends, in preference to dividends on
any Junior Stock, that shall accrue on each share of Series E Preferred Stock at
the rate of 5.0% per annum of the Stated Liquidation Value of such share from
the Issue Date to and including the date on which the Liquidation Preference of
such share is made available (whether on liquidation, dissolution, or winding up
of the Corporation or, in the case of paragraph 5, upon the applicable
Redemption Date). Accrued dividends on the Series E Preferred Stock will be
payable, as provided in paragraph 3(c) below, annually on each Dividend Payment
Date to the holders of record of the Series E Preferred Stock as of the close of
business on the Record Date for such dividend payment. Dividends shall be fully
cumulative and shall accrue (without interest or compounding) on a daily basis
without regard to the occurrence of a Dividend Payment Date and whether or not
such dividends are declared and whether or not there are any unrestricted funds
of the Corporation legally available for the payment of dividends. The amount of
dividends "accrued" as of the first Dividend Payment Date and as of any date
that is not a Dividend Payment Date shall be calculated on the basis of the
foregoing rate per annum for the actual number of days elapsed from the Issue
Date (in the case of the first Dividend Payment Date and any date prior to the
first Dividend Payment Date) or the last preceding Dividend Payment Date (in the
case of any other date) to and including the date as of which such determination
is to be made, based on a 365- or 366-day year, as the case may be.
(b) SPECIAL RECORD DATE. On each Dividend Payment Date, all dividends that
have accrued on each share of Series E Preferred Stock during the immediately
preceding Dividend Period shall, to the extent not paid as provided in paragraph
3(c) below on such Dividend Payment Date for any reason (whether or not such
unpaid dividends have been earned or declared or there are any unrestricted
funds of the Corporation legally available for the payment of dividends), be
added to the Liquidation Preference of such share and will remain a part thereof
until such dividends are paid as provided in paragraph 3(c) below. No interest
or additional dividends will accrue or be payable with respect to any dividend
payment on the Series E Preferred Stock that may be in arrears or with respect
to that portion of any other payment on the Series E Preferred Stock that is in
arrears which consist of accumulated or
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<PAGE>
accrued and unpaid dividends. Such accumulated or accrued and unpaid dividends
may be declared and paid at any time (subject to the rights of any Senior Stock
and, if applicable, to the concurrent satisfaction of any dividend arrearages
then existing with respect to any Parity Stock which ranks on a parity basis
with the Series E Preferred Stock as to the payment of dividends) without
reference to any regular Dividend Payment Date, to holders of record as of the
close of business on such date, not more than 45 days nor less than 10 days
preceding the payment date thereof, as may be fixed by the Board of Directors
(the "Special Record Date"). Notice of each Special Record Date shall be given,
not more than 45 days nor less than of days prior thereto, to the holders of
record of the shares of Series E Preferred Stock.
(c) METHOD OF PAYMENT. All dividends payable with respect to the shares of
Series E Preferred Stock shall be declared and paid in cash. All dividends paid
with respect to the shares of Series E Preferred Stock pursuant to this
paragraph 3 shall be paid pro rata to all the holders of shares of Series E
Preferred Stock outstanding on the applicable Record Date or Special Record
Date, as the case may be.
4. Distributions Upon Liquidation Dissolution or Winding Up.
Subject to the prior payment in full of the preferential amounts to which
any Senior Stock is entitled, in the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary, or involuntary, the holders of
Series E Preferred Stock shall be entitled to receive from the assets of the
Corporation available for distribution to stockholders, before any payment or
distribution, shall be made to the holders of any Junior Stock, an amount in
cash or property, at its fair market value, as determined by the Board of
Directors in good faith, or a combination thereof, per share, equal to the
Liquidation Preference of a share of Series E Preferred Stock as of the date of
payment or distribution, which payment or distribution shall be made pari passu
with any such payment or distribution made to the holders of any Parity Stock
ranking on a parity basis with the Series E Preferred Stock with respect to
distributions upon liquidation, dissolution or winding up of the Corporation.
The holders of Series E Preferred Stock shall be entitled to no other or further
distribution of or participation in any remaining assets of the Corporation
after receiving the Liquidation Preference per share. If, upon distribution of
the Corporation's assets in liquidation, dissolution or winding up, the assets
of the Corporation to be distributed among the holders of the Series E Preferred
Stock and to all holders of any Parity Stock ranking on a parity basis with the
Series E Preferred Stock with respect to distributions upon liquidation,
dissolution or winding up shall be insufficient to permit payment in full to
such holders of the respective preferential amounts to which they are entitled,
then the entire assets of the Corporation to be distributed to holders of the
Series E Preferred Stock and such Parity Stock shall be distributed pro rata to
such holders based upon the aggregate of the full preferential amounts to which
the shares of Series E Preferred Stock and such Parity Stock would otherwise
respectively be entitled. Neither the consolidation or merger of the Corporation
with or into any other corporation or corporations nor the sale, transfer or
lease of all or substantially all of the assets of the Corporation shall itself
be deemed to be a liquidation, dissolution or winding up of the Corporation
within the meaning of this paragraph 4. Notice of the liquidation, dissolution
or winding up of the Corporation shall be given, not less than 20 days prior to
the date on which such liquidation, dissolution or winding up is expected to
take place or become effective, to the holders of record of the shares of Series
E Preferred Stock.
5. Redemption.
(a) OPTIONAL REDEMPTION. Subject to the rights of any Senior Stock and the
provisions of paragraph 6, the shares of Series E Preferred Stock may be
redeemed, at the option of the Corporation by the action of the Board of
Directors, in whole or from time to time in part, on any Business Day occurring
after the Issue Date, at the Redemption Price on the Redemption Date. If less
than all outstanding shares of Series E Preferred Stock are to be redeemed on
any Redemption Date, the shares of Series E Preferred Stock to be redeemed shall
be chosen pro rata among all holders of Series E Preferred Stock. The
Corporation shall not be required to register a transfer of (i) any shares of
Series E Preferred Stock for a period of 15 days next preceding any selection of
shares of Series E Preferred Stock to be redeemed or (ii) any shares of Series E
Preferred Stock selected or called for redemption.
(b) NOTICE OF REDEMPTION. Notice of redemption shall be given by or on
behalf of the Corporation, not more than 60 days nor less than 30 days prior to
the Redemption Date, to the holders of record of the shares of Series E
Preferred Stock to be redeemed; but no defect in such notice or in the mailing
thereof shall affect the validity of the proceedings for the redemption of any
shares of Series E Preferred Stock. In addition to any information required by
law or by the applicable rules of any national securities
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exchange or national interdealer quotation system on which the Series E
Preferred Stock may be listed or admitted to trading or quoted, such notice
shall set forth the Redemption Price, the Redemption Date, the number of shares
to be redeemed, the portion of the Redemption Price, if any, which the
Corporation has elected to pay through the issuance of Class A Common Stock and
the place which the shares called for redemption will, upon presentation and
surrender of the stock certificates evidencing such shares, be redeemed. In the
event that fewer than the total number of shares of Series E Preferred Stock
represented by a certificate are redeemed, a new certificate representing the
number of unredeemed shares will be issued to the holder thereof without cost to
such holder.
(c) DEPOSIT OF REDEMPTION PRICE. If notice of any redemption by the
Corporation pursuant to this paragraph 5 shall have been given as provided in
paragraph 5(b) above, and if on or before the Redemption Date specified in such
notice an amount in cash sufficient to redeem in full on the Redemption Date at
the Redemption Price all shares of Series E Preferred Stock called for
redemption shall have been set apart so as to be available for such purpose and
only for such purpose, then effective as of the close of business on the
Redemption Date, the shares of Series E Preferred Stock called for redemption,
notwithstanding that any certificate therefor shall not have been surrendered
for cancellation, shall no longer be deemed outstanding, and the holders thereof
shall cease to be stockholders with respect to such shares and all rights with
respect to such shares shall forthwith cease and terminate, except the right of
the holders thereof to receive the Redemption Price of such shares, without
interest, upon the surrender of certificates representing the same.
(d) REDEMPTION BY ISSUANCE OF CLASS A COMMON STOCK. Subject to compliance
with the conditions contained in this paragraph 5(d), the Corporation may elect
to pay the Redemption Price (or designated portion thereof) of the shares of
Series E Preferred Stock called for redemption by issuing to the holder thereof,
in respect of his shares to be redeemed, a number of shares of Class A Common
Stock equal to the aggregate Redemption Price (or designated portion thereof) of
such shares divided by the Average Quoted Price of a share of Class A Common
Stock. No fractional shares of Class A Common Stock or scrip shall be issued
upon such redemption. As to any final fraction of a share of Class A Common
Stock that would otherwise be issuable to a holder upon redemption of his shares
of Series E Preferred Stock (determined on the basis of the total number of such
holder's shares of Series E Preferred Stock in respect of which shares of Class
A Common Stock are issuable), the Corporation shall pay an amount in cash or by
its check equal to the same fraction of the Average Quoted Price of a share of
Class A Common Stock.
The Corporation's right to elect to pay the Redemption Price (or designated
portion thereof) of the shares of Series E preferred Stock through the issuance
of shares of Class A Common Stock shall be conditioned upon: (i) the
Corporation's having timely given a Redemption Notice setting forth such
election as provided in paragraph 5(b), (ii) the Corporation's having obtained
and filed, on or before the Redemption Date, at the office of the redemption
agent for the Series E Preferred Stock (or with the books of the Corporation if
there is no redemption agent) an Opinion of Counsel to the effect that (A) the
shares of Class A Common Stock to be issued upon such redemption have been duly
authorized and, when issued and delivered in payment of the Redemption Price (or
designated portion thereof) of the shares of Series E Preferred Stock to be
redeemed, will be validly issued, fully paid and non-assessable and free from
preemptive rights, (B) that the issuance and delivery of such shares of Class A
Common Stock upon such redemption of shares of Series E Preferred Stock will not
violate the laws of the state of incorporation of the Corporation and (C),
unless at the time the Redemption Notice is given all shares of the Series E
Preferred Stock are owned by one or more TCI Holders, that the issuance and
delivery of the shares of Class A Common Stock upon such redemption of shares of
Series E Preferred Stock is exempt from the resignation or qualification
requirements of the 1933 Act and applicable state securities laws or, if no such
exemption is available, that the shares of Class A Common Stock to be issued
have been duly registered or qualified under the 1933 Act and such applicable
state securities laws, and (iii) the Corporation's having filed, on or before
the Redemption Date, at the office of such redemption agent (or with the books
of the Corporation if there is no redemption agent), an Officers' Certificate
setting forth the number of shares of Class A Common Stock to be issued in
payment of the Redemption Price (or designated portion thereof) of each share of
Series E Preferred Stock and the method of determining the same (consistent with
the provisions hereof). If the foregoing conditions have not been satisfied
prior to or on the Redemption Date, the Redemption Price for the shares of
Series E Preferred Stock (or portion thereof designated to be paid in Class A
Common Stock) shall be paid in cash.
(e) STATUS OF REDEEMED SHARES. All shares of Series E Preferred Stock
redeemed, exchanged, purchased or otherwise acquired by the Corporation shall be
retired and shall be restored to the status of authorized and unissued shares of
Series Preferred Stock (and may be reissued as part of another series of the
preferred stock of the Corporation, but such shares shall not be reissued as
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Series E Preferred Stock).
6. Limitations on Dividends and Redemptions.
If at any time the Corporation shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends for all
prior dividend periods on any Parity Stock which by the terms of the instrument
creating or evidencing such Parity Stock is entitled to the payment of such
cumulative dividends prior to the redemption, exchange, purchase or other
acquisition of the Series E Preferred Stock, and until full cumulative dividends
on such Parity Stock for all prior dividend periods are paid, or declared and
the consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, neither the Corporation nor any
Subsidiary thereof shall redeem, exchange, purchase or otherwise acquire any
shares of Series E Preferred Stock, Parity Stock or Junior Stock, or set aside
any money or assets for any such purpose pursuant to paragraph 5 hereof. a
sinking fund or otherwise, unless all then outstanding shares of Series E
Preferred Stock, of such Parity Stock and of any other class of series of Parity
Stock that by the terms of the instrument creating or evidencing such Parity
Stock is required to be redeemed under such circumstances are redeemed or
exchanged pursuant to the terms hereof and thereof.
If at any time the Corporation shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends on the
Series E Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Series E Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, neither the Corporation nor any
Subsidiary thereof shall redeem, exchange, purchase or otherwise acquire any
shares of Series E Preferred Stock, Parity Stock or Junior Stock, or set aside
any money or assets for any such purpose, pursuant to paragraph 5 hereof, a
sinking fund or otherwise, unless all then outstanding shares of Series E
Preferred Stock and of any other class or series of Parity Stock that by the
terms of the instrument creating or evidencing such Parity Stock is required to
be redeemed under such circumstances are redeemed or exchanged pursuant to the
terms hereof and thereof.
If at any time the Corporation shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends on the
Series E Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Series E Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside for such purpose
and no other purpose, the Corporation shall not declare or pay any dividend on
or make any distribution with respect to any Junior Stock or Parity Stock or set
aside any money or assets for any such purpose, except that the Corporation may
declare and pay a dividend on any Parity Stock ranking on a parity basis with
the Series E Preferred Stock with respect to the right to receive dividend
contemporaneously with the declaration and payment of a dividend on the Series E
Preferred Stock, provided that such dividends are declared and paid pro rata so
that the amount of dividends declared and paid per share of the Series E
Preferred Stock and such Parity Stock shall in all cases bear to each other the
same ratio that accumulated and accrued and unpaid dividends per share on the
Series E Preferred Stock and such Parity Stock bear to each other.
If the Corporation shall fail to redeem on any date fixed for redemption or
exchange pursuant to paragraph 5 hereof any shares of Series E Preferred Stock
called for redemption on such date, and until such shares are redeemed in full,
the Corporation shall not redeem or exchange any Parity Stock or Junior Stock or
declare or pay any dividend on or make any distribution with respect to any
Junior Stock, or set aside any money or assets for any such purpose, and neither
the Corporation nor any Subsidiary thereof shall purchase or otherwise acquire
any Series E Preferred Stock, Parity Stock or Junior Stock, or set aside any
money or assets for any such purpose.
Neither the Corporation nor any Subsidiary thereof shall redeem, exchange,
purchase or otherwise acquire any Parity Stock or Junior Stock, or set aside any
money or assets for any such purpose, if after giving effect to such redemption,
exchange, purchase or other acquisition, the amount (as determined by the Board
of Directors in good faith) that would be available for distribution to the
holders of the Series E Preferred Stock upon liquidation, dissolution or winding
up of the Corporation if such liquidation, dissolution or winding up were to
occur on the date fixed for such redemption, exchange, purchase or other
acquisition of such Parity Stock or Junior Stock would be less than the
aggregate Liquidation Preference as of such date of all shares of Series E
Preferred Stock then
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outstanding.
Nothing contained in the first, fourth or fifth paragraph of this paragraph
6 shall prevent (i) the payment of dividends on any Junior Stock solely in
shares of Junior Stock or the redemption, purchase or other acquisition of
Junior Stock solely in exchange for (together with a cash adjustment for
fractional shares, if any), or (but only in the case of the first and fifth
paragraphs hereof) through the application of the proceeds from the sale of,
shares of Junior Stock; or (ii) the payment of dividends on any Parity Stock
solely in shares of Parity Stock and/or Junior Stock or the redemption,
exchange, purchase or other acquisition of Series E Preferred Stock or Parity
Stock solely in exchange for (together with a cash adjustment for fractional
shares, if any), or (but only in the case of the first and fifth paragraphs
hereof) through the application of the proceeds from the sale of, shares of
Parity Stock and/or Junior Stock.
The provisions of the first paragraph of this paragraph 6 are for the sole
benefit of the holders of Series E Preferred Stock and Parity Stock having the
terms described therein and accordingly, at any time when there are no shares of
any such class or series of Parity Stock outstanding or if the holders of each
such class or series of Parity Stock have, by such vote or consent of the
holders thereof as may be provided for in the instrument creating or evidencing
such class or series, waived in whole or in part the benefit of such provisions
(either generally or in the specific instance), then the provisions of the first
paragraph of this paragraph 6 shall not (to the extent waived, in the case of
any partial waiver) restrict the redemption, exchange, purchase or other
acquisition of any shares of Series E Preferred Stock, Parity Stock or Junior
Stock. All other provisions of this paragraph 6 are for the sole benefit of the
holders of Series E Preferred Stock and accordingly, if the holders of shares of
Series E Preferred Stock shall have waived (as provided in paragraph 9) in whole
or in part the benefit of the applicable provisions, either generally or in the
specific instance, such provision shall not (to the extent of such waiver, in
the case of a partial waiver) restrict the redemption, exchange, purchase or
other acquisition of or declaration, payment or making of any dividends or
distributions on the Series E Preferred Stock, any Parity Stock or any Junior
Stock.
7. Conversion.
(a) Unless previously called for redemption as provided in Section 5
hereof, shares of Series E Preferred Stock shall be convertible, at the option
of the holder thereof, at any time subsequent to the Amendment Date in such
manner and upon such terms and conditions as hereinafter provided in this
paragraph 7, into fully paid and non-assessable full shares of Class A Common
Stock. No shares of Class A Common Stock shall be issued in respect of the
conversion of the Series E Preferred Stock after the fifteenth Business Day (the
"Cut-off Date") preceding the date fixed for redemption; provided that the
conversion of Shares surrendered for conversion in accordance with paragraph 7
after the Cut-off Date shall be given effect as of the date of such surrender if
the Redemption Price to be paid, or to be irrevocably set apart in trust for the
benefit of the holders of Shares to be so redeemed, has not been paid or so set
apart on or before such date fixed for redemption. In case cash, securities or
property other than Class A Common Stock shall be payable, deliverable or
issuable upon conversion as provided herein, then all references to Class A
Common Stock in this paragraph 7 shall be deemed to apply, so far as appropriate
and as nearly as may be, to such cash, property or other securities.
(b) Subject to the provisions for adjustment hereinafter set forth in this
paragraph 7, the Series E Preferred Stock may be converted into Class A Common
Stock at the initial conversion rate of 1,000 fully paid and non-assessable
shares of Class A Common Stock for one share of the Series E Preferred Stock.
(This conversion rate as from time to time adjusted cumulatively pursuant to the
provisions of this paragraph is hereinafter referred to as the "Conversion
Rate").
(c) In case after the Issue Date the Corporation shall (i) pay a dividend
or make a distribution on its outstanding shares of Class A Common Stock in
shares of its capital block or capital stock of any Subsidiary, (ii) subdivide
the then outstanding shares of Class A Common Stock into a greater number of
shares of Class A Common Stock, (iii) combine the then outstanding shares of
Class A Common Stock into a smaller number of shares of Class A Common Stock, or
(iv) issue by reclassification of its shares of Class A Common Stock any shares
of any other class of capital stock of the Corporation (including any such
reclassification in connection with a merger in which the Corporation is the
continuing corporation), then the Conversation Rate in effect immediately prior
to the opening of business on the record date for such dividend or distribution
or the effective date of such subdivision, combination or reclassification shall
be adjusted so that the holder of each share of the Series E Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the number
and kind of shares of capital stock of the Corporation (or capital stock of a
Subsidiary) that such holder would have owned or been entitled to receive
immediately following such action had such shares of Series E Preferred
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Stock been converted immediately prior to such time. An adjustment made pursuant
to this paragraph 7(c) for a dividend or distribution shall become effective
immediately after the record date for the dividend or distribution and an
adjustment made pursuant to this paragraph 7(c) for a subdivision, combination
or classification shall become effective immediately after the effective date of
the subdivision, combination or reclassification. Such adjustment shall be made
successively whenever any action listed above shall be taken.
(d) In case the Corporation shall after the Issue Date issue any rights or
warrants to all holders of shares of Class A Common Stock entitling them (for a
period expiring within 45 days after the record date for the determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Class A Common Stock (or Convertible Securities) at a price
per share of Class A Common Stock (or having an initial exercise price or
conversion price per share of Class A Common Stock) less than the then current
market price per share of Class A Common Stock (as determined in accordance with
the provisions of paragraph 7(f) below) on such record date, the number of
shares of Class A Common Stock into which each Share shall thereafter be
convertible shall be determined by multiplying the number of shares of Class A
Common Stock into which such Share was theretofore convertible immediately prior
to such record date by a fraction of which the numerator shall be the number of
shares of Class A Common Stock outstanding on such record date plus the number
of additional shares of Class A Common Stock offered for subscription or
purchase (or into which the Convertible Securities so offered are initially
convertible) and of which the denominator shall be the number of shares of Class
A Common Stock outstanding on such record date plus the number of shares of
Class A Common Stock which the aggregate offering price of the total number of
shares of Class A Common Stock so offered (or the aggregate initial conversion
or exercise price of the Convertible Securities so offered) would purchase at
the then current market price per share of Class A Common Stock (as determined
in accordance with the provisions of paragraph 7(f) below) on such record date.
Such adjustment shall be made successively whenever any such rights or warrants
are issued and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights or warrants. In
the event that all of the shares of Class A Common Stock (or all of the
Convertible Securities) subject to such rights or warrants have not been issued
when such rights or warrants expire (or, in the case of rights or warrants to
purchase Convertible Securities which have been exercised, all of the shares of
Class A Common Stock issuable upon conversion of such Convertible Securities
have not been issued prior to the expiration of the conversion right thereof),
then the Conversion Rate shall be readjusted retroactively to be the Conversion
Rate which would then be in effect had the adjustment upon the issuance of such
rights or warrants been made on the basis of the actual number of shares of
Class A Common Stock (or Convertible Securities) issued upon the exercise of
such right or warrants (or the conversion of such Convertible Securities); but
such subsequent adjustment shall not affect the number of shares of Class A
Common Stock issued upon the conversion of any Share prior to the date such
subsequent adjustment is made.
(e) In case the Corporation shall distribute after the Issue Date to all
holders of shares of Class A Common Stock (including any such distribution made
in connection with a merger in which the Corporation is the continuing
corporation, other than a merger to which paragraph 7(g) is applicable) any
securities, evidences of its indebtedness or assets (other than cash dividends
out of earnings since the Issue Date (determined without regard to gains on the
sale of significant capital assets) or capital stock in respect of which an
adjustment is made pursuant to paragraph 7(c) hereof) or rights or warrants to
purchase shares of Class A Common Stock or Class B Common Stock or securities
convertible into shares of Class A Common Stock or Class B Common Stock
(excluding those referred to in paragraph 7(d) above), then in each such case
the number of shares of Class A Common Stock into which each Share shall
thereafter be convertible shall be determined by multiplying the number of
shares of Class A Common Stock into which such Share was theretofore convertible
immediately prior to the record date for the determination of stockholders
entitled to receive the distribution by a fraction of which the numerator shall
be the then current market price per share of Class A Common Stock (as
determined accordance with the provisions of paragraph 7(f) below) on such
record date and of which the denominator shall be such current market price per
share of Class A Common Stock less the fair market value on such record date (as
determined by the Board of Directors of the Corporation whose determination
shall be conclusive) of the portion of the securities, assets or evidences of
indebtedness or rights and warrants so to be distributed applicable to one share
of Class A Common Stock. Such adjustment shall be made successively whenever any
such distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
distribution.
(f) For the purpose of any computation under paragraph 7(d), (e) or (k),
the current market price per share of Class A Common Stock at any date shall be
deemed to be the average of the daily closing prices for a share of Class A
Common Stock for the ten (10) consecutive trading days before the day in
question. The closing price for each day shall be the last reported sale price
regular way or,
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in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case on the
composite tape, or if the shares of Class A Common Stock are not quoted on the
composite tape, on the principal United States securities exchange registered
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") on
which the shares of Class A Common Stock are listed or admitted to trading, or
if they are not listed or admitted to trading on any such exchange, the last
reported sale price (or the average of the quoted closing bid and asked prices
if there were no reported sales) as reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or any comparable
system, or if the Class A Common Stock is not quoted on NASDAQ or any comparable
system, the average of the closing bid and asked prices as furnished by any
member of the National Association of Securities Dealers, Inc. selected from
time to time by the Corporation for that purpose or, in the absence of such
quotations, such other method of determining market value as the Board of
Directors shall from time to time deem to be fair.
(g) In case of any reclassification or change in the Class A Common Stock
(other than any reclassification or change referred to in paragraph 7(c) and
other than a change in par value) or in case of any consolidation of the
Corporation with any other corporation or any merger of the Corporation into
another corporation or of another corporation into the Corporation (other than a
merger in which the Corporation is the continuing corporation and which does not
result in any reclassification or change (other than a change in par value or
any reclassification or change to which paragraph 7(c) is applicable) in the
outstanding Class A Common Stock), or in case of any sale or transfer to another
corporation or entity (other than by mortgage or pledge) of all or substantially
all of the properties and assets of the Corporation, in any such case after the
Issue Date, the Corporation (or its successor in such consolidation or merger)
or the purchaser of such properties and assets shall make appropriate provision
so that the holder of a Share shall have the right thereafter to convert such
Share into the kind and amount of shares of stock and other securities and
property that such holder would have owned immediately after such
reclassification, change, consolidation, merger, sale or transfer if such holder
had converted such Share into Class A Common Stock immediately prior to the
effective date of such reclassification, change, consolidation, merger, sale or
transfer (assuming for this purpose (to the extent applicable) that such holder
failed to exercise any, rights of election and received per share of Class A
Common Stock the kind and amount of shares of stock and other securities and
property received per share by a plurality of the non-electing shares), and the
holders of the Series E Preferred Stock shall have no other conversion rights
under these provisions; provided, that effective provision shall be made, in the
Articles or Certificate of Incorporation of the resulting or surviving
corporation or otherwise or in any contracts of sale or transfer, so that the
provisions set forth herein for the protection of the conversion rights of the
Series E Preferred Stock shall thereafter be made applicable, as nearly as
reasonably may be to any such other shares of stock and other securities and
property deliverable upon conversion of the Series E Preferred Stock remaining
outstanding or other convertible preferred stock or other Convertible Securities
received by the holders of Series E Preferred Stock in place thereof; and
provided, further, that any such resulting or surviving corporation or purchaser
shall expressly assume the obligation to deliver, upon the exercise of the
conversion privilege, such shares, securities or property as the holders of the
Series E Preferred Stock remaining outstanding or other convertible preferred
stock or other convertible securities received by the holders in place thereof,
shall be entitled to receive pursuant to the provisions hereof, and to make
provisions for the protection of the conversion rights as above provided.
(h) Whenever the Conversion Rate or the conversion privilege shall be
adjusted as provided in paragraphs 7(c), (d), (e) or (g), the Corporation shall
promptly cause a notice to be mailed to the holders of record of the Series E
Preferred Stock describing the nature of the event requiring such adjustment,
the Conversion Rate in effect immediately thereafter and the kind and amount of
stock or other securities or property into which the Series E Preferred Stock
shall be convertible after such event. Where appropriate, such notice may be
given in advance and included as a part of a notice required to be mailed under
the provisions of paragraph 7(j).
(i) The Corporation may, but shall not be required to, make any adjustment
of the Conversion Rate if such adjustment would require an increase or decrease
of less than 1% in such Conversion Rate; provided however, that any adjustments
which by reason of this paragraph 7(i) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this paragraph 7 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. In any case in which this
paragraph 7(i) shall require that an adjustment shall become effective
immediately after a record date for such event, the Corporation may defer until
the occurrence of such event (x) issuing to the holder of any shares of Series E
Preferred Stock converted after such record date and before the occurrence of
such event the additional shares of Class A Common Stock or other capital stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the shares of Class A Common Stock, or other capital stock
issuable upon such conversion before giving effect to such adjustment and (y)
paying to such holder cash
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in lieu of any fractional interest to which such holder is entitled pursuant to
paragraph 7(n); provided, however, that, if requested by such holder, the
Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares of
Class A Common Stock or other capital stock, and such cash, upon the occurrence
of the event requiring such adjustment.
(j) In case at any time:
(i) the Corporation shall take any action which would require an
adjustment in the Conversion Rate pursuant to this paragraph;
(ii) there shall be any capital reorganization or reclassification of
the Class A Common Stock (other than a change in par value), or any
consolidation or merger to which the Corporation is a party and for which
approval of any shareholders of the Corporation is required, or any sale,
transfer or lease of all or substantially all of the properties and assets
of the Corporation, or a tender offer for shares of Class A Common Stock
representing, together with any shares of Class B Common Stock tendered for
in such tender offer, at least a majority of the total voting power
represented by the outstanding shares of Class A Common Stock and Class B
Common Stock which has been recommended by the Board of Directors as being
in the best interests of the holders of Class A Common Stock; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any such event, the Corporation shall give written notice, in the
manner provided in paragraph 5 hereof, to the holders of the Series E Preferred
Stock at their respective addresses as the same appear on the books of the
Corporation, at least twenty days (or ten days in the case of a recommended
tender offer as specified in clause (ii) above) prior to any record date for
such action, dividend or distribution or the date as of which it is expected
that holders of Class A Common Stock of record shall be entitled to exchange
their shares of Class A Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, transfer, lease, tender offer, dissolution, liquidation or winding up;
provided, however, that any notice required by any event described in clause
(ii) of this paragraph 7(j) shall be given in the manner and at the time that
such notice is given to the holders of Class A Common Stock. Without limiting
the obligations of the Corporation to provide notice of corporate actions
hereunder, the failure to give the notice required by this paragraph 7(j) or any
defect therein shall not affect the legality or validity of any such corporate
action of the Corporation or the vote upon such action.
(k) Before any holder of Series E Preferred Stock shall be entitled to
convert the same in Class A Common Stock, such holder shall surrender the
certificate or certificates for such Series E Preferred Stock at the office of
the Corporation or at the office of the transfer agent for the Series E
Preferred Stock, which certificate or certificates, if the Corporation shall so
request, shall be duly endorsed to the Corporation or in blank or accompanied by
proper instruments of transfer to the Corporation or in blank (such endorsements
or instruments of transfer to be in form satisfactory to the Corporation), and
shall give written notice to the Corporation at said office that such holder
elects to convert all or a part of the Shares represented by said certificate or
certificates in accordance with the terms of this paragraph 7, and shall state
in writing therein the name or names in which such holder wishes the
certificates for Class A Common Stock to be issued. Every such notice of
election to convert shall constitute a contract between the holder of such
Series E Preferred Stock and the Corporation, whereby the holder of such Series
E Preferred Stock shall be deemed to subscribe for the amount of Class A Common
Stock which such holder shall be entitled to receive upon conversion of the
number of shares of Series E Preferred Stock to be converted, and, in
satisfaction of such subscription, to deposit the shares of Series E Preferred
Stock to be converted, and thereby the Corporation shall be deemed to agree that
the surrender of the shares of Series E Preferred Stock to be converted shall
constitute full payment of such subscription for Class A Common Stock to be
issued upon such conversion. The Corporation will as soon as practicable after
such deposit of a certificate or certificates for Series E Preferred Stock,
accompanied by the written notice and the statement above prescribed, issue and
deliver at the office of the Corporation or of said transfer agent to the person
for whose account such Series E Preferred Stock was so surrendered, or to his
nominee(s) or, subject to compliance with applicable law, transferee(s), a
certificate or certificates for the number of full shares of Class A Common
Stock to which such holder shall be entitled, together with cash in lieu of any
fraction of a share as hereinafter provided. If surrendered certificates for
Series E Preferred Stock are converted only in part, the Corporation will issue
and deliver to the holder, or to his nominee(s), without charge therefor, a new
certificate or certificates representing the aggregate of the unconverted
Shares. Such conversion shall be deemed to
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have been made as of the date of such surrender of the Series E Preferred Stock
to be converted; and the person or persons entitled to receive the Class A
Common Stock issuable upon conversion of such Series E Preferred Stock shall be
treated for all purposes as the record holder or holders of such Class A Common
Stock on such date.
Upon the conversion of any Share, the Corporation shall pay, to the holder
of record of such Share on the immediately preceding Record Date, all accrued
but unpaid dividends on such Share to the date of the surrender of such Share
for conversion. Such payment shall be made in cash or, at the election of the
Corporation, the issuance of certificates representing such number of shares of
Class A Common Stock as have an aggregate current market price (as determined in
accordance with paragraph 7(f)) on the date of issuance equal to the amount of
such accrued but unpaid dividends. Upon the making of such payment to the person
entitled thereto as determined pursuant to the first sentence of this paragraph,
no further dividends shall accrue on such Share or to be payable to any other
person.
The issuance of certificates for shares of Class A Common Stock upon
conversion of shares of Series E Preferred Stock shall be made without charge
for any issue, stamp or other similar tax in respect of such issuance, provided,
however, if any such certificate is to be issued in a name other than that of
the registered holder of the share or shares of Series E Preferred Stock
converted, the person or persons requesting the issuance thereof shall pay to
the Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of the
Corporation that such tax has been paid.
The Corporation shall not be required to convert any shares of Series E
Preferred Stock, and no surrender of Series E Preferred Stock shall be effective
for that purpose, while the stock transfer books of the Corporation are closed
for any purpose; but the surrender of Series E Preferred Stock for conversion
during any period while such books are so closed shall become effective for
conversion immediately upon the reopening of such books, as if the conversion
had been made on the date such Series E Preferred Stock was surrendered.
(l) Promptly following the Amendment Date the Corporation shall reserve
and keep available at all times thereafter, solely for the purpose of issuance
upon conversion of the outstanding shares of Series E Preferred Stock, such
number of shares of Class A Common Stock as shall be issuable upon the
conversion of all outstanding Shares, provided that nothing contained herein
shall be construed to preclude the Corporation from satisfying its obligations
in respect of the conversion of the outstanding shares of Series E Preferred
Stock by delivery of shares of Class A Common Stock which are held in the
treasury of the Corporation. Promptly following the Amendment Date, the
Corporation shall take all such corporate and other actions as from time to time
may be necessary to insure that all shares of Class A Common Stock issuable upon
conversion of shares of Series E Preferred Stock at the Conversion Rate in
effect from time to time will, upon issue, be duly and validly authorized and
issued, fully paid and nonassessable and free of any preemptive or similar
rights.
(m) All shares of Series E Preferred Stock received by the Corporation
upon conversion thereof into Class A Common Stock shall be retired and shall be
restored to status of authorized and unissued shares of preferred stock (and may
be reissued as part of another series of the preferred stock of the
Corporation), but such shares shall not be reissued as Series E Preferred Stock
(n) The Corporation shall not be required to issue fractional shares of
Class A Common Stock or scrip upon conversion of the Series E Preferred Stock.
As to any final fraction of a share of Class A Common Stock which a holder of
one or more Shares would otherwise be entitled to receive upon conversion of
such Shares in the same transaction, the Corporation shall pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of the
market value of a full share of Class A Common Stock. For purposes of this
paragraph 7(n), the market value of a share of Class A Common Stock shall be the
last reported sale price regular way on the business day immediately preceding
the date of conversion, or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices regular way on
such day, in either case on the composite tape, or if the shares of Class A
Common Stock are not quoted on the composite tape, on the principal United
States securities exchange registered under the Exchange Act on which the shares
of Class A Common Stock are listed or admitted to trading, or if the shares of
Class A Common Stock are not listed or admitted to trading on any such exchange,
the last reported sale price (or the average of the quoted last reported bid and
asked prices if there were no reported sales) as reported by NASDAQ or any
comparable system, or if the Class A Common Stock is not quoted on NASDAQ or any
comparable system, the average of the closing bid and asked prices as furnished
by any member of the National Association of Securities Dealers, Inc. selected
from time to time by the Corporation for that purpose or, in
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<PAGE>
the absence of such quotations, such other method of determining market value as
the Board of Directors shall from time to time deem to be fair.
(o) If any shares of Class A Common Stock which would be issuable upon
conversion of Shares require registration with or approval of any governmental
authority before such shares may be issued upon conversion, the Corporation will
in good faith and as expeditiously as possible cause such shares to be duly
registered or approved, as the case may be. The Corporation will endeavor to
list the shares of Class A Common Stock required to be delivered upon conversion
of Shares prior to such delivery upon the principal national securities exchange
upon which the outstanding, Class A Common Stock is listed at the time of such
delivery.
8. Voting
(a) VOTING RIGHTS. The holders of Series E Preferred Stock shall have no
voting rights whatsoever, except as required by law and except for the voting
rights described in this paragraph 8; provided, however, that the number of
authorized shares of Series E Preferred Stock may be increased or decreased (but
not below the number of shares of Series E Preferred Stock then outstanding) by
the affirmative vote of the holders of at least 66 2/3 of the total voting power
of the then outstanding Voting Securities (as defined in Article V, Section C of
the Corporation's Restated Certificate of Incorporation), voting together as a
single class as provided in Article IX of the Certificate. Without limiting the
generality of the foregoing, no vote or consent of the holders of Series E
Preferred Stock shall be required for (a) the creation of any indebtedness of
any kind of the Corporation (b) the creation or designation of any class or
series of Senior Stock, Parity Stock or Junior Stock, or (c) any amendment to
the Certificate that would increase the number of authorized shares of Preferred
Stock or the number of authorized shares of Series E Preferred Stock or that
would decrease the number of authorized shares of Preferred Stock or the number
of authorized shares of Series E Preferred Stock (but not below the number of
shares of Preferred Stock or Series E Preferred Stock, as the case may be, then
outstanding).
(b) ELECTION OF DIRECTORS. The holders of the Series E Preferred Stock
shall have the right to vote at any annual or special meeting of stockholders
for the purpose of electing directors. Each share of Series E Preferred Stock
shall have one vote for such purpose, and shall vote as a single class with any
other class or series of capital stock of the Corporation entitled to vote in
any general election of directors, unless the instrument creating or evidencing
such class or series of capital stock otherwise expressly provides.
9. Waiver.
Any provision which for the benefit of the holders of Series E Preferred
Stock, prohibits, limits or restricts actions by the Corporation, or imposes
obligations on the Corporation, may be waived in whole or in part, or the
application of all or any part of such provision in any particular circumstance
or generally may be waived, in each case with the consent of the holders of at
least a majority of the number of shares of Series E Preferred Stock then
outstanding (or such greater percentage thereof as may be required by applicable
law or any applicable rules of any national securities exchange or national
interdealer quotation system), either in writing or by vote at an annual meeting
or a meeting called for such purpose at which the holders of Series E Preferred
Stock shall vote as a separate class.
10. Method of Giving Notices.
Any notice required or permitted hereby to be given to the holders of
shares of Series E Preferred Stock shall be deemed duly given if deposited in
the United States mail, first class mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Corporation or
supplied by him in writing to the Corporation for the purpose of such notice.
11. Exclusion of Other Rights.
Except as may otherwise be required by law and except for the equitable
rights and remedies which may otherwise be available to holders of Series E
Preferred Stock, the shares of Series E Preferred Stock shall not have any
designations, preferences, limitations or relative rights other than those
specifically set forth herein.
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12. Heading of Subdivisions.
The headings of the various subdivisions hereof are for convenience of reference
only and shall not affect the interpretation of any of the provisions hereof.
FURTHER RESOLVED, that the appropriate officers of the Corporation are
hereby authorized to execute and acknowledge a certificate setting forth these
resolutions and to cause such certificate to be filed and recorded, in
accordance with the requirements of Section 151(g) of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, duly authorized officer has executed
this certificate on this 11 day of October, 1994.
/s/ Larry Romrell
Name: Larry Romrell
Title: Executive Vice President
Attest: /s/ Stephen M. Brett
Name: Stephen M. Brett
Title: Secretary
56
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STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
_________________________________________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF CORRECTION
OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE TWENTY-FOURTH DAY OF
OCTOBER, A.D. 1994, AT 8:30 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
[Seal]
/s/ Edward J. Freel
Edward J. Freel, Secretary of State
AUTHENTICATION: 7278574
DATE: 10-24-94
57
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 08:30 AM 10/24/1994
944202081 - 2371729
CERTIFICATE OF CORRECTION
Filed pursuant to Section 103(f)
of the Delaware General Corporation Law
with respect to a
CERTIFICATE OF DESIGNATION
of
TELE-COMMUNICATIONS, INC.
Whereas, on October 11, 1994, Tele-Communications, Inc. (the "Corporation")
filed with the Delaware Secretary of State a Certificate of Designation (the
"Certificate of Designation") authorizing the issuance of a series of preferred
stock of the Corporation designated "Redeemable Convertible Preferred Stock,
Series E;"
Whereas, such Certificate of Designation inaccurately stated that the par
value of the Redeemable Convertible Preferred Stock, Series E, is $1.00 per
share, when in fact the par value of the Redeemable Convertible Preferred Stock,
Series E, is $.01 per share;
Therefore, the Certificate of Designation is hereby corrected in accordance
with the provisions of Section 103(f) of the Delaware General Corporation Law as
follows:
1. The words "par value $1.00 per share" shall be deleted from paragraph
number 1 of the Certificate of Designation and the words "par value $.01 per
share" shall be substituted in their place.
Executed on the date set forth below by the undersigned duly authorized
officer of the Corporation.
Date: October 21, 1994
Signature: /s/ Stephen M. Brett
Name: Stephen M. Brett
Title: Executive President
and General Counsel
58
<PAGE>
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
_______________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE TWENTY-
SIXTH DAY OF JANUARY, A.D. 1995, AT 10:55 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
[SEAL]
/s/ Edward J. Freel
Edward J. Freel, SECRETARY OF STATE
AUTHENTICATION: 7387640
DATE: 01-26-95
59
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 10:55 AM 01/26/1995
950019173 - 2371729
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION
_______________
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED
AS "CONVERTIBLE PREFERRED STOCK,
SERIES D" ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
_______________
The undersigned Executive Vice President of Tele-Communications, Inc., a
Delaware corporation (the "Corporation"), hereby certifies that the Board of
Directors duly adopted the following resolutions creating a series of preferred
stock designated as "Convertible Preferred Stock, Series D":
"BE IT RESOLVED, that, pursuant to authority expressly granted by the
provisions of the Restated Certificate of Incorporation of this Corporation, the
Board of Directors hereby creates and authorizes the issuance of a series of
preferred stock, par value $.01 per share, of this Corporation, to consist of
1,000,000 shares, and hereby fixes the designations, dividend rights, voting
powers, rights on liquidation and other preferences and relative, participating,
optional or other special rights and the qualifications, limitations or
restrictions of the shares of such series (in addition to the designations,
preferences and relative, participating, limitations or restrictions thereof set
forth in the Restated Certificate of Incorporation that are applicable to
preferred stock of all series) as follows:
1. Designation. The designation of the series of preferred stock, par
value $.01 per share, of this Corporation authorized hereby is "Convertible
Preferred Stock, Series D" (the "Convertible Preferred Stock").
2. Certain Definitions. Unless the context otherwise requires, the terms
defined this Section 2 shall have the meanings herein specified:
Affiliate: As to any person or, entity, any other person or entity which.
directly or indirectly, controls, or is under common control with, or is
controlled by, such person or entity. As used in this definition, "control"
(including, with its correlative meanings, "controlling," "controlled by" and
"under common control with") shall mean possession, directly or indirectly, of
the power to direct or cause the direction of management or policies of a Person
(whether through the ownership of securities, or partnership or other ownership
interest, by contract or otherwise).
Board of Directors: The Board of Directors of this Corporation and any
authorized committee thereof.
Business Day: Any day other than a Saturday, Sunday, or holiday in which
banking institutions in Denver, Colorado, are closed for business.
Capital Stock: Any and all shares, interests, participations or other
equivalents (however designated) of corporate stock of this
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Corporation.
Class A Common Stock: The Class A Common Stock, par value $1.00 per share,
of this Corporation as such exists on the date of this Certificate of
Designation, and Capital Stock of any other class into which such Class A Common
Stock may thereafter have been changed.
Class B Common Stock: The Class B Common Stock, par value $1.00 per share,
of this Corporation as such exists on the date of this Certificate of
Designation, and Capital Stock of any other class into which such Class B Common
Stock may thereafter have been changed.
Class B Preferred Stock: The Class B 6% Cumulative Redeemable Exchangeable
Junior Preferred Stock, par value $.01 per share of the Corporation.
Class C Preferred Stock: The Convertible Preferred Stock, Series C, par
value $.01 per share, of the Corporation.
Class E Preferred Stock: The Convertible Preferred Stock, Series E, par
value $.01 per share, of the Corporation.
Common Stock: The Class A Common Stock. Class B Common Stock and any other
class of Capital Stock of this Corporation designated as Common Stock.
Conversion Rate: As defined in Section 5(b).
Convertible Securities: Securities, other than the Class B Common Stock,
that are convertible into or exchangeable for Class A Common Stock.
Debt Instrument: Any bond, debenture, note, indenture, guarantee or other
instrument or agreement evidencing any Indebtedness of this Corporation, whether
existing at the Issue Date or thereafter created, incurred, assumed or
guaranteed.
Dividend Payment Date: As defined in Section 3(b).
Dividend Period: The period from but excluding the First Accrual Date to
and including the first Dividend Payment Date and each six-month period from but
excluding the Dividend Payment Date for the preceding Dividend Period to and
including the Dividend Payment Date for such Dividend Period.
Exchange Option. As defined in Section 7(a).
Expiration Date. As defined in Section 7(d).
First Accrual Date: The Issue Date.
Indebtedness: Any (i) liability, contingent or otherwise, of this
Corporation (x) for borrowed money whether or not the recourse of the lender is
to the whole of the assets of this Corporation or only to a portion thereof),
(y) evidenced by a note, debenture or similar instrument (including a purchase
money obligation) given other than in connection with the acquisition of
inventory or similar property in the ordinary course of business, or (z) for the
payment of money relating to an obligation under a lease that is required to be
capitalized for financial accounting purposes in accordance with generally
accepted accounting principles; (ii) liability of others described in the
preceeding clause (i) which this Corporation has guaranteed or which is
otherwise its legal liability; (iii) obligations secured by a mortgage, pledge,
lien, charge or other encumbrance to which the property or assets of this
Corporation are subject whether or not the obligations secured thereby shall
have been assumed by or shall otherwise be this Corporation's legal liability;
and (iv) any amendment, renewal, extension or refunding of any liability of the
types referred to in clauses (i), (il) and (iii) above.
Issue Date: The first date on which any shares of the Convertible Preferred
Stock are first issued or deemed to have been issued.
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Junior Securities: All shares of Common Stock, Class B Preferred Stock and
any other class or series of stock of this Corporation not entitled to receive
any dividends unless all dividends required to have been paid or declared and
set apart for payment on the Convertible Preferred Stock shall have been so paid
or declared and set apart for payment and, for purposes of Section 4 hereof, any
class or series of stock of this Corporation not entitled to receive any assets
upon liquidation, dissolution or winding up of the affairs of this Corporation
until the Convertible Preferred Stock shall have received the entire amount to
which such stock is entitled upon such liquidation, dissolution or winding up.
Liquidation Value: Measured per Share of the Convertible Preferred Stock as
of any particular date, the sum of (i) S300 plus (ii) an amount equal to all
dividends accrued on such Share through the Dividend Payment Date immediately
preceding the date on which the Liquidation Value is being determined, which
pursuant to Section 3(c) or (d) have been added to and remain a part of the
Liquidation Value as of such date, plus (iii), for purposes of determining
amounts payable pursuant to Sections 4 and 6 hereof, an amount equal to all
unpaid dividends accrued on the sum of the amounts specified in clauses (i) and
(ii) above to the date as of which the Liquidation Value is being determined.
Merger Agreement: The Agreement and Plan of Merger, dated as of August 8,
1994 among this Corporation, TCI Communications, Inc. and TeleCable Corporation.
Mirror Preferred Stock. As defined in Section 7(c).
Option Notice. As defined in Section 7(d).
Parity Securities: Any class or series of stock of this Corporation
entitled to receive payment of dividends on a parity with the Convertible
Preferred Stock or entitled to receive assets upon liquidation, dissolution or
winding up of the affairs of this Corporation on a parity with the Convertible
Preferred Stock. The Class A Preferred Stock, the Class C Preferred Stock and
Class E Preferred Stock rank on a parity basis with the Convertible Preferred
Stock.
Record Date: For dividends payable on any Dividend Payment Date, the
fifteenth day of the month preceding the month during which such Dividend
Payment Date shall occur.
Redemption Date: As to any Share, the date fixed for redemption of such
Share as specified in the notice of redemption given in accordance with Section
6(d), provided that no such date will be a Redemption Date unless the applicable
Redemption Price is actually paid on such date or the consideration sufficient
for the payment thereof, and for no other purpose, has been irrevocably set
apart in trust for the benefit of the holders of Shares to be redeemed, and if
the Redemption Price is not so paid in full or the consideration sufficient
therefor so irrevocably set apart in trust for the benefit of the holders of
Shares to be redeemed, then the Redemption Date will be the date on which such
Redemption Price is fully paid or the consideration sufficient for the payment
thereof, and for no other purpose, has been irrevocably set apart in trust for
the benefit of the holders of Shares to be redeemed; and provided, further that
for purposes of Section 6(c) hereof, the date fixed for redemption of Shares
which are required to be redeemed pursuant to such Section shall be the Business
Day which is 20 Business Days after the date this Corporation receives the
notice referred to in such Section from the holder of Shares therein specified.
Redemption Price: As to any Share that is to be redeemed on any Redemption
Date, the Liquidation Value as in effect on such Redemption Date; provided,
however, that for purposes of Section 5(p) hereof (but not Section 5(a) as it
may refer to Section 5(p)) and this definition, the date otherwise fixed for
redemption of such Shares shall be deemed the Redemption Date in respect of such
Shares.
Rights. As defined in Section 7(a).
Senior Securities: Any class or series of stock of this Corporation ranking
senior to the Convertible Preferred Stock in respect of the right to receive
payment of dividends or the right to participate in any distribution upon
liquidation, dissolution or winding up of the affairs of this Corporation.
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Share: As defined in Section 3(a).
Special Liquidation Value: In respect of any Dividend Payment Date and
Shares, all accrued dividends not paid or irrevocably set apart in trust for the
benefit of the holders of Shares on or before such date.
Special Securities: Capital Stock (other than Class A Common Stock or Class
B Common Stock) of this Corporation or a Subsidiary thereof which (a) is common
stock of the issuer thereof or (b) participates in one or more business
operations of the issuer thereof in such a manner that if such operations were
owned by a corporation and such Capital Stock were issued thereby such Capital
Stock would be common stock of such corporation.
Special Record Date: As defined in Section 3(c).
Subsidiary: With respect to any person or entity, any corporation or
partnership more than 50% of whose outstanding voting securities or partnership
interests, as the case may be, are directly or indirectly owned by such person
or entity.
Successor Interest: As defined in Section S(g).
3. Dividends.
(a) Subject to the rights of any Parity Securities with respect to
dividends, the holders of the Convertible Preferred Stock shall be entitled to
receive, and, subject to any prohibition or restriction contained in any Debt
Instrument, this Corporation shall be obligated to pay, but only out of funds
legally available therefor, preferential cumulative cash dividends which shall
accrue as provided herein. Except as otherwise provided in Sections 3(c) or 3(d)
hereof, dividends on each share of Convertible Preferred Stock (hereinafter
referred to as a "Share") shall accrue on a daily basis at the rate of 51/2% per
annum of the Liquidation Value to and including the date of conversion thereof
pursuant to Section 5 or the date on which the Liquidation Value or Redemption
Price of such Share is made available pursuant to Section 4 or 6 hereof,
respectively. Dividends on the Convertible Preferred Stock shall accrue as
provided herein, whether or not such dividends have been declared and whether or
not there are profits, surplus or other funds of the Corporation legally or
contractually available for the payment of dividends and regardless of the
provisions of any Parity Securities or Debt Instrument.
(b) Accrued dividends on the Convertible Preferred Stock shall be payable
semiannually on the first day of each January and July or the immediately
succeeding Business Day. If such first day is not a Business Day (each such
payment date being hereinafter referred to as a "Dividend Payment Date"),
commencing on July I, 1995 to the holders of record of the Convertible Preferred
Stock as of the close of business on the applicable Record Date. For purposes of
determining the amount of dividends "accrued" as of any date that is not a
Dividend Payment Date, such amount shall be calculated on the basis of the rate
per annum specified in Section 3(a) for actual days elapsed from but excluding
the First Accrual Date (in the case of any date prior to the first Dividend
Payment Date) or the last preceding Dividend Payment Date in respect of which
dividends were fully paid or irrevocably set apart in trust for the benefit of
the holders of Shares (or shares of Class A Common Stock were issued in respect
of the Special Liquidation Value as provided in Section 5(o) hereof), in the
case of any other date, to and including the date as of which such determination
is to be made, based on a 365-day year.
(c) If on any Dividend Payment Date this Corporation pursuant to
applicable law or the terms of any Debt Instrument shall be prohibited or
restricted from paying in cash the full dividends to which holders of the
Convertible Preferred Stock and any Parity Securities shall be entitled, the
amount available for such payment pursuant to applicable law and which is not
restricted by the terms of any Debt Instrument shall be distributed among the
holders of the Convertible Preferred Stock and such Parity Securities ratably in
proportion to the full amounts to which they would otherwise be entitled except
for the issuance of the Class A Common Stock issued in respect of the partial
conversion of Shares pursuant to Section 5(o) hereof. To the extent not paid on
each Dividend Payment Date, all dividends which have accrued on each Share
during the Dividend Period ending on such Dividend Payment Date will be added
cumulatively to the Liquidation Value of such Share and will remain a part
thereof until such dividends are paid. In the event that dividends are not paid
in full on two consecutive Dividend Payment Dates, dividends on that portion of
the Liquidation Value of each
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Share which consists of accrued dividends that have theretofore been or
thereafter are added to, and remain a part of, the Liquidation Value in
accordance with the preceding sentence shall accrue cumulatively on a daily
basis at the rate of ten percent (10%) per annum, from and after such second
consecutive Dividend Payment Date to and including the date of conversion of
such Share pursuant to Section 5 or the date on which the Liquidation Value or
Redemption Price of such Share is made available pursuant to Section 4 or 6
hereof, respectively, unless such portion of the Liquidation Value that consists
of accrued unpaid dividends shall be earlier paid in full. Such portion of the
Liquidation Value as consists of accrued unpaid dividends, may be declared and
paid at any time on any Business Day without reference to any regular Dividend
Payment Date, to holders of record as of the close of business on such date, not
more than 50 days nor less than 10 days preceding the payment date thereof, as
may be fixed by the Board of Directors of this Corporation (the "Special Record
Date").
(d) In the event that on any date fixed for redemption of Shares pursuant
to Section 6 this Corporation shall fail to pay the Redemption Price due and
payable upon presentation and surrender of the stock certificates evidencing
Shares to be redeemed, then dividends on such Shares shall accrue cumulatively
on a daily basis at the rate of ten percent (10%) per annum of the Liquidation
Value thereof from and after such date fixed for redemption to and including the
date of conversion of such Shares pursuant to Section 5 or the date on which the
Liquidation Value or Redemption Price of such Shares is made available pursuant
to Section 4 or 6 hereof, respectively.
(e) Notice of each Special Record Date shall be mailed, in the manner
provided in Section 6(d), to the holders of record of the Convertible Preferred
Stock not less than 15 days prior thereto.
(f) As long as any Convertible Preferred Stock shall be outstanding, no
dividend, whether in cash or property, shall be paid or declared, nor shall any
other distribution be made, on any Junior Security, nor shall any shares of any
Junior Security be purchased, redeemed, or otherwise acquired for value by this
Corporation, unless the holders of the Convertible Preferred Stock shall have
received all dividends to which they are entitled pursuant to Section 3(a)
hereof for all the Dividend Periods preceding the date on which such dividend on
the Junior Securities is to occur, or such dividends shall have been declared
and the consideration sufficient for the payment thereof irrevocably set apart
in trust for the benefit of the holders of Shares so as to be available for the
payment in full thereof and for no other purpose. The provisions of this Section
3(f) shall not apply (i) to a dividend payable in any junior Security, or (ii)
to the repurchase, redemption or other acquisition of shares of any Junior
Security solely through the issuance of Junior Securities (together with a cash
adjustment for fractional shares, if any) or through the application of the
proceeds from the sale of Junior Securities. This Corporation shall not permit a
Subsidiary thereof to take any action which this Corporation is prohibited by
this Section 3(f) from taking.
4. Liquidation. Upon any liquidation, dissolution or winding up of this
Corporation, whether voluntary or involuntary, the holders of Convertible
Preferred Stock shall be entitled to be paid an amount in cash equal to the
aggregate Liquidation Value at the date fixed for liquidation of all Shares
outstanding before any distribution or payment is made upon any Junior
Securities, which payment shall be made pari passu with any such payment made to
the holders of any Parity Securities. The holders of Convertible Preferred Stock
shall be entitled to no other or further distribution of or participation in any
remaining assets of this Corporation after receiving the Liquidation Value per
Share. If upon such liquidation, dissolution or winding up, the assets of this
Corporation to be distributed among the holders of Convertible Preferred Stock
and to all holders of Parity Securities are insufficient to permit payment in
full to such holders of the aggregate preferential amounts which they are
entitled to be paid, then the entire assets of this Corporation to be
distributed to such holders shall be distributed ratably among them based upon
the full preferential amounts to which the shares of Convertible Preferred Stock
and such Parity Securities would otherwise respectively be entitled. Upon any
such liquidation, dissolution or winding up, after the holders of Convertible
Preferred Stock and Parity Securities have been paid in full the amounts to
which they are entitled, the remaining assets of this Corporation may be
distributed to holders of Junior Securities. This Corporation shall mail written
notice of such liquidation, dissolution or winding up to each record holder of
Convertible Preferred Stock not less than 30 days prior to the payment date
stated in such written notice. Neither the consolidation or merger of this
Corporation into or with any other corporation or corporations, nor the sale,
transfer or lease by this Corporation of all or any part of its assets, shall be
deemed to be a liquidation, dissolution or winding up of this Corporation within
the meaning of this Section 4.
5. Conversion.
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(a) Unless previously called for, or otherwise subject to, redemption as
provided in Section 6 hereof, the Convertible Preferred Stock may be converted
at any time or from time to time, in such manner and upon such terms and
conditions as hereinafter provided in this Section 5 into fully paid and non-
assessable full shares of Class A Common Stock. No Share of Class A Common Stock
shall be issued in respect of the conversion of the Convertible Preferred Stock
(other than pursuant to Section 5(o) or 5(p) hereof) after the fifteenth
Business Day (the "Cut-off Date") preceding the date fixed for redemption;
provided that the conversion of Shares surrendered for conversion in accordance
with Section 5 after the Cut-off Date shall be given effect as of the date of
such surrender if the Redemption Price to be paid, or to be irrevocably set
apart in trust for the benefit of the holders of Shares to be so redeemed, has
not been paid or so set apart on or before such date fixed for redemption. In
case cash, securities or property other than Class A Common Stock shall be
payable, deliverable or issuable upon conversion as provided herein, then all
references to Class A Common Stock in this Section 5 shall be deemed to apply,
so far as appropriate and as nearly as may be, to such cash, property or other
securities.
(b) Subject to the provisions for adjustment hereinafter set forth in
this Section 5, the Convertible Preferred Stock may be converted into Class A
Common Stock at the initial conversion rate of 10 fully paid and non-assessable
shares of Class A Common Stock for one share of the Convertible Preferred Stock.
(This conversion rate as from time to time adjusted cumulatively pursuant to
the provisions of this Section is hereinafter referred to as the "Conversion
Rate").
(c) In case after August 8, 1994 this Corporation shall (i) pay a
dividend or make a distribution on its outstanding shares of Class A Common
Stock in shares of its Capital Stock or capital stock of any Subsidiary, (ii)
subdivide the then outstanding shares of Class A Common Stock into a greater
number of shares of Class A Common Stock, (iii) combine the then outstanding
shares of Class A Common Stock into a smaller number of shares of Class A Common
Stock, or (iv) issue by reclassification of its shares of Class A Common Stock
any shares of any other class of Capital Stock of this Corporation (including
any such reclassification in connection with a merger in which this Corporation
is the continuing corporation), then the Conversion Rate in effect immediately
prior to the opening of business on the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be adjusted so that the holder of each share of the
Convertible Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number and kind of shares of Capital Stock of this
Corporation (or capital stock of a Subsidiary) that such holder would have owned
or been entitled to receive immediately following such action had such shares of
Convertible Preferred Stock been converted immediately prior to such time. An
adjustment made pursuant to this Section 5(c) for a dividend or distribution
shall become effective immediately after the record date for the dividend or
distribution and an adjustment made pursuant to this Section 5(c) for a
subdivision, combination or reclassification shall become effective immediately
after the effective date of the subdivision, combination or reclassification.
Such adjustment shall be made successively whenever any action listed above
shall be taken.
(d) In case this Corporation shall after August 8, 1994 issue any rights
or warrants to all holders of shares of Class A Common Stock entitling them (for
a period expiring within 45 days after the record date for the determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Class A Common Stock (or Convertible Securities) at a price
per share of Class A Common Stock (or having an initial exercise price or
conversion price per share of Class A Common Stock) less than the then current
market price per share of Class A Common Stock (as determined in accordance with
the provisions of Section 5(f) below) on such record date, the number of shares
of Class A Common Stock into which each Share shall thereafter be convertible
shall be determined by multiplying the number of shares of Class A Common Stock
into which such Share was theretofore convertible immediately prior to such
record date by a fraction of which the numerator shall be the number of shares
of Class A Common Stock outstanding on such record date plus the number of
additional shares of Class A Common Stock offered for subscription or purchase
(or into which the Convertible Securities so offered are initially convertible)
and of which the denominator shall be the number of shares of Class A Common
Stock outstanding on such record date plus the number of shares of Class A
Common Stock which the aggregate offering price of the total number of shares of
Class A Common Stock so offered (or the aggregate initial conversion or exercise
price of the Convertible Securities so offered) would purchase at the then
current market price per share of Class A Common Stock (as determined in
accordance with the provisions of Section 5(f) below) on such record date. Such
adjustment shall be made successively whenever any such rights or warrants are
issued and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights or warrants. In
the event that all of the shares of Class A Common Stock (or all of the
Convertible Securities) subject to such rights or warrants have not been issued
when such rights or warrants expire (or, in the case of rights or warrants to
purchase Convertible Securities which have been exercised, all of the
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shares of Class A Common Stock issuable upon conversion of such Convertible
Securities have not been issued prior to the expiration of the conversion right
thereof), then the Conversion Rate shall be readjusted retroactively to be the
Conversion Rate which would then be in effect had the adjustment upon the
issuance of such rights or warrants been made on the basis of the actual number
of shares of Class A Common Stock (or Convertible Securities) issued upon the
exercise of such rights or warrants (or the conversion of such Convertible
Securities); but such subsequent adjustment shall not affect the number of
shares of Class A Common Stock issued upon the conversion of any Share prior to
the date such subsequent adjustment is made.
(e) In case this Corporation shall distribute after August 8, 1994 to all
holders of shares of Class A Common Stock (including any such distribution made
in connection with a merger in which this Corporation is the continuing
corporation, other than a merger to which Section 5(g) is applicable) any
securities, evidences of its indebtedness or assets (other than cash dividends
out of earnings since July 1, 1994 (determined without regard to gains on the
sale of significant capital assets) or Capital Stock in respect of which an
adjustment is made pursuant to Section 5(c) hereof) or rights or warrants to
purchase shares of Class A Common Stock or Class B Common Stock or securities
convertible into shares of Class A Common Stock or Class B Common Stock
(excluding those referred to in Section 5(d) above), then in each such case the
number of shares of Class A Common Stock into which each Share shall thereafter
be convertible shall be determined by multiplying the number of shares of Class
A Common Stock into which such Share was theretofore convertible immediately
prior to the record date for the determination of stockholders entitled to
receive the distribution by a fraction of which the numerator shall be the then
current market price per share of Class A Common Stock (as determined in
accordance with the provisions of Section 5(f) below) on such record date and of
which the denominator shall be such current market price per share of Class A
Common Stock less the fair market value on such record date (as determined by
the Board of Directors of this Corporation, whose determination shall be
conclusive) of the portion of the securities, assets or evidences of
indebtedness or rights and warrants so to be distributed applicable to one share
of Class A Common Stock. Such adjustment shall be made successively whenever any
such distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
distribution.
(f) For the purpose of any computation under Section 5(d), (e), (k), (o)
or (p) or Section 7, the current market price per share of Class A Common Stock
at any date shall be deemed to be the average of the daily closing prices for a
share of Class A Common Stock for the ten (10) consecutive trading days before
the day in question. The closing price for each day shall be the last reported
sale price regular way or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices regular way, in
either case on the composite tape, or if the shares of Class A Common Stock are
not quoted on the composite tape, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on which the shares of Class A Common Stock are listed or
admitted to trading, or if they are not listed or admitted to trading on any
such exchange, the last reported sale price (or the average of the quoted
closing bid and asked prices if there were no reported sales) as reported by the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or any comparable system, or if the Class A Common Stock is not quoted on NASDAQ
or any comparable system, the average of the closing bid and asked prices as
furnished by any member of the National Association of Securities Dealers, Inc.
selected from time to time by this Corporation for that purpose or, in the
absence of such quotations, such other method of determining market value as the
Board of Directors shall from time to time deem to be fair.
(g) In case of any reclassification or change in the Class A Common Stock
(other than any reclassification or change referred to in Section 5(c) and other
than a change in par value) or in case of any consolidation of this Corporation
with any other corporation or any merger of this Corporation into another
corporation or of another corporation into this Corporation (other than a merger
in which this Corporation is the continuing corporation and which does not
result in any reclassificaiion or change (other than a change in par value or
any reclassification or change to which Section 5(c) is applicable) in the
outstanding Class A Common Stock), or in case of any sale or transfer to another
corporation or entity (other than by mortgage or pledge) of all or substantially
all of the properties and assets of this Corporation, in any such case after
August 8, 1994, this Corporation (or its successor in such consolidation or
merger) or the purchaser of such properties and assets shall make appropriate
provision so that the holder of a Share shall have the right thereafter to
convert such Share into the kind and amount of shares of stock and other
securities and property (a "Successor Interest") that such holder would have
owned immediately after such reclassification, change, consolidation, merger,
sale or transfer if such holder had converted such Share into Class A Common
Stock immediately prior to the effective date of such reclassification, change,
consolidation, merger, sale or transfer (assuming for this purpose (to the
extent applicable) that such holder failed to exercise any rights of election
and received per share of Class A Common Stock the kind and amount of shares of
stock and other securities and
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property received per share by a plurality of the non-electing shares), and the
holders of the Convertible Preferred Stock shall have no other conversion rights
under these provisions (other than pursuant to Section 5(o) or 5(p) hereof,
provided that upon any conversion effected pursuant to Section 5(o) or 5(p)
after any event to which this Section 5(g) is applicable, references in Section
5(o) and 5(o) to Class A Common Stock shall be deemed to be references to
Successor Interests); provided, that effective provision shall be made, in the
Articles or Certificate of Incorporation of the resulting or surviving
corporation or otherwise or in any contracts of sale or transfer, so that the
provisions set forth herein for the protection of the conversion rights of the
Convertible Preferred Stock shall thereafter be made applicable, as nearly as
reasonably may be to any such other shares of stock and other securities and
property deliverable upon conversion of the Convertible Preferred Stock
remaining outstanding or other convertible preferred stock or other Convertible
Securities received by the holders of Convertible Preferred Stock in place
thereof; and provided, further, that any such resulting or surviving corporation
or purchaser shall expressly assume the obligation to deliver, upon the exercise
of the conversion privilege, such shares, securities or property as the holders
of the Convertible Preferred Stock remaining outstanding, or other convertible
preferred stock or other convertible securities received by the holders in place
thereof, shall be entitled to receive pursuant to the provisions hereof, and to
make provisions for the protection of the conversion rights as above provided.
(h) Whenever the Conversion Rate or the conversion privilege shall be
adjusted as provided in Sections 5(c), (d), (e) or (g), this Corporation shall
promptly cause a notice to be mailed to the holders of record of the Convertible
Preferred Stock describing the nature of the event requiring such adjustment,
the Conversion Rate in effect immediately thereafter and the kind and amount of
stock or other securities or property into which the Convertible Preferred Stock
shall be convertible after such event. Where appropriate, such notice may be
given in advance and included as a part of a notice required to be mailed under
the provisions of Section 5(j).
(i) This Corporation may, but shall not be required to, make any
adjustment of the Conversion Rate if such adjustment would require an increase
or decrease of less than 1% in such Conversion Rate; provided, however, that any
adjustments which by reason of this Section 5(i) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 5 shall be made to the nearest cent or the
nearest 1/100th of share, as the case may be. In any case in which this Section
5(i) shall require that an adjustment shall become effective immediately after a
record date for such event, the Corporation may defer until the occurrence of
such event (x) issuing to the holder of any shares of Convertible Preferred
Stock converted after such record date and before the occurrence of such event
the additional shares of Class A Common Stock or other Capital Stock issuable
upon such conversion by reason of the adjustment required by such event over and
above the shares of Class A Common Stock, or other Capital Stock issuable upon
such conversion before giving effect to such adjustment and (y) paying to such
holder cash in lieu of any fractional interest to which such holder is entitled
pursuant to Section 5(n); provided, however, that, if requested by such holder,
this Corporation shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares of
Class A Common Stock or other Capita] Stock, and such cash, upon the occurrence
of the event requiring such adjustment.
(j) In case at any time:
(i) this Corporation shall take any action which would require an
adjustment in the Conversion Rate pursuant to this Section;
(ii) there shall be any capital reorganization or reclassification
of the Class A Common Stock (other than a change in par value), or any
consolidation or merger to which the Corporation is a party and for which
approval of any shareholders of this Corporation is required, or any sale,
transfer or lease of all or substantially all of the properties and assets
of the Corporation, or a tender offer for shares of Class A Common Stock
representing, together with any shares of Class B Common Stock tendered for
in such tender offer, at least a majority of the total voting power
represented by the outstanding shares of Class A Common Stock and Class B
Common Stock which has been recommended by the Board of Directors as being
in the best interests of the holders of Class A Common Stock; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of this Corporation;
then, in any such event, this Corporation shall give written notice, in the
manner provided in Section 6(d) hereof, to the holders of the Convertible
Preferred Stock at their respective addresses as the same appear on the books of
the Corporation, at least twenty days (or
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ten days in the case of a recommended tender offer as specified in clause (ii)
above) prior to any record date for such action, dividend or distribution or the
date as of which it is expected that holders of Class A Common Stock of record
shall be entitled to exchange their shares of Class A Common Stock for
securities or other property, if any, deliverable upon such reorganization,
reclassification, consolidation, merger, sale, transfer, lease, tender offer,
dissolution, liquidation or winding up; provided, however, that any notice
required by any event described in clause (ii) of this Section 5(j) shall be
given in the manner and at the time that such notice is given to the holders of
Class A Common Stock. Without limiting the obligations of this Corporation to
provide notice of corporate actions hereunder, the failure to give the notice
required by this Section 5(j) or any defect therein shall not affect the
legality or validity of any such corporate action of the Corporation or the vote
upon such action.
(k) Before any holder of Convertible Preferred Stock shall be entitled to
convert the same into Class A Common Stock (other than pursuant to Section 5(o)
hereof but including pursuant to Section 5(p) hereof), such holder shall
surrender the certificate or certificates for such Convertible Preferred Stock
at the office of this Corporation or at the office of the transfer agent for the
Convertible Preferred Stock, which certificate or certificates, if this
Corporation shall so request, shall be duly endorsed to this Corporation or in
blank or accompanied by proper instruments of transfer to this Corporation or in
blank (such endorsements or instruments of transfer to be in form satisfactory
to this Corporation), and shall give written notice to this Corporation at said
office that such holder elects to convert all or a part of the Shares
represented by said certificate or certificates in accordance with the terms of
this Section 5 (and in the case of a conversion pursuant to Section 5(p) hereof,
specifying that such conversion is made pursuant to Section 5(p) hereof), and
shall state in writing therein the name or names in which such holder wishes the
certificates for Class A Common Stock to be issued. Every such notice of
election to convert shall constitute a contract between the holder of such
Convertible Preferred Stock and this Corporation, whereby the holder of such
Convertible Preferred Stock shall be deemed to subscribe for the amount of Class
A Common Stock which such holder shall be entitled to receive upon conversion of
the number of shares of Convertible Preferred Stock to be converted, and, in
satisfaction of such subscription, to deposit the shares of Convertible
Preferred Stock to be converted, and thereby this Corporation shall be deemed to
agree that the surrender of the shares of Convertible Preferred Stock to be
converted shall constitute full payment of such subscription for Class A Common
Stock to be issued upon such conversion. This Corporation will as soon as
practicable after such deposit of a certificate or certificates for Convertible
Preferred Stock, accompanied by the written notice and the statement above
prescribed, or on the Dividend Payment Date described in Section 5(o) hereof as
contemplated in such Section, issue and deliver at the office of this
Corporation or of said transfer agent to the person for whose account such
Convertible Preferred Stock was so surrendered, or to his nominee(s) or, subject
to compliance with applicable law, transferee(s), or the holders of Convertible
Preferred Stock on the Record Date in respect of the Dividend Payment Date
described in Section 5(o) hereof, a certificate or certificates for the number
of full shares of Class A Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share as hereinafter provided.
If surrendered certificates for Convertible Preferred Stock are converted only
in part, this Corporation will issue and deliver to the holder, or to his
nominee(s), without charge therefor, a new certificate or certificates
representing the aggregate of the unconverted Shares. Such conversion shall be
deemed to have been made as of the date of such surrender of the Convertible
Preferred Stock to be converted or on such Dividend Payment Date described in
Section 5(o) hereof, as the case may be; and the person or persons entitled to
receive the Class A Common Stock issuable upon conversion of such Convertible
Preferred Stock shall be treated for all purposes as the record holder or
holders of such Class A Common Stock on such date.
Upon the conversion of any Share (other than pursuant to Section 5(o) or
5(p) hereof), this Corporation shall pay, to the holder of record of such Share
on the immediately preceding Record Date, if such date is after the most recent
Dividend Payment Date, or otherwise to the holder of record of such Share as of
the date of conversion, all accrued but unpaid dividends on such Share to the
date of the surrender of such Share for conversion. Such payment shall be made
in cash or, at the election of this Corporation, the issuance of certificates
representing such number of shares of Class A Common Stock as have an aggregate
current market price (as determined in accordance with Section 5(f)) on the date
of issuance equal to the amount of such accrued but unpaid dividends. Upon the
making of such payment to the person entitled thereto as determined pursuant to
the first sentence of this paragraph, no further dividends shall accrue on such
Share or be payable to any other person.
The issuance of certificates for shares of Class A Common Stock upon
conversion of shares of Convertible Preferred Stock shall be made without charge
for any issue, stamp or other similar tax in respect of such issuance, provided,
however, if any such certificate is to be issued in a name other than that of
the registered holder of the share or shares of Converuble Preferred Stock
converted, the person or persons requesting the issuance thereof shall pay to
this Corporation the amount of any tax which may be payable in respect
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of any transfer involved in such issuance or shall establish to the satisfaction
of this Corporation that such tax has been paid.
Except for conversion pursuant to Section 5(o) or 5(p) hereof, this
Corporation shall not be required to convert any shares of Convertible Preferred
Stock, and no surrender of Convertible Preferred Stock shall be effective for
that purpose, while the stock transfer books of this Corporation are closed for
any purpose; but the surrender of Convertible Preferred Stock for conversion
during any period while such books are so closed shall become effective for
conversion immediately upon the reopening of such books, as if the conversion
had been made on the date such Convertible Preferred Stock was surrendered.
(l) This Corporation shall at all times reserve and keep available, solely
for the purpose of issuance upon conversion of the outstanding shares of
Convertible Preferred Stock, such number of shares of Class A Common Stock as
shall be issuable upon the conversion of all outstanding Shares, provided that
nothing contained herein shall be construed to preclude this Corporation from
satisfying its obligations in respect of the conversion of the outstanding
shares of Convertible Preferred Stock by delivery of shares of Class A Common
Stock which are held in the treasury of this Corporation. This Corporation shall
take all such corporate and other actions as from time to time may be necessary
to insure that all shares of Class A Common Stock issuable upon conversion of
shares of Convertible Preferred Stock al the Conversion Rate in effect from time
to time will, upon issue, be duly and validly authorized and issued, fully paid
and nonassessable and free of any preemptive or similar rights.
(m) All shares of Convertible Preferred Stock received by this Corporation
upon conversion thereof into Class A Common Stock shall be retired and shall be
restored to the status of authorized and unissued shares of preferred stock (and
may be reissued as part of another series of the preferred stock of this
Corporation, but such shares shall not be reissued as Convertible Preferred
Stock).
(n) This Corporation shall not be required to issue fractional shares of
Class A Common Stock or scrip upon conversion of the Convertible Preferred
Stock. As to any final fraction of a share of Class A Common Stock which a
holder of one or more Shares would otherwise be entitled to receive upon
conversion of such Shares in the same transaction, this Corporation shall pay a
cash adjustment in respect of such final fraction in an amount equal to the same
fraction of the market value of a full share of Class A Common Stock. For
purposes of this Section 5(n), the market value of a share of Class A Common
Stock shall be the last reported sale price regular way on the business day
immediately preceding the date of conversion, or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices regular way on such day, in either case on the composite tape, or if the
shares of Class A Common Stock are not quoted on the composite tape, on the
principal United States securities exchange registered under the Exchange Act on
which the shares of Class A Common Stock are listed or admitted to trading, or
if the shares of Class A Common Stock are not listed or admitted to trading on
any such exchange, the last reported sale price (or the average of the quoted
last reported bid and asked prices if there were no reported sales) as reported
by NASDAQ or any comparable system, or if the Class A Common Stock is not quoted
on NASDAQ or any comparable system, the average of the closing bid and asked
prices as funfished by any member of the National Association of Securities
Dealers, Inc. selected from time to time by this Corporation for that purpose
or, in the absence of such quotations, such other method of determining market
value as the Board of Directors shall from time to time deem to be fair.
(o) To the extent all cash dividends on the Convertible Preferred Stock
which have accrued on any Dividend Payment Date are not paid, or are not
irrevocably set apart in trust for the benefit of the holder of such Shares, on
such date, then each Share shall be deemed to be automatically partially
converted into a number of duly authorized, fully paid and non-assessable shares
of Class A Common Stock equal to the quotient obtained by dividing the Special
Liquidation Value in respect of such Share on such Dividend Payment Date by 95%
of the current market price of the Class A Common Stock on such date (as
determined in accordance with Section 5(f) hereof) and this Corporation shall
issue and deliver to the holder of record of such Share on the Record Date in
respect of such Dividend Payment Date a certificate evidencing such number of
shares of Class A Common Stock and payment in respect of fractional shares as
provided in Section 5(n) hereof. Upon the issuance of such Class A Common Stock
the dividend otherwise accrued on such Dividend Payment Date shall for all
purposes be deemed paid. Partial conversion of Shares pursuant to this Section
5(o) shall not reduce Liquidation Value (except for Special Liquidation Value to
the extent included in Liquidation Value), or (except as provided in the
immediately preceding sentence) otherwise affect the right of the holder of such
Shares to convert the same pursuant to the other provisions of this Section 5.
(p) If this Corporation fails on any Redemption Date to pay the Redemption
Price in respect of Shares otherwise called for
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redemption pursuant to Section 6(a) or (b) hereof or which a holder elects to
cause to be redeemed pursuant to Section 6(c) hereof, the holder of such Shares
may, in addition to any other right of conversion herein contained, convert such
Shares into a number of shares of Class A Common Stock equal to the quotient
obtained by dividing such Redemption Price by 95% of the current market price
(determined in accordance with Section 5(f) hereof) on such Redemption Date. The
holder's rights in this Section 5(p) shall be in addition to any other rights
such holder may have in respect of such failure.
(q) If any shares of Class A Common Stock which would be issuable upon
conversion of Shares require registration with or approval of any governmental
authority before such shares may be issued upon conversion (whether or not, in
the case of Section 5(o) or 5(p) hereof, any event giving rise to such issuance
has occurred or is likely to occur), this Corporation will in good faith and as
expeditiously as possible cause such shares to be duly registered or approved,
as the case may be. This Corporation will endeavor to list the shares of Class A
Common Stock required to be delivered upon conversion of Shares prior to such
delivery upon the principal national securities exchange upon which the
outstanding Common Stock is listed at the time of such delivery.
6. Redemption.
(a) Subject to the provisions of Section 6(g), if at any time after the
third anniversary of the Issue Date the market value per share (as defined
below) of the Class A Common Stock shall have equaled or exceeded $37.50 (as
adjusted for dividends on Class A Common Stock payable in Class A Common Stock,
stock splits and reverse stock splits in respect of the Class A Common Stock
occurring after August 8, 1994) on any 20 out of a period of 30 consecutive
Business Days ending within five days prior to the giving of a notice of
redemption pursuant to this Section, the shares of Convertible Preferred Stock
may be redeemed out of funds legally available therefor, at the option of this
Corporation by action of the Board of Directors, in whole or in part, at the
Redemption Price per Share as of the applicable Redemption Date. If less than
all Shares are to be redeemed, Shares shall be redeemed ratably among the
holders thereof. For purposes of this Section, the market values of the Class A
Common Stock shall be the last reported sale price of the Class A Common Stock
on the NASDAQ National Market System (or, if not quoted on the NASDAQ National
Market System, then on such exchange on which the Class A Common Stock is listed
as the Corporation may designate) on each such Business Day or if there shall
not have been a sale on any such Business Day, the market value for that
Business Day shall be the average of the bid and asked quotations on the NASDAQ
National Market System on that Business Day, or, if the Class A Common Stock
shall not then be quoted on the NASDAQ National Market System or listed on any
exchange, the market value shall be the highest bid quotation in the over-the-
counter market on such Business Day as reported by National Quotation Bureau,
Inc. or its successor or such other generally accepted source of publicly
reported bid and asked quotations as the Corporation may reasonably designate.
(b) Subject to the provisions of Section 6(g), the shares of Convertible
Preferred Stock may be redeemed out of funds legally available therefor, at the
option of this Corporation by action of the Board of Directors, in whole or from
time to time in part, at any time after the fifth anniversary of the Issue Date
at the Redemption Price per Share as of the applicable Redemption Date. If less
than all outstanding Shares are to be redeemed, Shares shall be redeemed ratably
among the holders thereof.
(c) Subject to the rights of any Parity Securities and subject to any
prohibitions or restrictions contained in any Debt Instrument, at any time on or
after the tenth anniversary of the Issue Date, any holder of Shares shall have
the right, at such holder's option, to require redemption by this Corporation at
the Redemption Price per Share as of the applicable Redemption Date of all or
any portion of such holder's Shares having an aggregate Liquidation Value in
excess of $50,000 (or, if all of the Shares held by such holder have an
aggregate Liquidation Value of less than $50,000, all but not less than all of
such Shares) by written notice to this Corporation stating the number of Shares
to be redeemed. This Corporadon shall redeem, out of funds legally available
therefor, the Shares so requested to be redeemed on such date within 20 Business
Days following this Corporation's receipt of such notice; provided, however,
that notwithstanding the provisions of Section 5(p) hereof, if this Corporation
fails on the Redemption Date to pay the Redemption Price in respect of Shares
otherwise subject to redemption pursuant to this Section 6(c) and fails
irrevocably to set apart such Redemption Price in trust for the benefit of the
holders of such Shares, the holder of such Shares shall not exercise the
conversion rights provided for in Section 5(p) for a period of one year from
such date fixed for redemption (the "One-Year Period"); provided, further, that
nothing contained in this Section 6(c) shall (i) affect any other rights of such
holder, including, without limitation, the accrual of dividends as provided in
Section 3 hereof with respect to any Shares in respect of which the Redemption
Price has not been paid or funds irrevocably set apart in trust for the benefit
of the holders of such Shares, (ii) otherwise affect the right of the holder to
convert Shares or (iii) otherwise affect the right of the holder of any Shares
in respect of which the Redemption
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Price has not been paid or funds irrevocably set apart in trust for the benefit
of the holders of such Shares to convert the same pursuant to the provisions of
Section 5 following the expiration of the One-Year Period. At any time during
the One-Year-Period, this Corporation may pay, out of funds legally available
therefor, ratably among the holders who have required Shares to be redeemed
under this Section 6(c), the Redemption Price for all or part of such Shares. If
the funds of this Corporation legally available for redemption of Shares are
insufficient to redeem the total number of shares required to be redeemed
pursuant to this Section 6(c), those funds which are legally available for
redemption of such Shares will be used to redeem the maximum possible number of
such Shares ratably among the holders who have required Shares to be redeemed
under this Section 6(c). Without limiting the holders' rights pursuant to
Section 5(p) hereof. at any time thereafter when additional funds of this
Corporation are legally available and not so restricted for such purpose, such
funds will immediately be used to redeem the Shares this Corporation failed to
redeem on such Redemption Date (to the extent not previously converted) until
the balance of such Shares are redeemed.
(d) Notice of any redemption pursuant to Section 6(a) or 6(b) shall be
mailed, first class, postage prepaid, not less than 30 days nor more than 60
days prior to the Redemption Date, to the holders of record of the shares of
Convertible Preferred Stock to be redeemed, at their respective addresses as the
same appear upon the books of this Corporation or are supplied by them in
writing to this Corporation for the purpose of such notice; but no failure to
mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the proceedings for the redemption of any shares of the
Convertible Preferred Stock; provided that this sentence shall not prejudice the
right of any holder to receive such damages which may result from any such
defective notice. Such notice shall set forth the Redemption Price, the
Redemption Date, the number of Shares to be redeemed and the place at which the
Shares called for redemption will, upon presentation and surrender of the stock
certificates evidencing such Shares. be redeemed. In case fewer than the total
number of shares of Convertible Preferred Stock represented by any certificate
are redeemed, a new certificate representing the number of unredeemed Shares
will be issued to the holder thereof without cost to such holder.
(e) If notice of any redemption by this Corporation pursuant to this
Section 6 shall have been mailed as provided in Section 6(d) and if on or before
the Redemption Date specified in such notice the consideration necessary for
such redemption shall have been irrevocably set apart in trust for the benefit
of the holders of Shares to be so redeemed so as to be available therefor and
only therefor, then on and after the close of business on the Redemption Date,
the Shares called for redemption, notwithstanding that any certificate therefor
shall not have been surrendered for cancellation, shall no longer be deemed
outstanding, and all rights with respect to such Shares shall forthwith cease
and terminate, except the right of the holders thereof to receive upon surrender
of their certificates the consideration payable upon redemption thereof.
(f) All shares of Convertible Preferred Stock redeemed, retired,
purchased or otherwise acquired by this Corporation shall be retired and shall
be restored to the status of authorized and unissued shares of preferred stock
(and may be reissued as part of another series of the preferred stock of this
Corporation, but such shares shall not be reissued as Convertible Preferred
Stock).
(g) If at any time this Corporation shall have failed to pay, or declare
and irrevocably set apart in trust for the benefit of the holders of Shares the
consideration sufficient to pay, all dividends accrued up to and including the
immediately preceding Dividend Payment Date on the Convertible Preferred Stock,
and until all dividends accrued up to and including the immediately preceding
Dividend Payment Date on the Convertible Preferred Stock shall have been paid or
declared and irrevocably set apart in trust for the benefit of the holders of
Shares so as to be available for the payment in full thereof and for no other
purpose, this Corporation shall not redeem, pursuant to a sinking fund or
otherwise, any shares of Convertible Preferred Stock, Parity, Securities or
Junior Securities, unless all then outstanding shares of Convertible Preferred
Stock are redeemed, and shall not purchase or otherwise acquire any shares of
Convertible Preferred Stock, Parity Securities or Junior Securities. If and so
long as this Corporation shall fail to redeem on a Redemption Date pursuant to
Section 6(a), (b) and (c) all shares of Convertible Preferred Stock required to
be redeemed on such date, this Corporation shall not redeem, or discharge any
sinking fund obligation with respect to, any Junior Securities, unless all then
outstanding shares of Convertible Preferred Stock are redeemed, and shall not
purchase or otherwise acquire any shares of Convertible Preferred Stock (other
than by way of redemption or conversion) or Junior Securities. Nothing contained
in this Section 6(g) shall prevent the purchase or acquisition of shares of
Convertible Preferred Stock pursuant to a purchase or exchange offer or offers
made to holders of all outstanding shares of Convertible Preferred Stock,
provided that as to holders of all outstanding shares of Convertible Preferred
Stock, the terms of the purchase or exchange offer for all such shares are
identical and all accrued dividends on all Shares have been paid or shall have
been paid or declared and irrevocably set apart in trust for the benefit of
holders of Shares so as to be available for the payment in full thereof and for
no other purpose. The provisions of this Section 6(g) are for the benefit of
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holders of Convertible Preferred Stock and accordingly the provisions of this
Section 6(g) shall not restrict any redemption by this Corporation of Shares
held by any holder, provided that all other holders of Shares shall have waived
in writing the benefits of this provision with respect to such redemption. This
Corporation shall not permit any Subsidiary thereof to take any action which
this Corporation is prohibited from taking pursuant to this Section 6(g).
7. Exchange Option.
(a) In case this Corporation shall at any time distribute to all holders
of the Class A Common Stock any rights or warrants ("Rights") to subscribe for
or purchase Special Securities, each holder of Shares shall have the option (the
"Exchange Option"), in lieu of any adjustment to the Conversion Rate pursuant to
Section 5, to exchange shares of Convertible Preferred Stock for shaes of Mirror
Preferred Stock (as defined below) which shall have an initial aggregate
liquidation value determined as follows:
(i) in the case of Rights exercisable upon payment, in whole or in
part, of cash or property other than Class A Common Stock, the maximum
aggregate liquidation value of shares of Mirror Preferred Stock issuable to
a holder of Convertible Preferred Stock upon exercise of the Exchange
Option shall be equal to the product of (x) the number shares of Special
Securities issuable upon exercise of the Rights which this Corporation
would have distributed to such holder of Convertible Preferred Stock had
such holder's Shares been converted immediately prior to the record date
for the distribution of such Rights, and (y) the amount of cash, or the
fair market value of such other property (as reasonably determined by the
Board of Directors; with respect to any Class A Common Stock that is
included in such property, the fair market value thereof shall be the
current market price as determined pursuant to Section 5(f) as of such
record date), payable by a holder of Class A Common Stock in respect of the
purchase of any such shares upon exercise of a Right; or
(ii) in the case of Rights exercisable upon the surrender of Class A
Common Stock without payment of additional consideration, the maximum
aggregate liquidation value of shares of Mirror Preferred Stock issuable
upon exercise of the Exchange Option by the holder thereof shall be equal
to the product of (x) the Conversion Rate expressed in dollars of
Liquidation Value per share of Class A Common Stock as in effect on the
record date for distribution of the Rights, and (y) the maximum number of
shares of Class A Common Stock that would have been surrendered by such
holder upon exercise of Rights that would have been distributed to such
holder had such holder converted his Shares immediately prior to the record
date for distribution of the Rights.
(b) The exercise price of the Exchange Option shall be one dollar in
Liquidation Value of Shares of Convertible Preferred Stock for each dollar of
liquidation value of shares of Minor Preferred Stock to be purchased upon
exercise of the Exchange Option.
(c) "Mirror Preferred Stock" means convertible preferred stock issued by
the issuer of the Special Securities, such Mirror Preferred Stock to have terms,
conditions, designations, dividend rights, voting powers, rights on liquidation
and other preferences and relative, participating, optional or other special
rights, and qualifications, limitations, or restrictions thereof which are
identical, or as nearly so as is practicable in the reasonable judgment of the
Board of Directors, to those of the Convertible Preferred Stock, except that the
running of any time periods pursuant to the terms of the Convertible Preferred
Stock shall be tacked to such time periods in the Mirror Preferred Stock and
except that Mirror Preferred Stock shall be convertible into shares of the
Special Security in respect of which such Mirror Preferred Stock is issued
pursuant to the terms hereof in lieu of Class A Common Stock. The rate at which
Mirror Preferred Stock shall be convertible into Special Securities, expressed
in shares of the Special Security per dollar of liquidation value of the Mirror
Preferred Stock, shall:
(i) in the case of Mirror Preferred Stock issued in respect of Rights
exercisable upon payment, in whole or in part, of cash or property other
than Class A Common Stock, be determined by a quotient, the numerator of
which shall be the number of shares of Special Securities issuable upon
exercise of the Rights which this Corporation would have distributed to all
holders of Convertible Preferred Stock had all of the Shares been converted
immediately prior to the record date for the distribution of such Rights
and the denominator of which shall be equal to the aggregate liquidation
value of Mirror Preferred Stock issuable (assuming exercise of all the
Exchange Options) to all holders of Convertible Preferred Stock in respect
of such Rights pursuant to Section 7(a)(i) above; or
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(ii) in the case of Mirror Preferred Stock issued in respect of Rights
exercisable upon surrender of shares of Class A Common Stock without
payment of additional consideration, be determined by the inverse of the
product of (x) the Conversion Rate of the Convertible Preferred Stock
expressed in dollars of Liquidation Value per share of Class A Common Stock
as in effect immediately prior to the record date for distribution of the
Rights (without giving effect to any antidilution adjustment pursuant to
Section 6 in respect of such Rights) and (y) the number of shares of Class
A Common Stock required to be surrendered upon the exercise of each Right.
(d) If this Corporation distributes Rights in respect of which the holders
of Convertible Preferred Stock are required to be granted an Exchange Option
hereunder, this Corporation shall, concurrently with the distribution of such
Rights to holders of Class A Common Stock, provide each holder of Convertible
Preferred Stock a notice (the "Option Notice") stating that such holder may, on
or before the date of expiration of the Rights (the "Expiration Date"), exercise
the Exchange Option in accordance herewith, and setting forth a description of
the Rights, the Special Securities, and the Mirror Preferred Stock. Such notice
shall be accompamed by any prospectus or similar document provided to holders of
Class A Common Stock in respect of the distribution of the Rights and a copy of
the certificate of designations (or similar document) proposed to be filed by
this Corporation or any Subsidiary with the appropriate government official in
order to establish the Mirror Preferred Stock.
(e) If a transaction described in this Section 7 occurs before the Issue
Date, holders of the Convertible Preferred Stock may exercise the rights in this
Section 7 within 45 days after the Issue Date or, if later, the date related
Rights expire.
(f) Upon the exchange of any Share, this Corporation shall pay, to the
holder of record of such Share on the immediately preceding Record Date, if such
date is after the most recent Dividend Payment Date, or otherwise, to the holder
of record of such Share as of the date of exercise of the Exchange Option, all
accrued but unpaid dividends on such Share to the date of the surrender of such
Share for exchange. Such payment shall be made in cash or, at the election of
this Corporation, the issuance of certificates representing such number of
shares of Class A Common Stock as have an aggregate current market price (as
determined in accordance with Section 5(f)) on the date of issuance equal to the
amount of such accrued but unpaid dividends. Upon the making of such payment to
the person entitled thereto as determined pursuant to the first sentence of this
paragraph, no further dividends shall accrue on such Share or be payable to any
other person.
8. No Voting Rights. Except as required by law and Sections 9 and 11
hereof, the holders of the Convertible Preferred Stock shall not be entitled to
vote on any matters submitted to a vote of the holders of the Capital Stock of
this Corporation.
9. Amendment. No amendment or modification of the designation, rights,
preferences, and limitations of the Shares set forth herein shall be binding or
effective without the prior consent of the holders of record of Shares
representing 66 2/3 % of the Liquidation Value of all Shares outstanding
(excluding, for this purpose, Shares owned by this Corporation or any of its
Affiliates) at the time such action is taken.
10. Preemptive Rights. The holders of the Convertible Preferred Stock will
not have any preemptive right to subscribe for or purchase any shares of stock
or any other securities which may be issued by this Corporation, provided that
this Section 10 shall not limit the rights of holders of the Convertible
Preferred Stock pursuant to Sections 5 or 7 hereof.
11. Senior Securities. The Convertible Preferred Stock shall not rank
junior to any other classes or series of stock of this Corporation in respect of
the right to receive dividends or the right to participate in any distribution
upon liquidation, dissolution or winding up of this Corporation. Without the
prior consent of the holders of record of Shares representing 66 2/3% of the
Liquidation Value of all Shares then outstanding (excluding, for this purpose,
Shares owned by this Corporation or any of its Affiliates), this Corporation
shall not issue any Senior Securities.
12. Exclusion of Other Rights. Except as may otherwise be required by law
and for the equitable rights and remedies that may otherwise be available to
holders of Convertible Preferred Stock, the shares of Convertible Preferred
Stock shall not have any designations, preferences, limitations or relative
rights, other than those specifically set forth in these resolutions (as such
resolutions may, subject to Section 9, be amended from time to time) and in the
Restated Certificate of Incorporation of this Corporation.
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13. Headings. The headings of the various sections and subsections hereof
are for convenience of reference only and shall not affect the interpretation of
any of the provisions hereof.
FURTHER RESOLVED, that the appropriate officers of this Corporation are
hereby authorized to execute and acknowledge a certificate setting forth these
resolutions and to cause such certificate to be filed and recorded, in
accordance with the requirements of Section 151(g) of the General Corporation
Law of the State of Delaware."
/s/ STEPHEN M. BRETT
Stephen M. Brett
Executive Vice President
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STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
_______________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE THIRD DAY OF AUGUST,
A.D. 1995, AT 12:45 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
EDWARD J. FREEL
--------------------
Edward J. Freel,
Secretary of State
AUTHENTICATION: 7596118
DATE: 08-03-95
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 12:45 PM 08/03/1995
950175231 - 2371729
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
TELE-COMMUNICATIONS, INC.
TELE-COMMUNICATIONS, INC., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
FIRST: That the Restated Certificate of Incorporation of the Corporation is
hereby amended as follows:
(i) THE FIRST PARAGRAPH OF ARTICLE IV OF THE RESTATED CERTIFICATE OF
INCORPORATION OF THE CORPORATION IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS
FOLLOWS: "AUTHORIZED STOCK
The total number of shares of capital stock which the Corporation shall
have authority to issue is two billion seven hundred seventy-seven million three
hundred seventy-five thousand ninety-six (2,777,375,096) shares, which shall be
divided into the following classes:
(a) Two billion seven hundred twenty-five million (2,725,000,000)
shares shall be of a class designated Common Stock, par value $1.00 per
share ("Common Stock"), such class to be divided into series as provided in
Section E of this Article IV;
(b) Seven hundred thousand (700,000) shares shall be of a class
designated Class A Preferred Stock, par value $.01 per share ("Class A
Preferred Stock");
(c) One million six hundred seventy-five thousand ninety-six
(1,675,096) shares shall be of a class designated Class B 6% Cumulative
Redeemable Exchangeable Junior Preferred Stock, par value $.01 per share
("Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock");
and
(d) Fifty million (50,000,000) shares shall be of a class designated
Series Preferred Stock, par value $.01 per share ("Series Preferred
Stock"), such class to be issuable in series as provided in Section D of
this Article IV.
The Class A Preferred Stock, the Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock and the Series Preferred Stock are
collectively referred to as "Preferred Stock"."
(ii) SECTION D OF ARTICLE IV OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE
CORPORATION IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
"SECTION D
SERIES PREFERRED STOCK
The Series Preferred Stock may be issued, from time to time, in one or more
series, with such powers, designations, preferences and relative, participating,
optional or other rights, and qualifications, limitations or restrictions
thereof, as shall be stated and expressed in a resolution or resolutions
providing for the issue of each such series adopted by the Board of Directors.
The Board of Directors, in such resolution or resolutions (a copy of which shall
be filed and recorded as required by law), is also expressly authorized to fix
with respect to each series:
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(i) the distinctive serial designations and the division of such
shares into series and the number of shares of a particular series, which
may be increased or decreased, but not below the number of shares thereof
then outstanding, by a certificate made, signed, filed and recorded as
required by law;
(ii) the dividend rate or amounts, if any, for the particular series,
the date or dates from which dividends on all shares of such series shall
be cumulative, if dividends on stock of the particular series shall be
cumulative and the relative rights of priority, if any, or participation,
if any, with respect to payment of dividends on shares of that series;
(iii) the rights of the shares of each series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation,
and the relative rights of priority, if any, of payment of shares of each
series;
(iv) the right, if any, of the holders of a particular series to
convert or exchange such stock into or for other classes or series of a
class of stock or indebtedness of the Corporation, and the terms and
conditions of such conversion or exchange, including provision for the
adjustment of the conversion or exchange rate in such events as the Board
of Directors shall determine;
(v) the voting rights, if any, of the holders of a particular series;
and
(vi) the terms and conditions, if any, for the Corporation to purchase
or redeem shares of a particular series.
All shares of any one series of the Series Preferred Stock shall be alike
in every particular. Except to the extent otherwise provided in the resolution
or resolutions providing for the issue of any series of Series Preferred Stock,
the holders of shares of such series shall have no voting rights except as may
be required by the laws of the State of Delaware."
(iii) SECTION E OF ARTICLE IV OF THE RESTATED CERTIFICATE OF INCORPORATION OF
THE CORPORATION IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
"SECTION E
SERIES A TCI GROUP COMMON STOCK, SERIES B TCI GROUP COMMON
STOCK, SERIES A LIBERTY MEDIA GROUP COMMON STOCK
AND SERIES B LIBERTY MEDIA GROUP COMMON STOCK
One billion seven hundred fifty million (1,750,000,000) shares of Common
Stock shall be of a series designated Tele-Communications, Inc. Series A TCI
Group Common Stock (the "Series A TCI Group Common Stock"), one hundred fifty
million (150,000,000) shares of Common Stock shall be of a series designated
Tele-Communications, Inc. Series B TCI Group Common Stock (the "Series B TCI
Group Common Stock"), seven hundred fifty million (750,000,000) shares of Common
Stock shall be of a series designated Tele-Communications, Inc. Series A Liberty
Media Group Common Stock (the "Series A Liberty Media Group Common Stock") and
seventy-five million (75,000,000) shares of Common Stock shall be of a series
designated Tele-Communications, Inc. Series B Liberty Media Group Common Stock
(the "Series B Liberty Media Group Common Stock").
Each share of Series A TCI Group Common Stock and each share of Series B
TCI Group Common Stock shall, except as otherwise provided in this Section E, be
identical in all respects and shall have equal rights, powers and privileges.
Each share of Series A Liberty Media Group Common Stock and each share of
Series B Liberty Media Group Common Stock shall, except as otherwise provided in
this Section E, be identical in all respects and shall have equal rights, powers
and privileges.
1. Voting Rights.
Holders of Series A TCI Group Common Stock shall be entitled to one vote
for each share of such stock held, holders of Series B TCI Group Common Stock
shall be entitled to ten votes for each share of such stock held, holders of
Series A Liberty Media Group
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Common Stock shall be entitled to one vote for each share of such stock held and
holders of Series B Liberty Media Group Common Stock shall be entitled to ten
votes for each share of such stock held, on all matters presented to such
stockholders. Except as may otherwise be required by the laws of the State of
Delaware or, with respect to any class of Preferred Stock or any series of such
a class, in this Certificate (including any resolution or resolutions providing
for the establishment of such class or series pursuant to authority vested in
the Board of Directors by this Certificate), the holders of shares of Series A
TCI Group Common Stock, the holders of shares of Series B TCI Group Common
Stock, the holders of shares of Series A Liberty Media Group Common Stock and
the holders of shares of Series B Liberty Media Group Common Stock and the
holders of shares of each class or series of Preferred Stock, if any, entitled
to vote thereon, shall vote as one class with respect to the election of
directors and with respect to all other matters to be voted on by stockholders
of the Corporation (including, without limitation, any proposed amendment to
this Certificate that would increase the number of authorized shares of Common
Stock or any series thereof or of any other class or series of stock or decrease
the number of authorized shares of any class or series of stock (but not below
the number of shares thereof then outstanding)), and no separate vote or consent
of the holders of shares of Series A TCI Group Common Stock, the holders of
shares of Series B TCI Group Common Stock, the holders of shares of Series A
Liberty Media Group Common Stock, the holders of shares of Series B Liberty
Media Group Common Stock or the holders of shares of any such class or series of
Preferred Stock shall be required for the approval of any such matter.
2. Conversion Rights.
(a) CONVERSION OF SERIES B TCI GROUP COMMON STOCK INTO SERIES A TCI GROUP
COMMON STOCK. Each share of Series B TCI Group Common Stock shall be
convertible, at the option of the holder thereof, into one share of Series A TCI
Group Common Stock. Any such conversion may be effected by any holder of Series
B TCI Group Common Stock by surrendering such holder's certificate or
certificates for the Series B TCI Group Common Stock to be converted, duly
endorsed, at the office of the Corporation or any transfer agent for the Series
B TCI Group Common Stock, together with a written notice to the Corporation at
such office that such holder elects to convert all or a specified number of
shares of Series B TCI Group Common Stock represented by such certificate and
stating the name or names in which such holder desires the certificate or
certificates for Series A TCI Group Common Stock to be issued. If so required by
the Corporation, any certificate for shares surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder of such shares or the duly authorized representative
of such holder. Promptly thereafter, the Corporation shall issue and deliver to
such holder or such holder's nominee or nominees, a certificate or certificates
for the number of shares of Series A TCI Group Common Stock to which such holder
shall be entitled as herein provided. Such conversion shall be deemed to have
been made at the close of business on the date of receipt by the Corporation or
any such transfer agent of the certificate or certificates, notice and, if
required, instruments of transfer referred to above, and the person or persons
entitled to receive the Series A TCI Group Common Stock issuable on such
conversion shall be treated for all purposes as the record holder or holders of
such Series A TCI Group Common Stock on that date. A number of shares of Series
A TCI Group Common Stock equal to the number of shares of Series B TCI Group
Common Stock outstanding from time to time shall be set aside and reserved for
issuance upon conversion of shares of Series B TCI Group Common Stock. Shares of
Series A TCI Group Common Stock shall not be convertible into shares of Series B
TCI Group Common Stock.
(b) CONVERSION OF SERIES B LIBERTY MEDIA GROUP COMMON STOCK INTO SERIES A
LIBERTY MEDIA GROUP COMMON STOCK. Each share of Series B Liberty Media Group
Common Stock shall be convertible, at the option of the holder thereof, into one
share of Series A Liberty Media Group Common Stock. Any such conversion may be
effected by any holder of Series B Liberty Media Group Common Stock by
surrendering such holder's certificate or certificates for the Series B Liberty
Media Group Common Stock to be converted, duly endorsed, at the office of the
Corporation or any transfer agent for the Series B Liberty Media Group Common
Stock, together with a written notice to the Corporation at such office that
such holder elects to convert all or a specified number of shares of Series B
Liberty Media Group Common Stock represented by such certificate and stating the
name or names in which such holder desires the certificate or certificates for
Series A Liberty Media Group Common Stock to be issued. If so required by the
Corporation, any certificate for shares surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder of such shares or the duly authorized representative
of such holder. Promptly thereafter, the Corporation shall issue and deliver to
such holder or such holder's nominee or nominees, a certificate or certificates
for the number of shares of Series A Liberty Media Group Common Stock to which
such holder shall be entitled as herein provided. Such conversion shall be
deemed to have been made at the close of business on the date of receipt by the
Corporation or any such transfer agent of the certificate or certificates,
notice and, if required, instruments of transfer referred
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to above, and the person or persons entitled to receive the Series A Liberty
Media Group Common Stock issuable on such conversion shall be treated for all
purposes as the record holder or holders of such Series A Liberty Media Group
Common Stock on that date. A number of shares of Series A Liberty Media Group
Common Stock equal to the number of shares of Series B Liberty Media Group
Common Stock outstanding from time to time shall be set aside and reserved for
issuance upon conversion of shares of Series B Liberty Media Group Common Stock.
Shares of Series A Liberty Media Group Common Stock shall not be convertible
into shares of Series B Liberty Media Group Common Stock.
(c) CONVERSION OF SERIES A LIBERTY MEDIA GROUP COMMON STOCK INTO SERIES A
TCI GROUP COMMON STOCK AND SERIES B LIBERTY MEDIA GROUP COMMON STOCK INTO SERIES
B TCI GROUP COMMON STOCK AT THE OPTION OF THE CORPORATION. (i) At the option of
the Corporation by action of its Board of Directors, (A) all shares of Series A
Liberty Media Group Common Stock shall be convertible into a number (or
fraction) of fully paid and nonassessable shares of Series A TCI Group Common
Stock equal to the Optional Conversion Ratio, and (B) all shares of Series B
Liberty Media Group Common Stock shall be convertible into a number (or
fraction) of fully paid and nonassessable shares of Series B TCI Group Common
Stock equal to the Optional Conversion Ratio.
(ii) For purposes of this paragraph 2(c), the "Optional Conversion Ratio"
shall mean the quotient (calculated to the nearest five decimal places) obtained
by dividing (A) the Liberty Media Group Common Stock Per Share Value by (B) the
average Market Value of one share of Series A TCI Group Common Stock over the
20-Trading Day period ending on the Trading Day preceding the Appraisal Date.
(iii) The "Liberty Media Group Private Market Value" shall mean an amount
equal to the private market value of the Liberty Media Group as of the last day
of the calendar month preceding the month in which the last of the two
appraisers referred to in the immediately following sentence are selected (the
last day of such calendar month is hereinafter referred to as the "Appraisal
Date"). In the event that the Corporation determines to establish the Liberty
Media Group Private Market Value, two investment banking firms of recognized
national standing shall be designated to determine the private market value of
the Liberty Media Group, one designated by the Corporation (the "First
Appraiser") and one designated by a committee of the Board of Directors all of
whose members are independent directors as determined under Nasdaq National
Market rules (the "Second Appraiser"). The date upon which the last of such
appraisers is selected is hereinafter referred to as the "Selection Date". Not
later than 20 days after the Selection Date, the First Appraiser and the Second
Appraiser shall each determine its initial view as to the private market value
of the Liberty Media Group as of the Appraisal Date and shall consult with one
another with respect thereto. Not later than the 30th day after the Selection
Date, the First Appraiser and the Second Appraiser shall each have determined
its final view as to such private market value. If the higher of the respective
final views of the First Appraiser and the Second Appraiser as to such private
market value (the "Higher Appraised Amount") is not more than 120% of the lower
of such respective final views (the "Lower Appraised Amount"), the Liberty Media
Group Private Market Value (subject to any adjustment provided in subparagraph
(v) of this paragraph 2(c)) shall be the average of those two amounts. If the
Higher Appraised Amount is more than 120% of the Lower Appraised Amount, the
First Appraiser and the Second Appraiser shall agree upon and jointly designate
a third investment banking firm of recognized national standing (the "Mutually
Designated Appraiser") to determine such private market value. The Mutually
Designated Appraiser shall not be provided with any of the work of the First
Appraiser and Second Appraiser. The Mutually Designated Appraiser shall, no
later than the 20th day after the date the Mutually Designated Appraiser is
designated, determine such private market value (the "Mutually Appraised
Amount"), and the Liberty Media Group Private Market Value (subject to any
adjustment provided in subparagraph (v) of this paragraph 2(c)) shall be (A) if
the Mutually Appraised Amount is between the Lower Appraised Amount and the
Higher Appraised Amount, (I) the average of (1) the Mutually Appraised Amount
and (2) the Lower Appraised Amount or the Higher Appraised Amount, whichever is
closer to the Mutually Appraised Amount, or (II) the Mutually Appraised Amount,
if neither the Lower Appraised Amount nor the Higher Appraised Amount is closer
to the Mutually Appraised Amount, or (B) if the Mutually Appraised Amount is
greater than the Higher Appraised Amount or less than the Lower Appraised
Amount, the average of the Higher Appraised Amount and the Lower Appraised
Amount. For these purposes, if any such investment banking firm expresses its
final view of the private market value of the Liberty Media Group as a range of
values, such investment banking firm's final view of such private market value
shall be deemed to be the midpoint of such range of values.
(iv) Each of the investment banking firms referred to in clause (iii) of
this paragraph 2(c) shall be instructed to determine the private market value of
the Liberty Media Group as of the Appraisal Date based upon the amount a willing
purchaser would pay to a
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willing seller, in an arm's length transaction, if it were acquiring the Liberty
Media Group, as if the Liberty Media Group were a publicly traded non-controlled
corporation and the purchaser was acquiring all of the capital stock of such
corporation, and without consideration of any potential regulatory constraints
limiting the potential purchasers of the Liberty Media Group other than that
which would have existed if the Liberty Media Group were a publicly traded non-
controlled entity.
(v) Following the determination of the Liberty Media Group Private Market
Value, the investment banking firms whose final views of the private market
value of the Liberty Media Group were used in the calculation of the Liberty
Media Group Private Market Value shall determine the Adjusted Outstanding Shares
of Liberty Media Group Common Stock together with any further appropriate
adjustments to the Liberty Media Group Private Market Value resulting from such
determination. The "Adjusted Outstanding Shares of Liberty Media Group Common
Stock" shall mean a number, as determined by such investment banking firms as of
the Appraisal Date, equal to the sum of the number of shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock
outstanding, the Number of Shares Issuable with Respect to the Inter-Group
Interest, the number of Committed Acquisition Shares issuable, the number of
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock issuable upon the conversion, exercise or exchange of all
Pre-Distribution Convertible Securities and the number of shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common Stock
issuable upon the conversion, exercise or exchange of those Convertible
Securities (other than Pre-Distribution Convertible Securities and other than
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares) the holders of which would derive an economic
benefit from conversion, exercise or exchange of such Convertible Securities
which exceeds the economic benefit of not converting, exercising or exchanging
such Convertible Securities. The "Liberty Media Group Common Stock Per Share
Value" shall mean the quotient obtained by dividing the Liberty Media Group
Private Market Value by the Adjusted Outstanding Shares of Liberty Media Group
Common Stock, provided that if such investment banking firms do not agree on the
determinations provided for in this subparagraph (v), the Liberty Media Group
Common Stock Per Share Value shall be the average of the quotients so obtained
on the basis of the respective determinations of such firms.
(vi) If the Corporation determines to convert shares of Series A Liberty
Media Group Common Stock into Series A TCI Group Common Stock and shares of
Series B Liberty Media Group Common Stock into Series B TCI Group Common Stock
at the Optional Conversion Ratio, such conversion shall occur on a Conversion
Date on or prior to the 120th day following the Appraisal Date. If the
Corporation determines not to undertake such conversion, the Corporation may at
any time thereafter undertake to reestablish the Liberty Media Group Common
Stock Per Share Value as of a subsequent date.
(vii) The Corporation shall not convert shares of Series A Liberty Media
Group Common Stock into shares of Series A TCI Group Common Stock without
converting shares of Series B Liberty Media Group Common Stock into shares of
Series B TCI Group Common Stock, and the Corporation shall not convert shares of
Series B Liberty Media Group Common Stock into shares of Series B TCI Group
Common Stock without converting shares of Series A Liberty Media Group Common
Stock into shares of Series A TCI Group Common Stock. The Series A Liberty Media
Group Common Stock and the Series B Liberty Media Group Common Stock shall also
be convertible at the option of the Corporation in accordance with paragraph
5(b)(iii) of this Section E.
3. Dividends.
(a) DIVIDENDS ON SERIES A TCI GROUP COMMON STOCK AND SERIES B TCI GROUP
COMMON STOCK. Dividends on the Series A TCI Group Common Stock and the Series B
TCI Group Common Stock may be declared and paid only out of the lesser of (i)
assets of the Corporation legally available therefor and (ii) the TCI Group
Available Dividend Amount. Subject to paragraph 4 of this Section E, whenever a
dividend is paid to the holders of Series A TCI Group Common Stock, the
Corporation shall also pay to the holders of Series B TCI Group Common Stock a
dividend per share equal to the dividend per share paid to the holders of Series
A TCI Group Common Stock, and whenever a dividend is paid to the holders of
Series B TCI Group Common Stock, the Corporation shall also pay to the holders
of Series A TCI Group Common Stock a dividend per share equal to the dividend
per share paid to the holders of Series B TCI Group Common Stock.
(b) DIVIDENDS ON SERIES A LIBERTY MEDIA GROUP COMMON STOCK AND SERIES B
LIBERTY MEDIA GROUP COMMON STOCK. Dividends on the Series A Liberty Media Group
Common Stock and the Series B Liberty Media Group Common Stock may be declared
and paid only out of the lesser of (i) assets of the Corporation legally
available therefor and (ii) the
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Liberty Media Group Available Dividend Amount. Subject to paragraph 4 and the
last sentence of paragraph 5(b) of this Section E, whenever a dividend is paid
to the holders of Series A Liberty Media Group Common Stock, the Corporation
shall also pay to the holders of Series B Liberty Media Group Common Stock a
dividend per share equal to the dividend per share paid to the holders of Series
A Liberty Media Group Common Stock, and whenever a dividend is paid to the
holders of Series B Liberty Media Group Common Stock, the Corporation shall also
pay to the holders of Series A Liberty Media Group Common Stock a dividend per
share equal to the dividend per share paid to the holders of Series B Liberty
Media Group Common Stock.
(c) DISCRIMINATION BETWEEN OR AMONG SERIES OF COMMON STOCK. The Board of
Directors, subject to the provisions of paragraph 3(a) and 3(b) of this Section
E, shall have the authority and discretion to declare and pay dividends on the
Series A TCI Group Common Stock and Series B TCI Group Common Stock or the
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock in equal or unequal amounts, notwithstanding the relationship
between the TCI Group Available Dividend Amount and the Liberty Media Group
Available Dividend Amount, the respective amounts of prior dividends declared
on, or the liquidation rights of, the Series A TCI Group Common Stock and Series
B TCI Group Common Stock or the Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock or any other factor.
4. Share Distributions.
(a) DISTRIBUTIONS ON SERIES A TCI GROUP COMMON STOCK AND SERIES B TCI
GROUP COMMON STOCK. The Corporation may provide for the initial issuance of
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock by declaring and paying a distribution (the "Distribution")
consisting of shares of Series A Liberty Media Group Common Stock to holders of
Series A TCI Group Common Stock and, on an equal per share basis, shares of
Series B Liberty Media Group Common Stock to holders of Series B TCI Group
Common Stock. If at any time after the Distribution a distribution paid in
Series A TCI Group Common Stock, Series B TCI Group Common Stock, Series A
Liberty Media Group Common Stock, Series B Liberty Media Group Common Stock or
any other securities of the Corporation or any other Person (hereinafter
sometimes called a "share distribution") is to be made with respect to the
Series A TCI Group Common Stock or Series B TCI Group Common Stock, such share
distribution may be declared and paid only as follows:
(i) a share distribution consisting of shares of Series A TCI Group
Common Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock, on an
equal per share basis; or consisting of shares of Series B TCI Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series B TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock, on an
equal per share basis; or consisting of shares of Series A TCI Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and, on an equal per share basis, shares of
Series B TCI Group Common Stock (or like Convertible Securities convertible
into or exercisable or exchangeable for shares of Series B TCI Group Common
Stock) to holders of Series B TCI Group Common Stock;
(ii) a share distribution consisting of shares of Series A Liberty
Media Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A Liberty Media Group
Common Stock) to holders of Series A TCI Group Common Stock and Series B
TCI Group Common Stock, on an equal per share basis; provided that the sum
of (A) the aggregate number of shares of Series A Liberty Media Group
Common Stock to be so issued (or the number of such shares which would be
issuable upon conversion, exercise or exchange of any Convertible
Securities to be so issued) and (B) the number of shares of such series
that are subject to issuance upon conversion, exercise or exchange of any
Convertible Securities then outstanding that are attributed to the TCI
Group (other than Pre-Distribution Convertible Securities and other than
Convertible Securities convertible into or exercisable or exchangeable for
Committed Acquisition Shares) is less than or equal to the Number of Shares
Issuable with Respect to the Inter-Group Interest; and
(iii) a share distribution consisting of any class or series of
securities of the Corporation or any other Person other than Series A TCI
Group Common Stock, Series B TCI Group Common Stock, Series A Liberty Media
Group Common Stock or Series B Liberty Media Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series A TCI Group Common Stock, Series B TCI Group Common Stock,
Series A Liberty Media Group Common Stock or
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Series B Liberty Media Group Common Stock), either on the basis of a
distribution of identical securities, on an equal per share basis, to
holders of Series A TCI Group Common Stock and Series B TCI Group Common
Stock or on the basis of a distribution of one class or series of
securities to holders of Series A TCI Group Common Stock and another class
or series of securities to holders of Series B TCI Group Common Stock,
provided that the securities so distributed (and, if the distribution
consists of Convertible Securities, the securities into which such
Convertible Securities are convertible or for which they are exercisable or
exchangeable) do not differ in any respect other than their relative voting
rights and related differences in designation, conversion, redemption and
share distribution provisions, with holders of shares of Series B TCI Group
Common Stock receiving the class or series having the higher relative
voting rights (without regard to whether such rights differ to a greater or
lesser extent than the corresponding differences in voting rights,
designation, conversion, redemption and share distribution provisions
between the Series A TCI Group Common Stock and the Series B TCI Group
Common Stock), provided that if the securities so distributed constitute
capital stock of a Subsidiary of the Corporation, such rights shall not
differ to a greater extent than the corresponding differences in voting
rights, designation, conversion, redemption and share distribution
provisions between the Series A TCI Group Common Stock and the Series B TCI
Group Common Stock, and provided in each case that such distribution is
otherwise made on an equal per share basis.
The Corporation shall not reclassify, subdivide or combine the Series A TCI
Group Common Stock without reclassifying, subdividing or combining the Series B
TCI Group Common Stock, on an equal per share basis, and the Corporation shall
not reclassify, subdivide or combine the Series B TCI Group Common Stock without
reclassifying, subdividing or combining the Series A TCI Group Common Stock, on
an equal per share basis.
(b) DISTRIBUTIONS ON SERIES A LIBERTY MEDIA GROUP COMMON STOCK AND SERIES
B LIBERTY MEDIA GROUP COMMON STOCK. If at any time a share distribution is to
be made with respect to the Series A Liberty Media Group Common Stock or Series
B Liberty Media Group Common Stock, such share distribution may be declared and
paid only as follows (or as permitted by paragraph 5 of this Section E with
respect to the redemptions and other distributions referred to therein):
(i) a share distribution consisting of shares of Series A Liberty
Media Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A Liberty Media Group
Common Stock) to holders of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock, on an equal per share basis; or
consisting of shares of Series B Liberty Media Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series B Liberty Media Group Common Stock) to holders of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock, on an equal per share basis; or consisting of shares of Series A
Liberty Media Group Common Stock (or Convertible Securities convertible
into or exercisable or exchangeable for shares of Series A Liberty Media
Group Common Stock) to holders of Series A Liberty Media Group Common Stock
and, on an equal per share basis, shares of Series B Liberty Media Group
Common Stock (or like Convertible Securities convertible into or
exercisable or exchangeable for shares of Series B Liberty Media Group
Common Stock) to holders of Series B Liberty Media Group Common Stock; and
(ii) a share distribution consisting of any class or series of
securities of the Corporation or any other Person other than as described
in clause (i) of this paragraph 4(b) and other than Series A TCI Group
Common Stock or Series B TCI Group Common Stock (or Convertible Securities
convertible into or exercisable or exchangeable for shares of Series A TCI
Group Common Stock or Series B TCI Group Common Stock) either on the basis
of a distribution of identical securities, on an equal per share basis, to
holders of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock or on the basis of a distribution of one class or
series of securities to holders of Series A Liberty Media Group Common
Stock and another class or series of securities to holders of Series B
Liberty Media Group Common Stock, provided that the securities so
distributed (and, if the distribution consists of Convertible Securities,
the securities into which such Convertible Securities are convertible or
for which they are exercisable or exchangeable) do not differ in any
respect other than their relative voting rights and related differences in
designation, conversion, redemption and share distribution provisions, with
holders of shares of Series B Liberty Media Group Common Stock receiving
the class or series having the higher relative voting rights (without
regard to whether such rights differ to a greater or lesser extent than the
corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Series A Liberty
Media Group Common Stock and the Series B Liberty Media Group Common
Stock), provided that if the securities so distributed constitute capital
stock of a Subsidiary of the Corporation,
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such rights shall not differ to a greater extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A Liberty Media Group Common
Stock and the Series B Liberty Media Group Common Stock, and provided in
each case that such distribution is otherwise made on an equal per share
basis.
The Corporation shall not reclassify, subdivide or combine the Series A
Liberty Media Group Common Stock without reclassifying, subdividing or combining
the Series B Liberty Media Group Common Stock, on an equal per share basis, and
the Corporation shall not reclassify, subdivide or combine the Series B Liberty
Media Group Common Stock without reclassifying, subdividing or combining the
Series A Liberty Media Group Common Stock, on an equal per share basis.
5. Redemption and Other Provisions Relating to the Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock.
(a) REDEMPTION IN EXCHANGE FOR STOCK OF SUBSIDIARY. At any time at which
all of the assets and liabilities attributed to the Liberty Media Group have
become and continue to be held directly or indirectly by any one or more
corporations all of the capital stock of which is owned by the Corporation (the
"Liberty Media Group Subsidiaries"), the Board of Directors may, subject to the
availability of assets of the Corporation legally available therefor, redeem, on
a pro rata basis, all of the outstanding shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock in exchange for an
aggregate number of outstanding fully paid and nonassessable shares of common
stock of each Liberty Media Group Subsidiary equal to the product of the
Adjusted Outstanding Interest Fraction and the number of all of the outstanding
shares of common stock of such Liberty Media Group Subsidiary. Any such
redemption shall occur on a Redemption Date set forth in a notice to holders of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock and Convertible Securities convertible into or exercisable or
exchangeable for shares of either such series (unless provision for notice is
otherwise made pursuant to the terms of such Convertible Securities) pursuant to
paragraph 5(d)(vi). In effecting such a redemption, the Board of Directors may
determine either to (i) redeem shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock in exchange for shares of
separate classes or series of common stock of each Liberty Media Group
Subsidiary with relative voting rights and related differences in designation,
conversion, redemption and share distribution provisions not greater than the
corresponding differences in voting rights, designation, conversion, redemption
and share distribution provisions between the Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock, with holders of
shares of Series B Liberty Media Group Common Stock receiving the class or
series having the higher relative voting rights, or (ii) redeem shares of Series
A Liberty Media Group Common Stock and Series B Liberty Media Group Common Stock
in exchange for shares of a single class of common stock of each Liberty Media
Group Subsidiary without distinction between the shares distributed to the
holders of the Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock. If the Corporation determines to undertake a
redemption as described in clause (i) of the preceding sentence, the outstanding
shares of common stock of each Liberty Media Group Subsidiary not distributed to
holders of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock shall consist solely of the class or series having the lower
relative voting rights.
(b) MANDATORY DIVIDEND, REDEMPTION OR CONVERSION IN CASE OF DISPOSITION
OF LIBERTY MEDIA GROUP ASSETS. In the event of the Disposition, in one
transaction or a series of related transactions, by the Corporation and its
subsidiaries of all or substantially all of the properties and assets of the
Liberty Media Group to one or more persons, entities or groups (other than (w)
in connection with the Disposition by the Corporation of all of the
Corporation's properties and assets in one transaction or a series of related
transactions in connection with the liquidation, dissolution or winding up of
the Corporation within the meaning of paragraph 6 of this Section E, (x) a
dividend, other distribution or redemption in accordance with any provision of
paragraph 3, paragraph 4, paragraph 5(a) or paragraph 6 of this Section E, (y)
to any person, entity or group which the Corporation, directly or indirectly,
after giving effect to the Disposition, controls or (z) in connection with a
Related Business Transaction), the Corporation shall, on or prior to the 85th
Trading Day following the consummation of such Disposition, either:
(i) subject to paragraph 3(b) of this Section E, declare and pay a
dividend in cash and/or in securities or other property (other than a
dividend or distribution of Common Stock) to the holders of the outstanding
shares of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock equally on a share for share basis (subject to the
last sentence of this Section 5(b)), in an aggregate amount equal to the
product of the Outstanding Interest Fraction as of the record date for
determining the holders entitled to receive such dividend and the Net
Proceeds of such Disposition; or
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(ii) provided that there are assets of the Corporation legally
available therefor and the Liberty Media Group Available Dividend Amount
would have been sufficient to pay a dividend in lieu thereof pursuant to
clause (i) of this paragraph 5(b), then:
(A) if such Disposition involves all (not merely
substantially all) of the properties and assets of the
Liberty Media Group, redeem all outstanding shares of Series
A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock in exchange for cash and/or
securities or other property (other than Common Stock) in an
aggregate amount equal to the product of the Adjusted
Outstanding Interest Fraction as of the date of such
redemption and the Net Proceeds of such Disposition, such
aggregate amount to be allocated (subject to the last
sentence of this paragraph 5(b)) to shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock in the ratio of the number of shares of
each such series outstanding (so that the amount of
consideration paid for the redemption of each share of
Series A Liberty Media Group Common Stock and each share of
Series B Liberty Media Group Common Stock is the same); or
(B) if such Disposition involves substantially all (but
not all) of the properties and assets of the Liberty Media
Group, apply an aggregate amount of cash and/or securities
or other property (other than Common Stock) equal to the
product of the Outstanding Interest Fraction as of the date
shares are selected for redemption and the Net Proceeds of
such Disposition to the redemption of outstanding shares of
Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock, such aggregate amount to
be allocated (subject to the last sentence of this paragraph
5(b)) to shares of Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock in the ratio
of the number of shares of each such series outstanding, and
the number of shares of each such series to be redeemed to
equal the lesser of (x) the whole number nearest the number
determined by dividing the aggregate amount so allocated to
the redemption of such series by the average Market Value of
one share of Series A Liberty Media Group Common Stock
during the ten-Trading Day period beginning on the 16th
Trading Day following the consummation of such Disposition
and (y) the number of shares of such series outstanding (so
that the amount of consideration paid for the redemption of
each share of Series A Liberty Media Group Common Stock and
each share of Series B Liberty Media Group Common Stock is
the same);
such redemption to be effected in accordance with the applicable provisions
of paragraph 5(d) of this Section E; or
(iii) convert (A) each outstanding share of Series A Liberty Media
Group Common Stock into a number (or fraction) of fully paid and
nonassessable shares of Series A TCI Group Common Stock and (B) each
outstanding share of Series B Liberty Media Group Common Stock into a
number (or fraction) of fully paid and nonassessable shares of Series B TCI
Group Common Stock, in each case equal to 110% of the average daily ratio
(calculated to the nearest five decimal places) of the Market Value of one
share of Series A Liberty Media Group Common Stock to the Market Value of
one share of Series A TCI Group Common Stock during the ten-Trading Day
period referred to in clause (ii)(B) of this paragraph 5(b).
For purposes of this paragraph 5(b):
(x) as of any date, "substantially all of the properties and assets
of the Liberty Media Group" shall mean a portion of such properties and
assets that represents at least 80% of the then-current market value (as
determined by the Board of Directors) of the properties and assets of the
Liberty Media Group as of such date;
(y) in the case of a Disposition of properties and assets in a series
of related transactions, such Disposition shall not be deemed to have been
consummated until the consummation of the last of such transactions; and
(z) the Corporation may pay the dividend or redemption price referred
to in clause (i) or (ii) of this subparagraph 5(b) either in the same form
as the proceeds of the Disposition were received or in any other
combination of cash or securities or other property (other than Common
Stock) that the Board of Directors determines will have an aggregate market
value on a fully distributed basis, of not less than the amount of the Net
Proceeds. If the dividend or redemption price is paid in the form of
securities of an issuer other than the Corporation, the Board of Directors
may determine either to (1) pay the dividend or
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redemption price in the form of separate classes or series of securities,
with one class or series of such securities to holders of Series A Liberty
Media Group Common Stock and another class or series of securities to
holders of Series B Liberty Media Group Common Stock, provided that such
securities (and, if such securities are convertible into or exercisable or
exchangeable for shares of another class or series of securities, the
securities so issuable upon such conversion, exercise or exchange) do not
differ in any respect other than their relative voting rights and related
differences in designation, conversion, redemption and share distribution
provisions, with holders of shares of Series B Liberty Media Group Common
Stock receiving the class or series having the higher relative voting
rights (without regard to whether such rights differ to a greater or lesser
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series
A Liberty Media Group Common Stock and the Series B Liberty Media Group
Common Stock), provided that if such securities constitute capital stock of
a Subsidiary of the Corporation, such rights shall not differ to a greater
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series
A Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock, and otherwise such securities shall be distributed on an equal per
share basis, or (2) pay the dividend or redemption price in the form of a
single class of securities without distinction between the shares received
by the holders of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock.
(c) CERTAIN PROVISIONS RESPECTING CONVERTIBLE SECURITIES. Unless the
provisions of any class or series of Pre-Distribution Convertible Securities or
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares provide specifically to the contrary, after any
Conversion Date or Redemption Date on which all outstanding shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common Stock
were converted or redeemed, any share of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock that is issued on conversion,
exercise or exchange of any Pre-Distribution Convertible Securities or any
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares shall, immediately upon issuance pursuant to
such conversion, exercise or exchange and without any notice or any other action
on the part of the Corporation or its Board of Directors or the holder of such
share of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock, be converted into (in case all such outstanding shares were
converted) or redeemed in exchange for (in case all such outstanding shares were
redeemed) the kind and amount of shares of capital stock, cash and/or other
securities or property that a holder of such Pre-Distribution Convertible
Securities or any Convertible Securities which are convertible into or
exercisable or exchangeable for Committed Acquisition Shares would have been
entitled to receive pursuant to the terms of such securities had such terms
provided that the conversion, exercise or exchange privilege in effect
immediately prior to any such conversion or redemption of all outstanding shares
of Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock would be adjusted so that the holder of any such Pre-Distribution
Convertible Securities or any Convertible Securities which are convertible into
or exercisable or exchangeable for Committed Acquisition Shares thereafter
surrendered for conversion, exercise or exchange would be entitled to receive
the kind and amount of shares of capital stock, cash and/or other securities or
property such holder would have received as a result of such action had such
securities been converted, exercised or exchanged immediately prior thereto.
With respect to any Convertible Securities which are created, established or
otherwise first authorized for issuance subsequent to the record date for the
Distribution (other than Pre-Distribution Convertible Securities and Convertible
Securities which are convertible into or exercisable or exchangeable for
Committed Acquisition Shares), the terms and provisions of which do not provide
for adjustments specifying the kind and amount of capital stock, cash and/or
securities or other property that such holder would be entitled to receive upon
the conversion, exercise or exchange of such Convertible Securities following
any Conversion Date or Redemption Date on which all outstanding shares of Series
A Liberty Media Group Common Stock and Series B Liberty Media Group Common Stock
were converted or redeemed, then upon such conversion, exercise or exchange of
such Convertible Securities, any share of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock that is issued on conversion,
exercise or exchange of any such Convertible Securities shall, immediately upon
issuance pursuant to such conversion, exercise or exchange and without any
notice or any other action on the part of the Corporation or its Board of
Directors or the holder of such share of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock, be redeemed in exchange for,
to the extent assets of the Corporation are legally available therefor, the
amount of $.01 per share in cash.
(d) GENERAL.
(i) Not later than the 10th Trading Day following the consummation of a
Disposition referred to in subparagraph 5(b) of this Section E, the Corporation
shall announce publicly by press release (A) the Net Proceeds of such
Disposition, (B) the number of
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outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock, (C) the number of shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock into or
for which Convertible Securities are then convertible, exercisable or
exchangeable and the conversion, exercise or exchange prices thereof (and
stating which, if any, of such Convertible Securities constitute Pre-
Distribution Convertible Securities or Convertible Securities which are
convertible into or exercisable or exchangeable for Committed Acquisition
Shares) and the number of Committed Acquisition Shares issuable, (D) the
Outstanding Interest Fraction as of a recent date preceding the date of such
notice and (E) the Adjusted Outstanding Interest Fraction as of a recent date
preceding the date of such notice. Not earlier than the 26th Trading Day and not
later than the 30th Trading Day following the consummation of such Disposition,
the Corporation shall announce publicly by press release which of the actions
specified in clauses (i), (ii) or (iii) of paragraph 5(b) of this Section E it
has irrevocably determined to take.
(ii) If the Corporation determines to pay a dividend pursuant to clause
(i) of subparagraph 5(b) of this Section E, the Corporation shall, not later
than the 30th Trading Day following the consummation of such Disposition, cause
to be given to each holder of outstanding shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock, and to each holder
of Convertible Securities convertible into or exercisable or exchangeable for
shares of either such series (unless provision for notice is otherwise made
pursuant to the terms of such Convertible Securities), a notice setting forth
(A) the record date for determining holders entitled to receive such dividend,
which shall be not earlier than the 40th Trading Day and not later than the 50th
Trading Day following the consummation of such Disposition, (B) the anticipated
payment date of such dividend (which shall not be more than 85 Trading Days
following the consummation of such Disposition), (C) the kind of shares of
capital stock, cash and/or other securities or property to be distributed in
respect of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock, (D) the Net Proceeds of such Disposition, (E)
the Outstanding Interest Fraction as of a recent date preceding the date of such
notice, (F) the number of outstanding shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock and the number of
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock into or for which outstanding Convertible Securities are then
convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof and (G) in the case of a notice to holders of
Convertible Securities, a statement to the effect that holders of such
Convertible Securities shall be entitled to receive such dividend only if they
appropriately convert, exercise or exchange them prior to the record date
referred to in clause (A) of this sentence. Such notice shall be sent by first-
class mail, postage prepaid, at such holder's address as the same appears on the
transfer books of the Corporation.
(iii) If the Corporation determines to undertake a redemption of shares
of Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock following a Disposition of all (not merely substantially all) of
the properties and assets of the Liberty Media Group pursuant to clause (ii) (A)
of paragraph 5(b) of this Section E, the Corporation shall cause to be given to
each holder of outstanding shares of Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock and to each holder of Convertible
Securities convertible into or exercisable or exchangeable for shares of either
such series (unless provision for notice is otherwise made pursuant to the terms
of such Convertible Securities), a notice setting forth (A) a statement that all
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock outstanding on the Redemption Date shall be redeemed, (B) the
Redemption Date (which shall not be more than 85 Trading Days following the
consummation of such Disposition), (C) the kind of shares of capital stock, cash
and/or other securities or property to be paid as a redemption price in respect
of shares of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock outstanding on the Redemption Date, (D) the Net
Proceeds of such Disposition, (E) the Adjusted Outstanding Interest Fraction as
of a recent date preceding the date of such notice, (F) the place or places
where certificates for shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock, properly endorsed or assigned for
transfer (unless the Corporation waives such requirement), are to be surrendered
for delivery of certificates for shares of such capital stock, cash and/or other
securities or property, (G) the number of outstanding shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock and the
number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock into or for which outstanding Convertible
Securities are then convertible, exercisable or exchangeable and the conversion,
exercise or exchange prices thereof (and stating which, if any, of such
Convertible Securities constitute Pre-Distribution Convertible Securities or
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares) and the number of Committed Acquisition Shares
issuable, and (H) in the case of a notice to holders of Convertible Securities,
a statement to the effect that holders of such Convertible Securities shall be
entitled to participate in such redemption only if such holders appropriately
convert, exercise or exchange such Convertible Securities on or prior to the
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Redemption Date referred to in clause (B) of this sentence and a statement as to
what, if anything, such holders shall be entitled to receive pursuant to the
terms of such Convertible Securities or, if applicable, paragraph 5(c) of this
Section E if such holders convert, exercise or exchange such Convertible
Securities following such Redemption Date. Such notice shall be sent by first-
class mail, postage prepaid, not less than 35 Trading Days nor more than 45
Trading Days prior to the Redemption Date, at such holder's address as the same
appears on the transfer books of the Corporation.
(iv) If the Corporation determines to undertake a redemption of shares
of Series A Media Group Common Stock and Series B Liberty Media Group Common
Stock following a Disposition of substantially all (but not all) of the
properties and assets of the Liberty Media Group pursuant to clause (ii)(B) of
paragraph 5(b) of this Section E, the Corporation shall, not later than the 30th
Trading Day following the consummation of such Disposition, cause to be given to
each holder of record of outstanding shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock, and to each holder
of Convertible Securities convertible into or exercisable or exchangeable for
shares of either such series (unless provision for notice is otherwise made
pursuant to the terms of such Convertible Securities), a notice setting forth
(A) a date not earlier than the 40th Trading Day and not later than the 50th
Trading Day following the consummation of such Disposition which shall be the
date on which shares of the Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock then outstanding shall be selected for
redemption, (B) the anticipated Redemption Date (which shall not be more than 85
Trading Days following the consummation of such Disposition), (C) the kind of
shares of capital stock, cash and/or other securities or property to be paid as
a redemption price in respect of shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock selected for redemption, (D)
the Net Proceeds of such Disposition, (E) the Outstanding Interest Fraction as
of a recent date preceding the date of such notice, (F) the number of
outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock and the number of shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock into or
for which outstanding Convertible Securities are then convertible, exercisable
or exchangeable and the conversion or exercise prices thereof, (G) in the case
of a notice to holders of Convertible Securities, a statement to the effect that
holders of such Convertible Securities shall be entitled to participate in such
selection for redemption only if such holders appropriately convert, exercise or
exchange such Convertible Securities on or prior to the date referred to in
clause (A) of this sentence and a statement as to what, if anything, such
holders shall be entitled to receive pursuant to the terms of such Convertible
Securities if such holders convert, exercise or exchange such Convertible
Securities following such date and (H) a statement that the Corporation will not
be required to register a transfer of any shares of Series A Liberty Media Group
Common Stock or Series B Liberty Media Group Common Stock for a period of 15
Trading Days next preceding the date referred to in clause (A) of this sentence.
Promptly following the date referred to in clause (A) of the preceding sentence,
but not earlier than the 40th Trading Day and not later than the 50th Trading
Day following the consummation of such Disposition, the Corporation shall cause
to be given to each holder of shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock to be so redeemed, a notice
setting forth (A) the number of shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock held by such holder to be
redeemed, (B) a statement that such shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock shall be redeemed,
(C) the Redemption Date (which shall not be more than 85 Trading Days following
the consummation of such Disposition), (D) the kind and per share amount of
shares of capital stock, cash and/or other securities or property to be received
by such holder with respect to each share of such Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock to be redeemed,
including details as to the calculation thereof, and (E) the place or places
where certificates for shares of such Series A Liberty Media Group Common Stock
or Series B Liberty Media Group Common Stock, properly endorsed or assigned for
transfer (unless the Corporation waives such requirement), are to be surrendered
for delivery of certificates for shares of such capital stock, cash and/or other
securities or property. The notices referred to in this clause (iv) shall be
sent by first-class mail, postage prepaid, at such holder's address as the same
appears on the transfer books of the Corporation. The outstanding shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock to be redeemed shall be redeemed by the Corporation pro rata among
the holders of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock or by such other method as may be determined by the
Board of Directors to be equitable.
(v) In the event of any conversion pursuant to paragraph 2(c) of this
Section E or pursuant to this paragraph 5 (other than pursuant to paragraph
5(c)), the Corporation shall cause to be given to each holder of outstanding
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock and to each holder of Convertible Securities convertible into
or exercisable or exchangeable for shares of either such series (unless
provision for such notice is otherwise made pursuant to the
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terms of such Convertible Securities), a notice setting forth (A) a statement
that all outstanding shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock shall be converted, (B) the Conversion
Date (which shall not be more than 85 Trading Days following the consummation of
such Disposition in the event of a conversion pursuant to paragraph 5(b) and
which shall not be more than 120 days after the Appraisal Date in the event of a
conversion pursuant to paragraph 2(c)), (C) the per share number of shares of
Series A TCI Group Common Stock or Series B TCI Group Common Stock, as
applicable, to be received with respect to each share of Series A Liberty Media
Group Common Stock or Series B Liberty Media Group Common Stock, including
details as to the calculation thereof, (D) the place or places where
certificates for shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock, properly endorsed or assigned for transfer
(unless the Corporation shall waive such requirement), are to be surrendered,
(E) the number of outstanding shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock, the number of Committed
Acquisition Shares issuable and the number of shares of Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock into or for
which outstanding Convertible Securities are then convertible, exercisable or
exchangeable and the conversion, exercise or exchange prices thereof and (F) in
the case of a notice to holders of Convertible Securities, a statement to the
effect that holders of such Convertible Securities shall be entitled to
participate in such conversion only if such holders appropriately convert,
exercise or exchange such Convertible Securities on or prior to the Conversion
Date referred to in clause (B) of this sentence and a statement as to what, if
anything, such holders shall be entitled to receive pursuant to the terms of
such Convertible Securities or, if applicable, paragraph 5(c) of this Section E
if such holders convert, exercise or exchange such Convertible Securities
following such Conversion Date. Such notice shall be sent by first-class mail,
postage prepaid, not less than 35 Trading Days nor more than 45 Trading Days
prior to the Conversion Date, at such holder's address as the same appears on
the transfer books of the Corporation.
(vi) If the Corporation determines to redeem shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock pursuant
to subparagraph (a) of this paragraph 5, the Corporation shall promptly cause to
be given to each holder of Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock and to each holder of Convertible Securities
convertible into or exercisable or exchangeable for shares of either such series
(unless provision for such notice is otherwise made pursuant to the terms of
such Convertible Securities), a notice setting forth (A) a statement that all
outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock shall be redeemed in exchange for shares of
common stock of the Liberty Media Group Subsidiaries, (B) the Redemption Date,
(C) the Adjusted Outstanding Interest Fraction as of a recent date preceding the
date of such notice, (D) the place or places where certificates for shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock, properly endorsed or assigned for transfer (unless the Corporation
shall waive such requirement), are to be surrendered for delivery of
certificates for shares of common stock of the Liberty Media Group Subsidiaries,
(E) the number of outstanding shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock and the number of shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock into or for which outstanding Convertible Securities are then
convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof (and stating which, if any, of such Convertible
Securities constitute Pre-Distribution Convertible Securities or Convertible
Securities which are convertible into or exercisable or exchangeable for
Committed Acquisition Shares) and the number of Committed Acquisition Shares
issuable, and (F) in the case of a notice to holders of Convertible Securities,
a statement to the effect that holders of such Convertible Securities shall be
entitled to participate in such redemption only if such holders appropriately
convert, exercise or exchange such Convertible Securities on or prior to the
Redemption Date referred to in clause (B) of this sentence and a statement as to
what, if anything, such holders shall be entitled to receive pursuant to the
terms of such Convertible Securities or, if applicable, paragraph 5(c) of this
Section E if such holders convert, exercise or exchange such Convertible
Securities following the Redemption Date. Such notice shall be sent by first-
class mail, postage prepaid, not less than 35 Trading Days nor more than 45
Trading Days prior to the Redemption Date, at such holder's address as the same
appears on the transfer books of the Corporation.
(vii) Neither the failure to mail any notice required by this paragraph
5(d) to any particular holder of Series A Liberty Media Group Common Stock,
Series B Liberty Media Group Common Stock or of Convertible Securities nor any
defect therein shall affect the sufficiency thereof with respect to any other
holder of outstanding shares of Series A Liberty Media Group Common Stock or
Series B Liberty Media Group Common Stock or of Convertible Securities, or the
validity of any conversion or redemption.
(viii) The Corporation shall not be required to issue or deliver
fractional shares of any class of capital stock or any fractional securities to
any holder of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock upon any
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conversion, redemption, dividend or other distribution pursuant to paragraph
2(c) of this Section E or pursuant to this paragraph 5. In connection with the
determination of the number of shares of any class of capital stock that shall
be issuable or the amount of securities that shall be deliverable to any holder
of record upon any such conversion, redemption, dividend or other distribution
(including any fractions of shares or securities), the Corporation may aggregate
the number of shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock held at the relevant time by such holder of
record. If the number of shares of any class of capital stock or the amount of
securities remaining to be issued or delivered to any holder of Series A Liberty
Media Group Common Stock or Series B Liberty Media Group Common Stock is a
fraction, the Corporation shall, if such fraction is not issued or delivered to
such holder, pay a cash adjustment in respect of such fraction in an amount
equal to the fair market value of such fraction on the fifth Trading Day prior
to the date such payment is to be made (without interest). For purposes of the
preceding sentence, "fair market value" of any fraction shall be (A) in the case
of any fraction of a share of capital stock of the Corporation, the product of
such fraction and the Market Value of one share of such capital stock and (B) in
the case of any other fractional security, such value as is determined by the
Board of Directors.
(ix) No adjustments in respect of dividends shall be made upon the
conversion or redemption of any shares of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock; provided, however, that if
the Conversion Date or the Redemption Date with respect to the Series A Liberty
Media Group Common Stock or Series B Liberty Media Group Common Stock shall be
subsequent to the record date for the payment of a dividend or other
distribution thereon or with respect thereto, the holders of shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock at
the close of business on such record date shall be entitled to receive the
dividend or other distribution payable on or with respect to such shares on the
date set for payment of such dividend or other distribution, notwithstanding the
conversion or redemption of such shares or the Corporation's default in payment
of the dividend or distribution due on such date.
(x) Before any holder of shares of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock shall be entitled to receive
certificates representing shares of any kind of capital stock or cash and/or
securities or other property to be received by such holder with respect to
shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock pursuant to paragraph 2(c) of this Section E or pursuant to
this paragraph 5, such holder shall surrender at such place as the Corporation
shall specify certificates for such shares of Series A Liberty Media Group
Common Stock or Series B Liberty Media Group Common Stock, properly endorsed or
assigned for transfer (unless the Corporation shall waive such requirement).
The Corporation shall as soon as practicable after such surrender of
certificates representing shares of Series A Liberty Media Group Common Stock or
Series B Liberty Media Group Common Stock deliver to the person for whose
account shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock were so surrendered, or to the nominee or nominees of
such person, certificates representing the number of whole shares of the kind of
capital stock or cash and/or securities or other property to which such person
shall be entitled as aforesaid, together with any payment for fractional
securities contemplated by paragraph 5(d)(viii). If less than all of the shares
of Series A Liberty Media Group Common Stock or Series B Liberty Media Group
Common Stock represented by any one certificate are to be redeemed, the
Corporation shall issue and deliver a new certificate for the shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
not redeemed. The Corporation shall not be required to register a transfer of
(1) any shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock for a period of 15 Trading Days next preceding any
selection of shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock to be redeemed or (2) any shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
selected or called for redemption. Shares selected for redemption may not
thereafter be converted pursuant to paragraph 2(b) of this Section E.
(xi) From and after any applicable Conversion Date or Redemption Date,
all rights of a holder of shares of Series A Liberty Media Group Common Stock or
Series B Liberty Media Group Common Stock that were converted or redeemed shall
cease except for the right, upon surrender of the certificates representing
shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock, to receive certificates representing shares of the kind and
amount of capital stock or cash and/or securities or other property for which
such shares were converted or redeemed, together with any payment for fractional
securities contemplated by paragraph 5(d)(viii) of this Section E and such
holder shall have no other or further rights in respect of the shares of Series
A Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
so converted or redeemed, including, but not limited to, any rights with respect
to any cash, securities or other properties which are reserved or otherwise
designated by the Corporation as being held for the satisfaction of the
Corporation's obligations to pay or deliver any cash, securities or other
property
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upon the conversion, exercise or exchange of any Convertible Securities
outstanding as of the date of such conversion or redemption or any Committed
Acquisition Shares which may then be issuable. No holder of a certificate that,
immediately prior to the applicable Conversion Date or Redemption Date for the
Series A Liberty Media Group Common Stock or Series B Liberty Media Group Common
Stock, represented shares of Series A Liberty Media Group Common Stock or Series
B Liberty Media Group Common Stock shall be entitled to receive any dividend or
other distribution with respect to shares of any kind of capital stock into or
in exchange for which the Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock was converted or redeemed until surrender of
such holder's certificate for a certificate or certificates representing shares
of such kind of capital stock. Upon such surrender, there shall be paid to the
holder the amount of any dividends or other distributions (without interest)
which theretofore became payable with respect to a record date after the
Conversion Date or Redemption Date, as the case may be, but that were not paid
by reason of the foregoing, with respect to the number of whole shares of the
kind of capital stock represented by the certificate or certificates issued upon
such surrender. From and after a Conversion Date or Redemption Date, as the case
may be, for any shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock, the Corporation shall, however, be entitled to
treat the certificates for shares of Series A Liberty Media Group Common Stock
or Series B Liberty Media Group Common Stock that have not yet been surrendered
for conversion or redemption as evidencing the ownership of the number of whole
shares of the kind or kinds of capital stock for which the shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
represented by such certificates shall have been converted or redeemed,
notwithstanding the failure to surrender such certificates.
(xii) The Corporation shall pay any and all documentary, stamp or similar
issue or transfer taxes that may be payable in respect of the issue or delivery
of any shares of capital stock and/or other securities on conversion or
redemption of shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock pursuant to this Section E. The Corporation
shall not, however, be required to pay any tax that may be payable in respect of
any transfer involved in the issue and delivery of any shares of capital stock
in a name other than that in which the shares of Series A Liberty Media Group
Common Stock or Series B Liberty Media Group Common Stock so converted or
redeemed were registered and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to the Corporation the amount of
any such tax, or has established to the satisfaction of the Corporation that
such tax has been paid.
6. Liquidation.
In the event of a liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the Corporation and subject to the
prior payment in full of the preferential amounts to which any class or series
of Preferred Stock is entitled, (a) the holders of the shares of Series A TCI
Group Common Stock and the holders of the shares of Series B TCI Group Common
Stock shall share equally, on a share for share basis, in a percentage of the
funds of the Corporation remaining for distribution to its common stockholders
equal to 100% multiplied by the average daily ratio (expressed as a decimal) of
X/Z for the 20-Trading Day period ending on the Trading Day prior to the date of
the public announcement of such liquidation, dissolution or winding up, and (b)
the holders of the shares of Series A Liberty Media Group Common Stock and the
holders of the shares of Series B Liberty Media Group Common Stock shall share
equally, on a share for share basis, in a percentage of the funds of the
Corporation remaining for distribution to its common stockholders equal to 100%
multiplied by the average daily ratio (expressed as a decimal) of Y/Z for such
20-Trading Day period, where X is the aggregate Market Capitalization of the
Series A TCI Group Common Stock and the Series B TCI Group Common Stock, Y is
the aggregate Market Capitalization of the Series A Liberty Media Group Common
Stock and the Series B Liberty Media Group Common Stock, and Z is the aggregate
Market Capitalization of the Series A TCI Group Common Stock, the Series B TCI
Group Common Stock, the Series A Liberty Media Group Common Stock and the Series
B Liberty Media Group Common Stock. Neither the consolidation or merger of the
Corporation with or into any other corporation or corporations nor the sale,
transfer or lease of all or substantially all of the assets of the Corporation
shall itself be deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this paragraph 6.
7. Determinations by the Board of Directors.
Any determinations made by the Board of Directors under any provision in
this Section E shall be final and binding on all stockholders of the
Corporation, except as may otherwise be required by law. The Corporation shall
prepare a statement of any such
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determination by the Board of Directors respecting the fair market value of any
properties, assets or securities and shall file such statement with the
Secretary of the Corporation.
8. Certain Definitions.
Unless the context otherwise requires, the terms defined in this paragraph
8 shall have, for all purposes of this Section E, the meanings herein specified:
"Adjusted Outstanding Interest Fraction", as of any date, shall mean a
fraction the numerator of which is the aggregate number of shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common Stock
outstanding on such date and the denominator of which is the sum of (a) such
aggregate number of shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock outstanding on such date, (b) the
Number of Shares Issuable with Respect to the Inter-Group Interest as of such
date, (c) the aggregate number of shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock issuable, determined as of
such date, upon conversion, exercise or exchange of Pre-Distribution Convertible
Securities and (d) the number of Committed Acquisition Shares issuable,
determined as of such date.
"Committed Acquisition Shares" shall mean (a) the shares of Series A
Liberty Media Group Common Stock that the Corporation has, prior to the record
date for the Distribution, agreed to issue, but as of such record date has not
issued, and (b) the shares of Series A Liberty Media Group Common Stock that are
issuable upon conversion, exercise or exchange of Convertible Securities that
the Corporation has, prior to the record date for the Distribution, agreed to
issue, but as of such record date has not issued, in each case including
obligations of the Corporation to issue shares of the Corporation's Class A
Common Stock, par value $1.00 per share, which as a result of the Distribution,
constitute obligations to issue, among other securities, Series A Liberty Media
Group Common Stock or Convertible Securities which are convertible into or
exercisable or exchangeable for Series A Liberty Media Group Common Stock;
provided, however that Committed Acquisition Shares shall not include any shares
of Series A Liberty Media Group Common Stock or Series B Liberty Media Group
Common Stock issuable upon conversion, exercise or exchange of Pre-Distribution
Convertible Securities. The type and amount of Committed Acquisition Shares
issuable shall be appropriately adjusted to reflect subdivisions and
combinations of the Series A Liberty Media Group Common Stock and dividends or
distributions of shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock to holders of Series A Liberty Media Group
Common Stock and other reclassifications of the Series A Liberty Media Group
Common Stock, in each case occurring (or the record date for which occurs) after
the Distribution.
"Conversion Date" shall mean any date fixed by the Board of Directors for a
conversion of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock, as set forth in a notice to holders of Series
A Liberty Media Group Common Stock and Series B Liberty Media Group Common Stock
pursuant to paragraph 5(d) of this Section E.
"Convertible Securities" shall mean any securities of the Corporation
(other than any series of Common Stock) that are convertible into, exchangeable
for or evidence the right to purchase any shares of any series of Common Stock,
whether upon conversion, exercise, exchange, pursuant to antidilution provisions
of such securities or otherwise.
"Corporation Earnings (Loss) Attributable to the Liberty Media Group", for
any period, shall mean the net earnings or loss of the Liberty Media Group for
such period determined on a basis consistent with the determination of the net
earnings or loss of the Liberty Media Group for such period as presented in the
combined financial statements of the Liberty Media Group for such period,
including income and expenses of the Corporation attributed to the operations of
the Liberty Media Group on a substantially consistent basis, including without
limitation, corporate administrative costs, net interest and income taxes.
"Corporation Earnings (Loss) Attributable to the TCI Group", for any
period, shall mean the net earnings or loss of the TCI Group for such period
determined on a basis consistent with the determination of the net earnings or
loss of the TCI Group for such period as presented in the combined financial
statements of the TCI Group for such period, including income and expenses of
the Corporation attributed to the operations of the TCI Group on a substantially
consistent basis, including without limitation, corporate administrative costs,
net interest and income taxes.
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"Disposition" shall mean the sale, transfer, assignment or other
disposition (whether by merger, consolidation, sale or contribution of assets or
stock or otherwise) of properties or assets.
"Inter-Group Interest Fraction", as of any date, shall mean a fraction the
numerator of which is the Number of Shares Issuable with Respect to the Inter-
Group Interest as of such date and the denominator of which is the sum of (a)
such Number of Shares Issuable with Respect to the Inter-Group Interest as of
such date and (b) the aggregate number of shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock outstanding as of
such date.
"Liberty Media Group" shall mean, as of any date that any shares of Series
A Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
have been issued and continue to be outstanding:
(a) the interest of the Corporation or of any of its subsidiaries in
Liberty Media Corporation or any of its subsidiaries (including any
successor thereto by merger, consolidation or sale of all or substantially
all of its assets, whether or not in connection with a Related Business
Transaction) and their respective properties and assets,
(b) all assets and liabilities of the Corporation or any of its
subsidiaries to the extent attributed to any of the properties or assets
referred to in clause (a) of this sentence, whether or not such assets or
liabilities are assets and liabilities of Liberty Media Corporation or any
of its subsidiaries (or a successor as described in clause (a) of this
sentence),
(c) all assets and properties contributed or otherwise transferred to
the Liberty Media Group from the TCI Group, and
(d) the interest of the Corporation or any of its subsidiaries in the
businesses, assets and liabilities acquired by the Corporation or any of
its subsidiaries for the Liberty Media Group, as determined by the Board of
Directors;
provided that (i) from and after any dividend or other distribution with respect
to any shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock (other than a dividend or other distribution payable in
shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock, with respect to which adjustment shall be made as provided
in clause (a) of the definition of "Number of Shares Issuable with Respect to
the Inter-Group Interest", or in other securities of the Corporation attributed
to the Liberty Media Group for which provision shall be made as set forth in the
penultimate sentence of this definition), the Liberty Media Group shall no
longer include an amount of assets or properties equal to the aggregate amount
of such kind of assets or properties so paid in respect of shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
multiplied by a fraction the numerator of which is equal to the Inter-Group
Interest Fraction in effect immediately prior to the record date for such
dividend or other distribution and the denominator of which is equal to the
Outstanding Interest Fraction in effect immediately prior to the record date for
such dividend or other distribution and (ii) from and after any transfer of
assets or properties from the Liberty Media Group to the TCI Group, the Liberty
Media Group shall no longer include the assets or properties so transferred. If
the Corporation shall pay a dividend or make any other distribution with respect
to shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock payable in securities of the Corporation attributed to the
Liberty Media Group other than Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock, the TCI Group shall be deemed to hold
an amount of such other securities equal to the amount so distributed multiplied
by the fraction specified in clause (i) of this definition (determined as of a
time immediately prior to the record date for such dividend or other
distribution), and to the extent interest or dividends are paid or other
distributions are made on such other securities so distributed to the holders of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock, the Liberty Media Group shall no longer include a corresponding
ratable amount of the kind of assets paid as such interest or dividends or other
distributions in respect of such securities so deemed to be held by the TCI
Group. The Corporation may also, to the extent any such other securities
constitute Convertible Securities which are at the time convertible, exercisable
or exchangeable, cause such Convertible Securities deemed to be held by the TCI
Group to be deemed to be converted, exercised or exchanged (and to the extent
the terms of such Convertible Securities require payment or delivery of
consideration in order to effect such conversion, exercise or exchange, the
Liberty Media Group shall in such case include an amount of the kind of
properties or assets required to be paid or delivered as such consideration for
the amount of the Convertible Securities deemed converted, exercised or
exchanged as if such Convertible Securities were outstanding), in which case
such Convertible Securities shall no longer be deemed to be held by the TCI
Group or attributed to the Liberty Media Group.
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"Liberty Media Group Available Dividend Amount", as of any date, shall mean
the product of the Outstanding Interest Fraction and either: (a) the excess of
(i) an amount equal to the total assets of the Liberty Media Group less the
total liabilities (not including preferred stock) of the Liberty Media Group as
of such date over (ii) the aggregate par value of, or any greater amount
determined to be capital in respect of, all outstanding shares of Series A
Liberty Media Group Common Stock, Series B Liberty Media Group Common Stock and
each class or series of Preferred Stock attributed to the Liberty Media Group or
(b) in case there is no such excess, an amount equal to the Corporation Earnings
(Loss) Attributable to the Liberty Media Group (if positive) for the fiscal year
in which such date occurs and/or the preceding fiscal year.
"Market Capitalization" of any class or series of capital stock of the
Corporation on any Trading Day shall mean the product of (i) the Market Value of
one share of such class or series on such Trading Day and (ii) the number of
shares of such class or series outstanding on such Trading Day.
"Market Value" of any class or series of capital stock of the Corporation
on any day shall mean the average of the high and low reported sales prices
regular way of a share of such class or series on such day (if such day is a
Trading Day, and if such day is not a Trading Day, on the Trading Day
immediately preceding such day) or in case no such reported sale takes place on
such Trading Day the average of the reported closing bid and asked prices
regular way of a share of such class or series on such Trading Day, in either
case on the Nasdaq National Market, or if the shares of such class or series are
not quoted on such Nasdaq National Market on such Trading Day, the average of
the closing bid and asked prices of a share of such class or series in the over-
the-counter market on such Trading Day as furnished by any New York Stock
Exchange member firm selected from time to time by the Corporation, or if such
closing bid and asked prices are not made available by any such New York Stock
Exchange member firm on such Trading Day, the market value of a share of such
class or series as determined by the Board of Directors; provided that for
purposes of determining the ratios set forth in paragraphs 2(c), 5(b) and 6 of
this Section E, (a) the "Market Value" of any share of any series of Common
Stock on any day prior to the "ex" date or any similar date for any dividend or
distribution paid or to be paid with respect to such series of Common Stock
shall be reduced by the fair market value of the per share amount of such
dividend or distribution as determined by the Board of Directors and (b) the
"Market Value" of any share of any series of Common Stock on any day prior to
(i) the effective date of any subdivision (by stock split or otherwise) or
combination (by reverse stock split or otherwise) of outstanding shares of such
series of Common Stock or (ii) the "ex" date or any similar date for any
dividend or distribution with respect to any such series of Common Stock in
shares of such series of Common Stock shall be appropriately adjusted to reflect
such subdivision, combination, dividend or distribution.
"Net Proceeds" shall mean, as of any date, with respect to any Disposition
of any of the properties and assets of the Liberty Media Group, an amount, if
any, equal to the gross proceeds of such Disposition after any payment of, or
reasonable provision for, (a) any taxes payable by the Corporation in respect of
such Disposition or in respect of any resulting dividend or redemption pursuant
to clause (i) or (ii), respectively, of paragraph 5(b) of this Section E (or
which would have been payable but for the utilization of tax benefits
attributable to the TCI Group), (b) any transaction costs, including, without
limitation, any legal, investment banking and accounting fees and expenses and
(c) any liabilities and other obligations (contingent or otherwise) of, or
attributed to, the Liberty Media Group, including, without limitation, any
indemnity or guarantee obligations incurred in connection with the Disposition
or any liabilities for future purchase price adjustments and any preferential
amounts plus any accumulated and unpaid dividends and other obligations (without
duplication of amounts allocated for the satisfaction of the Corporation's
obligations with respect to Pre-Distribution Convertible Securities and
Committed Acquisition Shares issuable which are included in the determination of
the Adjusted Outstanding Interest Fraction) in respect of Preferred Stock
attributed to the Liberty Media Group. For purposes of this definition, any
properties and assets of the Liberty Media Group remaining after such
Disposition shall constitute "reasonable provision" for such amount of taxes,
costs and liabilities (contingent or otherwise) as can be supported by such
properties and assets. To the extent the proceeds of any Disposition include any
securities or other property other than cash, the Board of Directors shall
determine the value of such securities or property, including for the purpose of
determining the equivalent value thereof if the Board of Directors determines to
pay a dividend or redemption price in cash or securities or other property as
provided in clause (z) of paragraph 5(b) of this Section E.
"Number of Shares Issuable with Respect to the Inter-Group Interest" after
the Distribution shall be zero and shall from time to time thereafter, as
applicable, be
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(a) adjusted as appropriate to reflect subdivisions (by stock split
or otherwise) and combinations (by reverse stock split or otherwise) of the
Series A Liberty Media Group Common Stock and dividends or distributions of
shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock to holders of Series A Liberty Media Group Common
Stock and other reclassifications of Series A Liberty Media Group Common
Stock,
(b) decreased (but not to less than zero) by (i) the aggregate number
of shares of Series A Liberty Media Group Common Stock issued or sold by
the Corporation after the Distribution other than Committed Acquisition
Shares, the proceeds of which are attributed to the TCI Group, (ii) the
aggregate number of shares of Series A Liberty Media Group Common Stock
issued or delivered upon conversion, exercise or exchange of Convertible
Securities (other than Pre-Distribution Convertible Securities and
Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares), the proceeds of which are
attributed to the TCI Group, (iii) the aggregate number of shares of Series
A Liberty Media Group Common Stock issued or delivered by the Corporation
as a dividend or distribution to holders of Series A TCI Group Common Stock
and Series B TCI Group Common Stock, (iv) the aggregate number of shares of
Series A Liberty Media Group Common Stock issued or delivered upon the
conversion, exercise or exchange of any Convertible Securities (other than
Pre-Distribution Convertible Securities and Convertible Securities which
are convertible into or exercisable or exchangeable for Committed
Acquisition Shares) issued or delivered by the Corporation after the
Distribution as a dividend or distribution or by reclassification or
exchange to holders of Series A TCI Group Common Stock and Series B TCI
Group Common Stock and (v) the aggregate number of shares of Series A
Liberty Media Group Common Stock (rounded, if necessary, to the nearest
whole number), equal to the aggregate fair value (as determined by the
Board of Directors) of assets or properties attributed to the Liberty Media
Group that are transferred from the Liberty Media Group to the TCI Group in
consideration of a reduction in the Number of Shares Issuable with Respect
to the Inter-Group Interest, divided by the Market Value of one share of
Series A Liberty Media Group Common Stock as of the date of such transfer,
and
(c) increased by (i) the aggregate number of any shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock which are retired or otherwise cease to be outstanding following
their purchase with funds attributed to the TCI Group, (ii) a number
(rounded, if necessary, to the nearest whole number), equal to the fair
value (as determined by the Board of Directors) of assets or properties,
theretofore attributed to the TCI Group that are contributed to the Liberty
Media Group in consideration of an increase in the Number of Shares
Issuable with Respect to the Inter-Group Interest, divided by the Market
Value of one share of Series A Liberty Media Group Common Stock as of the
date of such contribution and (iii) the aggregate number of shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock into or for which Convertible Securities are deemed to be
converted, exercised or exchanged pursuant to the last sentence of the
definition of "TCI Group" in this paragraph 8. The Corporation shall not
issue or sell shares of Series B Liberty Media Group Common Stock in
respect of a reduction in the Number of Shares Issuable with Respect to the
Inter-Group Interest.
Whenever a change in the Number of Shares Issuable with Respect to the
Inter-Group Interest occurs, the Corporation shall prepare and file a statement
of such change with the Secretary of the Corporation.
"Outstanding Interest Fraction", as of any date, shall mean a fraction the
numerator of which is the aggregate number of shares of Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock outstanding on
such date and the denominator of which is the sum of (a) such aggregate number
of shares of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock outstanding on such date and (b) the Number of Shares
Issuable with Respect to the Inter-Group Interest as of such date.
"Pre-Distribution Convertible Securities" shall mean Convertible Securities
that were outstanding on the record date for the Distribution and were, prior to
such date, convertible into or exercisable or exchangeable for shares of the
Class A Common Stock, par value $1.00 per share, of the Corporation.
"Redemption Date" shall mean any date fixed for a redemption or purchase of
shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock, as set forth in a notice to holders of such series pursuant
to this Certificate.
"Related Business Transaction" shall mean any Disposition of all or
substantially all of the properties and assets of the Liberty
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Media Group in which the Corporation receives as proceeds of such Disposition
primarily equity securities (including, without limitation, capital stock,
convertible securities, partnership or limited partnership interests and other
types of equity securities, without regard to the voting power or contractual or
other management or governance rights related to such equity securities) of the
purchaser or acquiror of such assets and properties of the Liberty Media Group,
any entity which succeeds (by merger, formation of a joint venture enterprise or
otherwise) to such assets and properties of the Liberty Media Group or a third
party issuer, which purchaser, acquiror or other issuer is engaged or proposes
to engage primarily in one or more businesses similar or complementary to the
businesses conducted by the Liberty Media Group prior to such Disposition, as
determined in good faith by the Board of Directors.
"Subsidiary" shall mean, with respect to any person or entity, any
corporation or partnership 50% or more of whose outstanding voting securities or
partnership interests, as the case may be, are directly or indirectly owned by
such person or entity.
"TCI Group" shall mean, as of any date:
(a) the interest of the Corporation or any of its subsidiaries in all
of the businesses in which the Corporation or any of its subsidiaries (or
any of their predecessors or successors) is or has been engaged, directly
or indirectly, and the respective assets and liabilities of the Corporation
or any of its subsidiaries, other than any businesses, assets or
liabilities of the Liberty Media Group;
(b) a proportionate interest in the businesses, assets and
liabilities of the Liberty Media Group equal to the Inter-Group Interest
Fraction as of such date;
(c) from and after any dividend or other distribution with respect to
shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock (other than a dividend or other distribution
payable in shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock, with respect to which adjustment shall be
made as provided in clause (a) of the definition of "Number of Shares
Issuable with Respect to the Inter-Group Interest", or in other securities
of the Corporation attributed to the Liberty Media Group, for which
provision shall be made as set forth in the penultimate sentence of this
definition), an amount of assets or properties theretofore included in the
Liberty Media Group equal to the aggregate amount of such kind of assets or
properties so paid in respect of such dividend or other distribution with
respect to shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock multiplied by a fraction the numerator of
which is equal to the Inter-Group Interest Fraction in effect immediately
prior to the record date for such dividend or other distribution and the
denominator of which is equal to the Outstanding Interest Fraction in
effect immediately prior to the record date for such dividend or other
distribution; and
(d) any assets or properties transferred from the Liberty Media Group
to the TCI Group;
provided that, from and after any contribution or transfer of any assets or
properties from the TCI Group to the Liberty Media Group, the TCI Group shall no
longer include such assets or properties so contributed or transferred (other
than pursuant to its interest in the businesses, assets and liabilities of the
Liberty Media Group pursuant to clause (b) above). If the Corporation shall pay
a dividend or make any other distribution with respect to shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
payable in other securities of the Corporation attributed to the Liberty Media
Group, the TCI Group shall be deemed to hold an amount of such other securities
equal to the amount so distributed multiplied by the fraction specified in
clause (c) of this definition (determined as of a time immediately prior to the
record date for such dividend or other distribution), and to the extent interest
or dividends are paid or other distributions are made on such other securities
so distributed to holders of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock, the TCI Group shall include a
corresponding ratable amount of the kind of assets paid as such interest or
dividends or other distributions in respect of such securities so deemed to be
held by the TCI Group. The Corporation may also, to the extent any such other
securities constitute Convertible Securities which are at the time convertible,
exercisable or exchangeable, cause such Convertible Securities deemed to be held
by the TCI Group to be deemed to be converted, exercised or exchanged (and to
the extent the terms of such Convertible Securities require payment or delivery
of consideration in order to effect such conversion, exercise or exchange, the
TCI Group shall in such case no longer include an amount of the kind of
properties or assets required to be paid or delivered as such consideration for
the amount of the Convertible Securities deemed converted, exercised or
exchanged as if such Convertible Securities were outstanding), in which case
such Convertible Securities shall no longer be deemed to be held by the TCI
Group or attributed to the Liberty Media Group.
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"TCI Group Available Dividend Amount", as of any date, shall mean either:
(a) the excess of (i) an amount equal to the total assets of the TCI Group less
the total liabilities (not including preferred stock) of the TCI Group as of
such date over (ii) the aggregate par value of, or any greater amount determined
to be capital in respect of, all outstanding shares of Series A TCI Group Common
Stock, Series B TCI Group Common Stock and each class or series of Preferred
Stock attributed to the TCI Group or (b) in case there is no such excess, an
amount equal to the Corporation Earnings (Loss) Attributable to the TCI Group
(if positive) for the fiscal year in which such date occurs and/or the preceding
fiscal year.
"Trading Day" shall mean each weekday other than any day on which any
relevant class or series of capital stock of the Corporation is not traded on
the Nasdaq National Market System or in the over-the-counter market."
(IV) SECTION C OF ARTICLE V OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE
CORPORATION IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
"SECTION C
REMOVAL OF DIRECTORS
Subject to the rights of the holders of any class or series of Preferred
Stock, directors may be removed from office only for cause (as hereinafter
defined) upon the affirmative vote of the holders of 66 2/3% of the total voting
power of the then outstanding shares of Series A TCI Group Common Stock, Series
B TCI Group Common Stock, Series A Liberty Media Group Common Stock, Series B
Liberty Media Group Common Stock and any class or series of Preferred Stock
entitled to vote at an election of directors, voting together as a single class.
Except as may be provided by law, "cause" for removal, for purposes of this
Section C, shall exist only if: (i) the director whose removal is proposed has
been convicted of a felony, or has been granted immunity to testify in an action
where another has been convicted of a felony, by a court of competent
jurisdiction and such conviction is no longer subject to direct appeal; (ii)
such director has become mentally incompetent, whether or not so adjudicated,
which mental incompetence directly affects his ability as a director of the
Corporation, as determined by at least 66 2/3% of the members of the Board of
Directors then in office (other than such director); or (iii) such director's
actions or failure to act have been determined by at least 66 2/3% of the
members of the Board of Directors then in office (other than such director) to
be in derogation of the director's duties."
(V) ARTICLE VIII OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION
IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
"ARTICLE VIII
MEETINGS OF STOCKHOLDERS
SECTION A
ANNUAL AND SPECIAL MEETINGS
Subject to the rights of the holders of any class or series of Preferred
Stock, stockholder action may be taken only at an annual or special meeting.
Except as otherwise provided in the terms of any class or series of Preferred
Stock or unless otherwise prescribed by law or by another provision of this
Certificate, special meetings of the stockholders of the Corporation, for any
purpose or purposes, shall be called by the Secretary of the Corporation (i)
upon the written request of the holders of not less than 66 2/3% of the total
voting power of the outstanding Voting Securities (as hereinafter defined) or
(ii) at the request of at least 75% of the members of the Board of Directors
then in office. The term "Voting Securities" shall include the Series A TCI
Group Common Stock, the Series B TCI Group Common Stock, the Series A Liberty
Media Group Common Stock, the Series B Liberty Media Group Common Stock and any
class or series of Preferred Stock entitled to vote with the holders of Common
Stock generally upon all matters which may be submitted to a vote of
stockholders at any annual meeting or special meeting thereof.
SECTION B
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ACTION WITHOUT A MEETING
Except as otherwise provided in the terms of any class or series of
Preferred Stock, no action required to be taken or which may be taken at any
annual meeting or special meeting of stockholders may be taken without a
meeting, and the power of stockholders to consent in writing, without a meeting,
is specifically denied."
(VI) ARTICLE IX OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION
IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
"ARTICLE IX
ACTIONS REQUIRING SUPERMAJORITY STOCKHOLDER VOTE
Subject to the rights of the holders of any class or series of Preferred
Stock, the affirmative vote of the holders of at least 66 2/3% of the total
voting power of the then outstanding Voting Securities (as defined in Section A
of Article VIII of this Certificate), voting together as a single class at a
meeting specifically called for such purpose, shall be required in order for the
Corporation to take any action to authorize:
(a) the amendment, alteration or repeal of any provision of this
Certificate or the addition or insertion of other provisions herein;
(b) the adoption, amendment or repeal of any provision of the Bylaws
of the Corporation; provided, however, that this clause (b) shall not apply
to, and no vote of the stockholders of the Corporation shall be required to
authorize, the adoption, amendment or repeal of any provision of the Bylaws
of the Corporation by the Board of Directors in accordance with the power
conferred upon it pursuant to Section F of Article V of this Certificate;
(c) the merger or consolidation of this Corporation with or into any
other corporation; provided, however, that this clause (c) shall not apply
to any merger or consolidation (i) as to which the laws of the State of
Delaware, as then in effect, do not require the consent of this
Corporation's stockholders, or (ii) which at least 75% of the members of
the Board of Directors then in office have approved;
(d) the sale, lease or exchange of all, or substantially all, of the
property and assets of the Corporation; or
(e) the dissolution of the Corporation.
All rights at any time conferred upon the stockholders of the Corporation
pursuant to this Certificate are granted subject to the provisions of this
Article IX."
(vii) Upon the effectiveness of this Certificate of Amendment, (a) each share of
the Class A Common Stock, par value $1.00 per share, of the Corporation that is
issued and outstanding (including shares held in the treasury of the
Corporation) shall be redesignated and changed, ipso facto and without any other
action on the part of the stockholders thereof, into one share of Series A TCI
Group Common Stock and (b) each share of Class B Common Stock, par value $1.00
per share, of the Corporation that is issued and outstanding (including shares
held in the treasury of the Corporation) shall be redesignated and changed, ipso
facto and without any other action on the part of the stockholders thereof, into
one share of Series B TCI Group Common Stock.
SECOND: That said amendments were duly adopted by the Board of Directors of
the Corporation, and pursuant to resolution of the Board of Directors of the
Corporation, the annual meeting of the stockholders of the Corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, at which meeting the necessary number
of shares as required by statute and the Restated Certificate of Incorporation
of the Corporation were voted in favor of said amendments.
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THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
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IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Amendment this 3rd day of August, 1995.
TELE-COMMUNICATIONS, INC.
By: BRENDON R. CLOUSTON
Name: Brendon R. Clouston
Title: Executive Vice President
ATTEST:
By: STEPHEN M. BRETT
Name: Stephen M. Brett
Title: Secretary
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STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
_______________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE THIRD
DAY OF AUGUST, A.D. 1995, AT 12:46 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS FOR RECORDING.
EDWARD J. FREEL
---------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7596126
DATE: 08-03-95
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 12:46 PM 08/03/1995
950175234 - 2371729
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION
_______________
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED
AS "CONVERTIBLE REDEEMABLE PARTICIPATING PREFERRED STOCK,
SERIES F" ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
_______________
The undersigned Executive Vice President of Tele-Communications, Inc., a
Delaware corporation (the "Corporation"), hereby certifies that the Board of
Directors of the Corporation duly adopted the following resolutions creating a
series of preferred stock designated as "Convertible Redeemable Participating
Preferred Stock, Series F":
BE IT RESOLVED, that pursuant to authority expressly granted by the
provisions of Article IV, Section D of the Restated Certificate of Incorporation
of the Corporation, the Board of Directors hereby creates and authorizes the
issuance of a series of preferred stock, par value $.01 per share, of the
Corporation, to consist of 500,000 shares, and hereby fixes the designations,
dividend rights, voting powers, rights on liquidation, conversion rights,
redemption rights and other preferences and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions of the
shares of such series (in addition to the designations, preferences and
relative, participating, limitations or restrictions thereof set forth in the
Restated Certificate of Incorporation that are applicable to preferred stock of
all series) as follows:
1. Designation. The designation of the series of preferred stock, par value
$.01 per share, of the Corporation authorized hereby is "Convertible Redeemable
Participating Preferred Stock, Series F" (the "Series F Preferred Stock").
2. Certain Definitions. Unless the context otherwise requires, the terms
defined in this paragraph 2 shall have, for all purposes, the meanings herein
specified:
"Average Quoted Price", when used with respect to the Series A TCI Group
Common Stock, shall mean the average of the Quoted Prices of the Series A TCI
Group Common Stock for the most recent period of five trading days on which
shares of such series trade ending three Business Days prior to the Redemption
Date, appropriately adjusted to take into account the actual occurrence, during
the period following the first of such five trading days and ending on the
Business Day immediately preceding such Redemption Date, of any event of a type
described in paragraph 7. The "Quoted Price" of a share of Series A TCI Group
Common Stock on any day means the last sale price (or, if no sale price is
reported, the average of the high and low bid prices) of the Series A TCI Group
Common Stock, on such day as reported on the National Association of Securities
Dealers, Inc. Automated Quotation System, Inc. ("NASDAQ") or if the Series A TCI
Group Common Stock is listed on an exchange, as reported in the composite
transactions for the principal exchange on which such stock is listed.
"Board of Directors" shall mean the Board of Directors of the Corporation
and, unless the context indicates otherwise, shall also mean, to the extent
permitted by law, any committee thereof authorized, with respect to any
particular matter, to exercise the power of
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the Board of Directors of the Corporation with respect to such matter.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in Denver, Colorado are not required to be open.
"capital stock" shall mean any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) corporate stock.
"Certificate" shall mean the Restated Certificate of Incorporation of the
Corporation, as it may from time to time hereafter be amended or restated.
"Class A Preferred Stock" shall mean the Class A Preferred Stock, par value
$.01 per share, of the Corporation.
"Class B Preferred Stock" shall mean the Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock, par value $.01 per share, of the
Corporation.
"Conversion Rate" shall have the meaning ascribed to such term in paragraph
7(b) hereof.
"Convertible Securities" shall mean securities, other than the Series B TCI
Group Common Stock, that are convertible into or exchangeable for Series A TCI
Group Common Stock; provided, however, that neither the Series A Liberty Media
Group Common Stock nor the Series B Liberty Media Group Common Stock shall be
deemed to be a Convertible Security by virtue of the Corporation's right to
cause the outstanding shares of each such series of Liberty Media Group Common
Stock to be converted into Series A TCI Group Common Stock and Series B TCI
Group Common Stock, respectively, in accordance with paragraphs 2(c) or
5(b)(iii) of Section E of Article IV of the Certificate.
"Cut-Off Date" shall have the meaning ascribed to such term in paragraph
7(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Issue Date" shall mean the date on which shares of Series F Preferred
Stock are first issued.
"Junior Stock" shall mean (i) the TCI Group Common Stock, (ii) the Liberty
Media Group Common Stock, (iii) the Class B Preferred Stock, (iv) any other
class or series of capital stock, whether now existing or hereafter created, of
the Corporation, other than (A) the Series F Preferred Stock, (B) any class or
series of Parity Stock (except to the extent provided under clause (v) hereof)
and (C) any Senior Stock, and (v) any class or series of Parity Stock to the
extent that it ranks junior to the Series F Preferred Stock as to dividend
rights, rights of redemption or rights on liquidation, as the case may be. For
purposes of clause (v) above, a class or series of Parity Stock shall rank
junior to the Series F Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation if the holders of shares of Series F
Preferred Stock shall be entitled to dividend payments, payments on redemption
or payments of amounts distributable upon dissolution, liquidation or winding up
of the Corporation, as the case may be, in preference or priority to the holders
of shares of such class or series.
"Liberty Media Group Common Stock" shall mean, collectively, the Series A
Liberty Media Group Common Stock and the Series B Liberty Media Group Common
Stock.
"Liquidation Preference" per share of Series F Preferred Stock shall be
$.01.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"Officers' Certificate" shall mean a certificate signed by the Chairman of
the Board or the President of the Corporation and by the Treasurer of the
Corporation.
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"Opinion of Counsel" shall mean a written opinion from legal counsel
selected by the Corporation. The counsel may be an employee of or counsel to the
Corporation.
"Original Stated Amount" of a share of Series F Preferred Stock means
$24,875.
"Parity Stock" shall mean any class or series of capital stock, whether now
existing or hereafter created, of the Corporation ranking on a parity basis with
the Series F Preferred Stock as to dividend rights, rights of redemption or
rights on liquidation. Capital stock of any class or series shall rank on a
parity as to dividend rights, rights of redemption or rights on liquidation with
the Series F Preferred Stock, whether or not the dividend rates, dividend
payment dates, redemption or liquidation prices per share or sinking fund or
mandatory redemption provisions, if any, are different from those of the Series
F Preferred Stock, if the holders of shares of such class or series shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in proportion to their respective accumulated and accrued and
unpaid dividends, redemption prices or liquidation prices, respectively, without
preference or priority, one over the other, as between the holders of shares of
such class or series and the holders of Series F Preferred Stock. No class or
series of capital stock that ranks junior to the Series F Preferred Stock as to
rights on liquidation shall rank or be deemed to rank on a parity basis with the
Series F Preferred Stock as to dividend rights or rights of redemption, unless
the instrument creating or evidencing such class or series of capital stock
otherwise expressly provides.
"Participating Dividend" shall have the meaning ascribed to such term in
paragraph 3(a) hereof.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or agency or political subdivision thereof, or other entity, whether
acting in an individual, fiduciary or other capacity.
"Redemption Date" as to any share of Series F Preferred Stock shall mean
the date fixed for redemption of such share by the Board of Directors of the
Corporation pursuant to paragraph 5(a); provided that no such date will be a
Redemption Date unless the applicable Redemption Price is actually paid or
deposited as provided in paragraph 5(d) hereof on such date.
"Redemption Price" as to any share of Series F Preferred Stock which is to
be redeemed on any Redemption Date shall mean the Stated Amount thereof on such
Redemption Date.
"Senior Stock" shall mean any class or series of capital stock, whether now
existing or hereafter created, of the Corporation ranking prior to the Series F
Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation. Capital stock of any class or series shall rank prior to the Series
F Preferred Stock as to dividend rights, rights of redemption or rights on
liquidation if the holders of shares of such class or series shall be entitled
to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in preference or priority to the holders of shares of Series F
Preferred Stock. No class or series of capital stock that ranks on a parity
basis with or junior to the Series F Preferred Stock as to rights on liquidation
shall rank or be deemed to rank prior to the Series F Preferred Stock as to
dividend rights or rights of redemption, notwithstanding that the dividend rate,
dividend payment dates, sinking fund provisions, if any, or mandatory redemption
provisions thereof are different from those of the Series F Preferred Stock,
unless the instrument creating or evidencing such class or series of capital
stock otherwise expressly provides.
"Series A Liberty Media Group Common Stock" shall have the meaning ascribed
to such term in Section E of Article IV of the Certificate.
"Series A TCI Group Common Stock" shall mean the Series A TCI Group Common
Stock, par value $1.00 per share, of the Corporation, which term shall include,
where appropriate, in the case of any reclassification, recapitalization or
other change in the Series A TCI Group Common Stock, or in the case of a
consolidation or merger of the Corporation with or into another Person affecting
the Series A TCI Group Common Stock, such capital stock to which a holder of
Series A TCI Group Common Stock shall be entitled upon the occurrence of such
event; provided, however, that with respect to any period prior to the date of
filing of the amendment to the Certificate redesignating the Class A Common
Stock, par value $1.00 per share, of the Corporation as "Series A
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TCI Group Common Stock," such term shall be deemed to refer to the Class A
Common Stock, par value $1.00 per share, of the Corporation.
"Series B Liberty Media Group Common Stock" shall have the meaning ascribed
to such term in Section E of Article IV of the Certificate.
"Series B TCI Group Common Stock" shall mean the Series B TCI Group Common
Stock, par value $1.00 per share, of the Corporation, which term shall include,
where appropriate, in the case of any reclassification, recapitalization or
other change in the Series B TCI Group Common Stock, or in the case of a
consolidation or merger of the Corporation with or into another Person affecting
the Series B TCI Group Common Stock, such capital stock to which a holder of
Series B TCI Group Common Stock shall be entitled upon the occurrence of such
event; provided, however, that with respect to any period prior to the date of
filing of the amendment to the Certificate redesignating the Class B Common
Stock, par value $1.00 per share, of the Corporation as "Series B TCI Group
Common Stock," such term shall be deemed to refer to the Class B Common Stock,
par value $1.00 per share, of the Corporation.
"Stated Amount" per share of the Series F Preferred Stock as of any date in
question (the "Determination Date") shall mean an amount equal to the sum of (a)
the Original Stated Amount of such share, plus (b) an amount equal to all
dividends which have been declared on the shares of Series F Preferred Stock
(including, but not limited to, Participating Dividends) but which, as of the
Determination Date, are unpaid. In connection with the determination of the
Stated Amount of a share of Series F Preferred Stock upon redemption, the
Determination Date shall be the applicable date of redemption.
"Subsidiary" of any Person shall mean (i) a corporation a majority of the
capital stock of which, having voting power under ordinary circumstances to
elect directors, is at the time, directly or indirectly, owned by such Person
and/or one or more Subsidiaries of such Person and (ii) any other Person (other
than a corporation) in which such Person and/or one or more Subsidiaries of such
Person, directly or indirectly, has (x) a majority ownership interest or (y) the
power to elect or direct the election of a majority of the members of the
governing body of such first-named Person.
"TCI Group Common Stock" shall mean, collectively, the Series A TCI Group
Common Stock and the Series B TCI Group Common Stock.
"TCI Holder" shall mean the Corporation and each Subsidiary of the
Corporation.
3. Dividends.
(a) CASH DIVIDEND RIGHTS. Subject to the prior preferences and other
rights of any Senior Stock and the provisions of paragraph 6 hereof, the holders
of Series F Preferred Stock shall be entitled to receive cash dividends per
share in an amount (the "Participating Dividend") equal to the product of (x)
the amount of the cash dividend declared and to be paid on a single share of
Series A TCI Group Common Stock (or any other security into which the Series F
Preferred Stock is then convertible) and (y) the number of shares of Series A
TCI Group Common Stock (or other security) into which a share of Series F
Preferred Stock may be converted as of the date such dividend is paid. The
Participating Dividends shall be the only dividends payable to holders of Series
F Preferred Stock and such Participating Dividends shall be declared and paid
only when, as and if a cash dividend is declared and paid upon the outstanding
shares of Series A TCI Group Common Stock. Dividends or distributions on the
Series A TCI Group Common Stock which are paid or made in securities, properties
or other assets of the Corporation other than cash shall not constitute
Participating Dividends and holders of Series F Preferred Stock shall have no
rights with respect thereto, other than as may be provided in paragraph 7.
Participating Dividends shall be payable prior and in preference to any dividend
payments to the holders of any Junior Stock. Participating Dividends shall be
payable to holders of record of shares of Series F Preferred Stock as of the
record date for the determination of holders of Series A TCI Group Common Stock
entitled to receive such dividend and shall be payable on the payment date
established by the Corporation for the payment of such cash dividend to holders
of Series A TCI Group Common Stock.
(b) METHOD OF PAYMENT. All dividends payable with respect to the shares of
Series F Preferred Stock shall be declared and
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paid in cash. All dividends paid with respect to the shares of Series F
Preferred Stock pursuant to this paragraph 3 shall be paid pro rata to all the
holders of shares of Series F Preferred Stock outstanding on the applicable
record date.
4. Distributions Upon Liquidation, Dissolution or Winding Up.
Subject to the prior payment in full of the preferential amounts to which
any Senior Stock is entitled, in the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the holders of
Series F Preferred Stock shall be entitled to receive from the assets of the
Corporation available for distribution to stockholders, before any payment or
distribution shall be made to the holders of any Junior Stock, an amount in cash
or property at its fair market value, as determined by the Board of Directors in
good faith, or a combination thereof, per share, equal to the Liquidation
Preference of a share of Series F Preferred Stock as of the date of payment or
distribution, which payment or distribution shall be made pari passu with any
such payment or distribution made to the holders of any Parity Stock ranking on
a parity basis with the Series F Preferred Stock with respect to distributions
upon liquidation, dissolution or winding up of the Corporation. Following the
payment of all amounts owing to holders of each class or series of capital stock
of the Corporation having a preference or priority over the TCI Group Common
Stock as to distributions upon the liquidation, dissolution or winding up of the
Corporation, then the holders of the Series F Preferred Stock shall be entitled
to participate, with the holders of the TCI Group Common Stock, pro rata, based
upon the number of shares of Series A TCI Group Common Stock into which the
shares of Series F Preferred Stock are then convertible, as to any amounts
remaining for distribution to the holders of TCI Group Common Stock upon the
liquidation, dissolution or winding up of the Corporation. If, upon distribution
of the Corporation's assets in liquidation, dissolution or winding up, the
assets of the Corporation to be distributed among the holders of the Series F
Preferred Stock and to all holders of any Parity Stock ranking on a parity basis
with the Series F Preferred Stock with respect to distributions upon
liquidation, dissolution or winding up shall be insufficient to permit payment
in full to such holders of the respective preferential amounts to which they are
entitled, then the entire assets of the Corporation to be distributed to holders
of the Series F Preferred Stock and such Parity Stock shall be distributed pro
rata to such holders based upon the aggregate of the full preferential amounts
to which the shares of Series F Preferred Stock and such Parity Stock would
otherwise respectively be entitled. Neither the consolidation or merger of the
Corporation with or into any other corporation or corporations nor the sale,
transfer or lease of all or substantially all of the assets of the Corporation
shall itself be deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this paragraph 4. Notice of the liquidation,
dissolution or winding up of the Corporation shall be given, not less than 20
days prior to the date on which such liquidation, dissolution or winding up is
expected to take place or become effective, to the holders of record of the
shares of Series F Preferred Stock.
5. Redemption.
(a) OPTIONAL REDEMPTION. Subject to the rights of any Senior Stock and the
provisions of paragraph 6, the shares of Series F Preferred Stock may be
redeemed, at the option of the Corporation by the action of the Board of
Directors, in whole or from time to time in part, at the Redemption Price on any
Redemption Date occurring on or after the thirtieth Business Day following the
Issue Date. The Redemption Price shall be payable (except as provided in the
last sentence of paragraph 5(c) hereof) only in shares of Series A TCI Group
Common Stock. If less than all outstanding shares of Series F Preferred Stock
are to be redeemed on any Redemption Date, the shares of Series F Preferred
Stock to be redeemed shall be chosen pro rata among all holders of Series F
Preferred Stock. The Corporation shall not be required to register a transfer of
(i) any shares of Series F Preferred Stock for a period of 15 days next
preceding any selection of shares of Series F Preferred Stock to be redeemed or
(ii) any shares of Series F Preferred Stock selected or called for redemption.
(b) NOTICE OF REDEMPTION. Notice of redemption shall be given by or on
behalf of the Corporation, not more than 60 days nor less than 30 days prior to
the Redemption Date, to the holders of record of the shares of Series F
Preferred Stock to be redeemed; but no defect in such notice or in the mailing
thereof shall affect the validity of the proceedings for the redemption of any
shares of Series F Preferred Stock. In addition to any information required by
law or by the applicable rules of any national securities exchange or national
interdealer quotation system on which the Series F Preferred Stock may be listed
or admitted to trading or quoted, such notice shall set forth the Redemption
Price, the Redemption Date, the number of shares to be redeemed, the portion of
the Redemption Price, if any, which the Corporation has elected to pay through
the issuance of Series A TCI Group Common Stock and the place at which the
shares of Series F Preferred Stock called for redemption will, upon presentation
and surrender of the stock certificates
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evidencing such shares, be redeemed. In the event that fewer than the total
number of shares of Series F Preferred Stock represented by a certificate are
redeemed, a new certificate representing the number of unredeemed shares will be
issued to the holder thereof without cost to such holder.
(c) ISSUANCE OF SERIES A TCI GROUP COMMON STOCK. Subject to compliance
with the conditions contained in this paragraph 5(c), the Corporation shall pay
the Redemption Price of the shares of Series F Preferred Stock called for
redemption by issuing to the holder thereof, in respect of its shares to be
redeemed, a number of shares of Series A TCI Group Common Stock equal to the
aggregate Redemption Price (or designated portion thereof) of such shares
divided by the Average Quoted Price of a share of Series A TCI Group Common
Stock. No fractional shares of Series A TCI Group Common Stock or scrip shall be
issued upon such redemption. As to any final fraction of a share of Series A TCI
Group Common Stock that would otherwise be issuable to a holder upon redemption
of his shares of Series F Preferred Stock (determined on the basis of the total
number of such holder's shares of Series F Preferred Stock in respect of which
shares of Series A TCI Group Common Stock are issuable), the Corporation shall
pay an amount in cash or by its check equal to the same fraction of the Average
Quoted Price of a share of Series A TCI Group Common Stock.
The Corporation's right to pay the Redemption Price of the shares of Series
F Preferred Stock through the issuance of shares of Series A TCI Group Common
Stock shall be conditioned upon: (i) the Corporation's having timely given a
notice of redemption setting forth such election as provided in paragraph 5(b);
(ii) the Corporation's having obtained and filed, on or before the Redemption
Date, at the office of the redemption agent for the Series F Preferred Stock (or
with the books of the Corporation if there is no redemption agent) an Opinion of
Counsel to the effect that (A) the shares of Series A TCI Group Common Stock to
be issued upon such redemption have been duly authorized and, when issued and
delivered in payment of the Redemption Price of the shares of Series F Preferred
Stock to be redeemed, will be validly issued, fully paid and non-assessable and
free from preemptive rights, (B) that the issuance and delivery of such shares
of Series A TCI Group Common Stock upon such redemption of shares of Series F
Preferred Stock will not violate the laws of the state of incorporation of the
Corporation, and (C) unless at the time the Redemption Notice is given all
shares of the Series F Preferred Stock are owned by one or more TCI Holders,
that the issuance and delivery of the shares of Series A TCI Group Common Stock
upon such redemption of shares of Series F Preferred Stock is exempt from the
registration or qualification requirements of the 1933 Act and applicable state
securities laws or, if no such exemption is available, that the shares of Series
A TCI Group Common Stock to be issued have been duly registered or qualified
under the 1933 Act and such applicable state securities laws; and (iii) the
Corporation's having filed, on or before the Redemption Date, at the office of
such redemption agent (or with the books of the Corporation if there is no
redemption agent), an Officers' Certificate setting forth the number of shares
of Series A TCI Group Common Stock to be issued in payment of the Redemption
Price of each share of Series F Preferred Stock and the method of determining
the same (consistent with the provisions hereof). If the foregoing conditions
have not been satisfied prior to or on the Redemption Date, the Corporation
shall pay the Redemption Price for the shares of Series F Preferred Stock to be
redeemed in cash.
(d) DEPOSIT OF REDEMPTION PRICE. If notice of any redemption by the
Corporation pursuant to this paragraph 5 shall have been given as provided in
paragraph 5(b) above, and if on or before the Redemption Date specified in such
notice the Corporation shall have deposited with the redemption agent for the
Series F Preferred Stock (or if there is no redemption agent, shall have set
apart so as to be available for such purpose and only such purpose) shares of
Series A TCI Group Common Stock sufficient to redeem in full on the Redemption
Date at the Redemption Price all shares of Series F Preferred Stock called for
redemption and provided that the conditions set forth in paragraph 5(c) have
been satisfied, then effective as of the close of business on the Redemption
Date, the shares of Series F Preferred Stock called for redemption,
notwithstanding that any certificate therefor shall not have been surrendered
for cancellation, shall no longer be deemed outstanding, and the holders thereof
shall cease to be stockholders with respect to such shares, and all rights with
respect to such shares shall forthwith cease and terminate, except the right of
the holders thereof to receive the Series A TCI Group Common Stock (or cash, as
applicable) issuable (or payable) in payment of the Redemption Price of such
shares, without interest, upon the surrender of certificates representing the
same.
(e) STATUS OF REDEEMED SHARES. All shares of Series F Preferred Stock
redeemed, exchanged, purchased or otherwise acquired by the Corporation shall be
retired and shall be restored to the status of authorized and unissued shares of
Series Preferred Stock (and may be reissued as part of another series of the
preferred stock of the Corporation, but such shares shall not be reissued as
Series F Preferred Stock).
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6. Limitations on Dividends and Redemptions.
If at any time the Corporation shall have declared a dividend on the Series
F Preferred Stock and failed to pay or set aside consideration sufficient to pay
such dividend, or if the Corporation declares a cash dividend on the shares of
Series A TCI Group Common Stock and fails to pay or set aside the Participating
Dividend required to be paid to the holders of the Series F Preferred Stock,
then (i) the Corporation shall not declare or pay any dividend on or make any
distribution with respect to any Parity Stock or Junior Stock or set aside any
money or assets for any such purpose until such dividend payable to the holders
of Series F Preferred Stock has been paid or consideration sufficient to pay
such dividend has been set aside for such purpose, and (ii) neither the
Corporation nor any Subsidiary thereof shall redeem, exchange, purchase or
otherwise acquire any shares of Series F Preferred Stock, Parity Stock or Junior
Stock, or set aside any money or assets for any such purpose, pursuant to
paragraph 5 hereof, a sinking fund or otherwise, unless all then outstanding
shares of any class or series of Parity Stock that by the terms of the
instrument creating or evidencing such Parity Stock is required to be redeemed
under such circumstances are redeemed or exchanged pursuant to the terms hereof
and thereof.
If the Corporation shall fail to redeem on any date fixed for redemption or
exchange pursuant to paragraph 5 hereof any shares of Series F Preferred Stock
called for redemption on such date, and until such shares are redeemed in full,
the Corporation shall not redeem or exchange any Parity Stock or Junior Stock or
declare or pay any dividend on or make any distribution with respect to any
Junior Stock, or set aside any money or assets for any such purpose, and neither
the Corporation nor any Subsidiary thereof shall purchase or otherwise acquire
any Series F Preferred Stock, Parity Stock or Junior Stock, or set aside any
money or assets for any such purpose.
Neither the Corporation nor any Subsidiary thereof shall redeem, exchange,
purchase or otherwise acquire any Parity Stock or Junior Stock, or set aside any
money or assets for any such purpose, if after giving effect to such redemption,
exchange, purchase or other acquisition, the amount (as determined by the Board
of Directors in good faith) that would be available for distribution to the
holders of the Series F Preferred Stock upon liquidation, dissolution or winding
up of the Corporation if such liquidation, dissolution or winding up were to
occur on the date fixed for such redemption, exchange, purchase or other
acquisition of such Parity Stock or Junior Stock would be less than the
aggregate Liquidation Preference as of such date of all shares of Series F
Preferred Stock then outstanding.
Nothing contained in this paragraph 6 shall prevent (i) the payment of
dividends on any Junior Stock solely in shares of Junior Stock or the
redemption, purchase or other acquisition of Junior Stock solely in exchange for
(together with a cash adjustment for fractional shares, if any) shares of Junior
Stock, or (ii) the payment of dividends on any Parity Stock solely in shares of
Parity Stock and/or Junior Stock or the redemption, exchange, purchase or other
acquisition of Parity Stock solely in exchange for (together with a cash
adjustment for fractional shares, if any), or through the application of the
proceeds from the sale of, shares of Parity Stock and/or Junior Stock.
All provisions of this paragraph 6 are for the sole benefit of the holders
of Series F Preferred Stock and accordingly, if the holders of shares of Series
F Preferred Stock shall have waived (as provided in paragraph 9) in whole or in
part the benefit of the applicable provisions, either generally or in the
specific instance, such provision shall not (to the extent of such waiver, in
the case of a partial waiver) restrict the redemption, exchange, purchase or
other acquisition of, or declaration, payment or making of any dividends or
distributions on the Series F Preferred Stock, any Parity Stock or any Junior
Stock.
7. Conversion.
(a) Unless previously called for redemption as provided in Section 5
hereof, shares of Series F Preferred Stock shall be convertible, at the option
of the holder thereof, at any time in such manner and upon such terms and
conditions as hereinafter provided in this paragraph 7, into fully paid and non-
assessable full shares of Series A TCI Group Common Stock. No shares of Series A
TCI Group Common Stock shall be issued in respect of the conversion of the
Series F Preferred Stock after the fifteenth Business Day (the "Cut-off Date")
preceding the date fixed for redemption; provided that the conversion of shares
surrendered for conversion in accordance with this paragraph 7 after the Cut-off
Date shall be given effect as of the date of such surrender if the
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Redemption Price to be paid, or to be irrevocably set apart in trust for the
benefit of the holders of shares to be so redeemed, has not been paid or so set
apart on or before such date fixed for redemption. In case cash, securities or
property other than Series A TCI Group Common Stock shall be payable,
deliverable or issuable upon conversion as provided herein, then all references
to Series A TCI Group Common Stock in this paragraph 7 shall be deemed to apply,
so far as appropriate and as nearly as may be, to such cash, property or other
securities
(b) Subject to the provisions for adjustment hereinafter set forth in this
paragraph 7, the Series F Preferred Stock may be converted into Series A TCI
Group Common Stock at the initial conversion rate of 1,000 fully paid and non-
assessable shares of Series A TCI Group Common Stock for one share of the Series
F Preferred Stock. (This conversion rate as from time to time adjusted
cumulatively pursuant to the provisions of this paragraph is hereinafter
referred to as the "Conversion Rate").
(c) In case after the Issue Date the Corporation shall (i) pay a dividend
or make a distribution on its outstanding shares of Series A TCI Group Common
Stock in shares of Series A TCI Group Common Stock, (ii) subdivide the then
outstanding shares of Series A TCI Group Common Stock into a greater number of
shares of Series A TCI Group Common Stock, (iii) combine the then outstanding
shares of Series A TCI Group Common Stock into a smaller number of shares of
Series A TCI Group Common Stock, or (iv) issue by reclassification of its shares
of Series A TCI Group Common Stock any shares of any other class of capital
stock of the Corporation (including any such reclassification in connection with
a merger in which the Corporation is the continuing corporation), then the
Conversion Rate in effect immediately prior to the opening of business on the
record date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be adjusted so that the
holder of each share of Series F Preferred Stock thereafter surrendered for
conversion shall be entitled to receive the number of shares of Series A TCI
Group Common Stock (and the number and kind of other securities) that such
holder would have owned or been entitled to receive immediately following such
action had such shares of Series F Preferred Stock been converted immediately
prior to such time. An adjustment made pursuant to this paragraph 7(c) for a
dividend or distribution shall become effective immediately after the record
date for the dividend or distribution and an adjustment made pursuant to this
paragraph 7(c) for a subdivision, combination or reclassification shall become
effective immediately after the effective date of the subdivision, combination
or reclassification. Such adjustment shall be made successively whenever any
action listed above shall be taken.
(d) In case the Corporation shall after the Issue Date issue any rights or
warrants to all holders of shares of Series A TCI Group Common Stock entitling
them (for a period expiring within 45 days after the record date for the
determination of stockholders entitled to receive such rights or warrants) to
subscribe for or purchase shares of Series A TCI Group Common Stock (or
Convertible Securities) at a price per share of Series A TCI Group Common Stock
(or having an initial exercise price or conversion price per share of Series A
TCI Group Common Stock) less than the then current market price per share of
Series A TCI Group Common Stock (as determined in accordance with the provisions
of paragraph 7(f) below) on such record date, the number of shares of Series A
TCI Group Common Stock into which each share of Series F Preferred Stock shall
thereafter be convertible shall be determined by multiplying the number of
shares of Series A TCI Group Common Stock into which such share of Series F
Preferred Stock was theretofore convertible immediately prior to such record
date by a fraction of which the numerator shall be the number of shares of
Series A TCI Group Common Stock outstanding on such record date plus the number
of additional shares of Series A TCI Group Common Stock offered for subscription
or purchase (or into which the Convertible Securities so offered are initially
convertible) and of which the denominator shall be the number of shares of
Series A TCI Group Common Stock outstanding on such record date plus the number
of shares of Series A TCI Group Common Stock which the aggregate offering price
of the total number of shares of Series A TCI Group Common Stock so offered (or
the aggregate initial conversion or exercise price of the Convertible Securities
so offered) would purchase at the then current market price per share of Series
A TCI Group Common Stock (as determined in accordance with the provisions of
paragraph 7(f) below) on such record date. Such adjustment shall be made
successively whenever any such rights or warrants are issued and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. In the event that all
of the shares of Series A TCI Group Common Stock (or all of the Convertible
Securities) subject to such rights or warrants have not been issued when such
rights or warrants expire (or, in the case of rights or warrants to purchase
Convertible Securities which have been exercised, all of the shares of Series A
TCI Group Common Stock issuable upon conversion of such Convertible Securities
have not been issued prior to the expiration of the conversion right thereof),
then the Conversion Rate shall be readjusted retroactively to be the Conversion
Rate which would then be in effect had the adjustment upon the issuance of such
rights or warrants been made on the basis of the actual number of shares of
Series A TCI Group Common Stock (or Convertible Securities) issued upon the
exercise of such rights or warrants (or the conversion of such Convertible
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Securities); but such subsequent adjustment shall not affect the number of
shares of Series A TCI Group Common Stock issued upon the conversion of any
share of Series F Preferred Stock prior to the date such subsequent adjustment
is made.
(e) In case the Corporation shall distribute after the Issue Date to all
holders of shares of Series A TCI Group Common Stock (including any such
distribution made in connection with a merger in which the Corporation is the
continuing corporation, other than a merger to which paragraph 7(g) is
applicable) any securities, evidences of its indebtedness or assets (other than
cash dividends or Series A TCI Group Common Stock in respect of which an
adjustment is made pursuant to paragraph 7(c) hereof) or rights or warrants to
purchase shares of Series A TCI Group Common Stock or securities convertible
into shares of Series A TCI Group Common Stock (excluding those referred to in
paragraph 7(d) above), then in each such case the number of shares of Series A
TCI Group Common Stock into which each share of Series F Preferred Stock shall
thereafter be convertible shall be determined by multiplying the number of
shares of Series A TCI Group Common Stock into which such share was theretofore
convertible immediately prior to the record date for the determination of
stockholders entitled to receive the distribution by a fraction of which the
numerator shall be the then current market price per share of Series A TCI Group
Common Stock (as determined in accordance with the provisions of paragraph 7(f)
below) on such record date and of which the denominator shall be such current
market price per share of Series A TCI Group Common Stock less the fair market
value on such record date (as determined by the Board of Directors of the
Corporation, whose determination shall be conclusive) of the portion of the
securities, assets or evidences of indebtedness or rights or warrants so to be
distributed applicable to one share of Series A TCI Group Common Stock. Such
adjustment shall be made successively whenever any such distribution is made and
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such distribution.
(f) For the purpose of any computation under paragraph 7(d), (e) or (k),
the current market price per share of Series A TCI Group Common Stock at any
date shall be deemed to be the average of the daily closing prices for a share
of Series A TCI Group Common Stock for the ten (10) consecutive trading days
before the day in question, appropriately adjusted to take into account the
actual occurrence during such period of any of the events specified in paragraph
7(c) hereof. The closing price for each day shall be the last reported sale
price regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either case
on the composite tape, or if the shares of Series A TCI Group Common Stock are
not quoted on the composite tape, on the principal United States securities
exchange registered under the Exchange Act on which the shares of Series A TCI
Group Common Stock are listed or admitted to trading, or if they are not listed
or admitted to trading on any such exchange, the last reported sale price (or
the average of the quoted closing bid and asked prices if there were no reported
sales) as reported by NASDAQ or any comparable system, or if the Series A TCI
Group Common Stock is not quoted on NASDAQ or any comparable system, the average
of the closing bid and asked prices as furnished by any member of the National
Association of Securities Dealers, Inc. selected from time to time by the
Corporation for that purpose or, in the absence of such quotations, such other
method of determining market value as the Board of Directors shall from time to
time deem to be fair. With respect to any calculation of the current market
price per share of Series A TCI Group Common Stock relating to any period prior
to the redesignation of the Corporation's Class A Common Stock, par value $1.00
per share, into Series A TCI Group Common Stock, such current market price shall
be calculated based upon the closing price of a share of such Class A Common
Stock of the Corporation for periods prior to such redesignation.
(g) In case of any reclassification or change in the Series A TCI Group
Common Stock (other than any reclassification or change referred to in paragraph
7(c) and other than a change in par value) or in case of any consolidation of
the Corporation with any other corporation or any merger of the Corporation into
another corporation or of another corporation into the Corporation (other than a
merger in which the Corporation is the continuing corporation and which does not
result in any reclassification or change (other than a change in par value or
any reclassification or change to which paragraph 7(c) is applicable) in the
outstanding Series A TCI Group Common Stock), or in case of any sale or transfer
to another corporation or entity (other than by mortgage or pledge) of all or
substantially all of the properties and assets of the Corporation, in any such
case after the Issue Date, the Corporation (or its successor in such
consolidation or merger) or the purchaser of such properties and assets shall
make appropriate provision so that the holder of a share of Series F Preferred
Stock shall have the right thereafter to convert such share into the kind and
amount of shares of stock and other securities and property that such holder
would have owned immediately after such reclassification, change, consolidation,
merger, sale or transfer if such holder had converted such share of Series F
Preferred Stock into Series A TCI Group Common Stock immediately prior to the
effective date of such reclassification, change, consolidation, merger, sale or
transfer (assuming for this purpose (to the extent applicable) that such holder
failed to exercise any rights of election and received per share of Series A TCI
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Group Common Stock the kind and amount of shares of stock and other securities
and property received per share by a plurality of the non-electing shares), and
the holders of the Series F Preferred Stock shall have no other conversion
rights under these provisions; provided, that effective provision shall be made,
in the Articles or Certificate of Incorporation of the resulting or surviving
corporation or otherwise or in any contracts of sale or transfer, so that the
provisions set forth herein for the protection of the conversion rights of the
Series F Preferred Stock shall thereafter be made applicable, as nearly as
reasonably may be practicable, to any such other shares of stock and other
securities and property deliverable upon conversion of the Series F Preferred
Stock remaining outstanding or other convertible preferred stock or other
Convertible Securities received by the holders of Series F Preferred Stock in
place thereof; and provided, further, that any such resulting or surviving
corporation or purchaser shall expressly assume the obligation to deliver, upon
the exercise of the conversion privilege, such shares, securities or property as
the holders of the Series F Preferred Stock remaining outstanding, or other
convertible preferred stock or other convertible securities received by the
holders in place thereof, shall be entitled to receive pursuant to the
provisions hereof, and to make provisions for the protection of the conversion
rights as above provided.
(h) Whenever the Conversion Rate or the conversion privilege shall be
adjusted as provided in paragraphs 7(c), (d), (e) or (g), the Corporation shall
promptly cause a notice to be mailed to the holders of record of the Series F
Preferred Stock describing the nature of the event requiring such adjustment,
the Conversion Rate in effect immediately thereafter and the kind and amount of
stock or other securities or property into which the Series F Preferred Stock
shall be convertible after such event. Where appropriate, such notice may be
given in advance and included as a part of a notice required to be mailed under
the provisions of paragraph 7(j).
(i) The Corporation may, but shall not be required to, make any adjustment
of the Conversion Rate if such adjustment would require an increase or decrease
of less than 1% in such Conversion Rate; provided, however, that any adjustments
which by reason of this paragraph 7(i) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this paragraph 7 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. In any case in which this
paragraph 7(i) shall require that an adjustment shall become effective
immediately after a record date for such event, the Corporation may defer until
the occurrence of such event (x) issuing to the holder of any shares of Series F
Preferred Stock converted after such record date and before the occurrence of
such event the additional shares of Series A TCI Group Common Stock or other
capital stock issuable upon such conversion by reason of the adjustment required
by such event over and above the shares of Series A TCI Group Common Stock or
other capital stock issuable upon such conversion before giving effect to such
adjustment and (y) paying to such holder cash in lieu of any fractional interest
to which such holder is entitled pursuant to paragraph 7(n); provided, however,
that, if requested by such holder, the Corporation shall deliver to such holder
a due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares of Series A TCI Group Common Stock or other
capital stock, and such cash, upon the occurrence of the event requiring such
adjustment.
(j) In case at any time:
(i) the Corporation shall take any action which would require an
adjustment in the Conversion Rate pursuant to this paragraph;
(ii) there shall be any capital reorganization or reclassification
of the Series A TCI Group Common Stock (other than a change in par value),
or any consolidation or merger to which the Corporation is a party and for
which approval of any shareholders of the Corporation is required, or any
sale, transfer or lease of all or substantially all of the properties and
assets of the Corporation; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any such event, the Corporation shall give written notice, in the
manner provided in herein, to the holders of the Series F Preferred Stock at
their respective addresses as the same appear on the books of the Corporation,
at least twenty days (or ten days in the case of a recommended tender offer as
specified in clause (ii) above) prior to any record date for such action,
dividend or distribution or the date as of which it is expected that holders of
Series A TCI Group Common Stock of record shall be entitled to exchange their
shares of Series A TCI Group Common Stock for securities or other property, if
any, deliverable upon such reorganization, reclassification, consolidation,
merger, sale, transfer, lease, dissolution, liquidation or winding up; provided,
however, that any notice required by any event described in clause (ii) of this
paragraph 7(j) shall be given in the manner and at the time that such notice is
given to the holders of Series A TCI Group Common Stock. Without limiting the
obligations of the Corporation to
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provide notice of corporate actions hereunder, the failure to give the notice
required by this paragraph 7(j) or any defect therein shall not affect the
legality or validity of any such corporate action of the Corporation or the vote
upon such action.
(k) Each share of Series F Preferred Stock that ceases to be owned, of
record and beneficially, by a TCI Holder will automatically be converted without
action by the holder thereof into shares of Series A TCI Group Common Stock at
the then applicable Conversion Rate; such conversion shall be deemed effective
immediately prior to the transfer or other event resulting in such shares of
Series F Preferred Stock ceasing to be held of record and beneficially by a TCI
Holder. A pledge or other grant of a security interest in shares of Series F
Preferred Stock shall not be deemed to constitute a direct or indirect transfer
of such shares or another event causing such automatic conversion until such
time as the pledgee or other holder of a security interest initiates any action
for the purpose of exercising on such pledge or security interest or foreclosing
upon the pledged securities, and from and after the time of such transfer or
other event such shares of Series F Preferred Stock will be deemed to represent
only the right to receive the number of shares of Series A TCI Group Common
Stock issuable upon such conversion.
(l) Before any holder of Series F Preferred Stock shall be entitled to
convert the same into Series A TCI Group Common Stock, such holder shall
surrender the certificate or certificates for such Series F Preferred Stock at
the office of the Corporation or at the office of the transfer agent for the
Series F Preferred Stock, which certificate or certificates, if the Corporation
shall so request, shall be duly endorsed to the Corporation or in blank or
accompanied by proper instruments of transfer to the Corporation or in blank
(such endorsements or instruments of transfer to be in form satisfactory to the
Corporation), and shall give written notice to the Corporation at said office
that such holder elects to convert all or a part of the shares represented by
said certificate or certificates in accordance with the terms of this paragraph
7 (except that no such written notice shall be necessary in the event of an
automatic conversion pursuant to paragraph 7(k) hereof), and shall state in
writing therein the name or names in which such holder wishes the certificates
for Series A TCI Group Common Stock to be issued. Every such notice of election
to convert shall constitute a contract between the holder of such Series F
Preferred Stock and the Corporation, whereby the holder of such Series F
Preferred Stock shall be deemed to subscribe for the amount of Series A TCI
Group Common Stock which such holder shall be entitled to receive upon
conversion of the number of shares of Series F Preferred Stock to be converted,
and, in satisfaction of such subscription, to deposit the shares of Series F
Preferred Stock to be converted, and thereby the Corporation shall be deemed to
agree that the surrender of the shares of Series F Preferred Stock to be
converted shall constitute full payment of such subscription for Series A TCI
Group Common Stock to be issued upon such conversion. The Corporation will as
soon as practicable after such deposit of a certificate or certificates for
Series F Preferred Stock, accompanied by the written notice and the statement
above prescribed, issue and deliver at the office of the Corporation or of said
transfer agent to the Person for whose account such Series F Preferred Stock was
so surrendered, or to his nominee(s) or, subject to compliance with applicable
law, transferee(s), a certificate or certificates for the number of full shares
of Series A TCI Group Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share as hereinafter provided.
If surrendered certificates for Series F Preferred Stock are converted only in
part, the Corporation will issue and deliver to the holder, or to his
nominee(s), without charge therefor, a new certificate or certificates
representing the aggregate of the unconverted shares. Such conversion shall be
deemed to have been made as of the date of such surrender of the Series F
Preferred Stock to be converted or, in the case of an automatic conversion
pursuant to paragraph 7(k) hereof, as of the date of the transfer or other event
resulting in such automatic conversion, and the Person or Persons entitled to
receive the Series A TCI Group Common Stock issuable upon conversion of such
Series F Preferred Stock shall be treated for all purposes as the record holder
or holders of such Series A TCI Group Common Stock on such date.
Upon the conversion of any share, the Corporation shall pay, to the holder
of record of such share of Series F Preferred Stock, dividends on such share
which have been declared but have not been paid as of the date of the surrender
of such share for conversion or the date such automatic conversion shall have
been deemed to take place. Such payment shall be made in cash or, at the
election of the Corporation, the issuance of certificates representing such
number of shares of Series A TCI Group Common Stock as have an aggregate current
market price (as determined in accordance with paragraph 7(f)) on the date of
issuance equal to the amount of such unpaid dividends. Upon the making of such
payment to the Person entitled thereto as determined pursuant to the first
sentence of this paragraph, no further dividends shall accrue on such share or
be payable to any other Person.
The issuance of certificates for shares of Series A TCI Group Common Stock
upon conversion of shares of Series F Preferred Stock shall be made without
charge for any issue, stamp or other similar tax in respect of such issuance;
provided, however, if any such certificate is to be issued in a name other than
that of the registered holder of the share or shares of Series F Preferred Stock
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converted, the Person or Persons requesting the issuance thereof shall pay to
the Corporation the amount of any such tax which may be payable in respect of
any transfer involved in such issuance or shall establish to the satisfaction of
the Corporation that such tax has been paid.
The Corporation shall not be required to convert any shares of Series F
Preferred Stock, and no surrender of Series F Preferred Stock shall be effective
for that purpose, while the stock transfer books of the Corporation are closed
for any purpose; but the surrender of Series F Preferred Stock for conversion
during any period while such books are so closed shall become effective for
conversion immediately upon the reopening of such books, as if the conversion
had been made on the date such Series F Preferred Stock was surrendered.
(m) The Corporation shall reserve and keep available at all times
thereafter, solely for the purpose of issuance upon conversion of the
outstanding shares of Series F Preferred Stock, such number of shares of Series
A TCI Group Common Stock as shall be issuable upon the conversion of all
outstanding shares of Series F Preferred Stock, provided that nothing contained
herein shall be construed to preclude the Corporation from satisfying its
obligations in respect of the conversion of the outstanding shares of Series F
Preferred Stock by delivery of shares of Series A TCI Group Common Stock which
are held in the treasury of the Corporation. The Corporation shall take all such
corporate and other actions as from time to time may be necessary to insure that
all shares of Series A TCI Group Common Stock issuable upon conversion of shares
of Series F Preferred Stock at the Conversion Rate in effect from time to time
will, upon issue, be duly and validly authorized and issued, fully paid and
nonassessable and free of any preemptive or similar rights, and will be free and
clear of any liens, claims, charges or other encumbrances, except those created
by the holder of the shares of Series F Preferred Stock being converted or the
Person entitled to receive the shares of Series A TCI Group Common Stock
issuable upon such conversion.
(n) All shares of Series F Preferred Stock received by the Corporation
upon conversion thereof into Series A TCI Group Common Stock shall be retired
and shall be restored to the status of authorized and unissued shares of Series
F Preferred Stock (and may be reissued as part of another series of the
Preferred Stock of the Corporation), but such shares shall not be reissued as
shares of Series F Preferred Stock.
(o) The Corporation shall not be required to issue fractional shares of
Series A TCI Group Common Stock or scrip upon conversion of the Series F
Preferred Stock. As to any final fraction of a share of Series A TCI Group
Common Stock which a holder of one or more Shares would otherwise be entitled to
receive upon conversion of such Shares in the same transaction, the Corporation
shall pay a cash adjustment in respect of such final fraction in an amount equal
to the same fraction of the market value of a full share of Series A TCI Group
Common Stock. For purposes of this paragraph 7(o), the market value of a share
of Series A TCI Group Common Stock shall be the last reported sale price regular
way on the business day immediately preceding the date of conversion, or,
in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way on such day, in either case on
the composite tape, or if the shares of Series A TCI Group Common Stock are not
quoted on the composite tape, on the principal United States securities exchange
registered under the Exchange Act on which the shares of Series A TCI Group
Common Stock are listed or admitted to trading, or if the shares of Series A TCI
Group Common Stock are not listed or admitted to trading on any such exchange,
the last reported sale price (or the average of the quoted last reported bid and
asked prices if there were no reported sales) as reported by NASDAQ or any
comparable system, or if the Series A TCI Group Common Stock is not quoted on
NASDAQ or any comparable system, the average of the closing bid and asked prices
as furnished by any member of the National Association of Securities Dealers,
Inc. selected from time to time by the Corporation for that purpose or, in the
absence of such quotations, such other method of determining market value as the
Board of Directors shall from time to time deem to be fair.
8. Voting.
(a) VOTING RIGHTS. The holders of Series F Preferred Stock shall have no
voting rights whatsoever, except as required by law and except for the voting
rights described in this paragraph 8. Without limiting the generality of the
foregoing, no vote or consent of the holders of Series F Preferred Stock shall
be required for (a) the creation of any indebtedness of any kind of the
Corporation, (b) the creation or designation of any class or series of Senior
Stock, Parity Stock or Junior Stock, or (c) any amendment to the Certificate
that would increase the number of authorized shares of Preferred Stock or the
number of authorized shares of Series F Preferred Stock or that would decrease
the number of authorized shares of Preferred Stock or the number of authorized
shares of Series F Preferred
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Stock (but not below the number of shares of Preferred Stock or Series F
Preferred Stock, as the case may be, then outstanding).
(b) ELECTION OF DIRECTORS. The holders of the Series F Preferred Stock
will have the right to vote at any annual or special meeting of stockholders for
the purpose of electing directors. Each share of Series F Preferred Stock shall
have one vote for such purpose, and the holders of such shares shall vote as a
single class with any other class or series of capital stock of the Corporation
entitled to vote in any general election of directors, unless the instrument
creating or evidencing such other class or series of capital stock otherwise
expressly provides.
9. Waiver.
Any provision which, for the benefit of the holders of Series F Preferred
Stock, prohibits, limits or restricts actions by the Corporation, or imposes
obligations on the Corporation, may be waived in whole or in part, or the
application of all or any part of such provision in any particular circumstance
or generally may be waived, in each case with the consent in writing of the
holders of at least a majority of the number of shares of Series F Preferred
Stock then outstanding (or such greater percentage thereof as may be required by
applicable law or any applicable rules of any national securities exchange or
national interdealer quotation system); provided, however, that no such waiver
shall be binding or be otherwise effective against any holder of shares of
Series F Preferred Stock which does not execute a written consent to such
waiver.
10. Method of Giving Notices.
Any notice required or permitted hereby to be given to the holders of
shares of Series F Preferred Stock shall be deemed duly given if deposited in
the United States mail, first class mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Corporation or
supplied by him in writing to the Corporation for the purpose of such notice.
11. Exclusion of Other Rights.
Except as may otherwise be required by law and except for the equitable
rights and remedies which may otherwise be available to holders of Series F
Preferred Stock, the shares of Series F Preferred Stock shall not have any
designations, preferences, limitations or relative rights other than those
specifically set forth herein.
12. Heading of Subdivisions.
The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
FURTHER RESOLVED, that the appropriate officers of the Corporation are
hereby authorized to execute and acknowledge a certificate setting forth these
resolutions and to cause such certificate to be filed and recorded, in
accordance with the requirements of Section 151(g) of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, duly authorized officer has executed
this certificate on this 3rd day of August, 1995.
By: BRENDON R. CLOUSTON
Name: Brendon R. Clouston
Title: Executive Vice President
Attest: STEPHEN M. BRETT
Name: Stephen M. Brett
Title: Secretary
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State of Delaware
PAGE 1
OFFICE OF THE SECRETARY OF STATE
____________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE TWENTY-
FIFTH DAY OF JANUARY, A.D. 1996, AT 3:00 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OR DEEDS FOR RECORDING.
[SEAL]
/s/ EDWARD J. FREEL
----------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
2371729 8100 DATE: 7804651
960024220 01-25-96
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 03:00 PM 01/25/1996
960024220 - 2371729
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATIONS
_______________
SETTING FORTH A COPY OF RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED AS
"REDEEMABLE CONVERTIBLE TCI GROUP PREFERRED STOCK, SERIES G"
ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
_______________
The undersigned, an executive Vice President of TELE-COMMUNICATIONS, INC.,
a Delaware corporation (the "Company"), HEREBY CERTIFIES that the Board of
Directors of the Company on DECEMBER 13, 1995, duly adopted the following
resolutions creating a new series of the Company's Series Preferred Stock:
"BE IT RESOLVED, that pursuant to authority expressly granted by the
provisions of Article IV, Section D of the Restated Certificate of Incorporation
of the Company, the Board of Directors hereby creates and authorizes the
issuance of a new series of the Company's Series Preferred Stock, par value $.01
per share (Series Preferred Stock"), and hereby fixes the powers, designations,
dividend rights, voting powers, rights on liquidation, conversion rights,
redemption rights and other preferences and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions of the
shares of such series (in addition to the powers, designations, preferences and
relative, participating, optional or other special rights and the
qualifications, limitations or restrictions thereof set forth in the Restated
Certificate of Incorporation that are applicable to each class and series of the
Company's preferred stock, par value $.01 per share ("Preferred Stock")) as
follows:
1. Designation Number of Shares. The designation of the series of Series
Preferred Stock, par value $.01 per share, of the Company created hereby shall
be "Redeemable Convertible TCI Group Preferred Stock, Series G" ("Series G
Preferred Stock"). The designated number of shares of Series G Preferred Stock
shall be 7,259,380. Each share of Series G Preferred Stock shall have a stated
value of $21.60 ("Stated Value").
Any shares of Series G Preferred Stock redeemed, converted or otherwise
acquired by the Company shall be retired, shall not be reissued as shares of
Series G Preferred Stock and shall resume the status of authorized and unissued
shares of Series Preferred Stock, without designation as to series, until such
shares are once more designated as part of a particular series of Series
Preferred Stock by the Board of Directors.
2. Certain Definitions. Unless the context otherwise requires, the terms
defined in this paragraph 2 shall have, for all purposes of this Certificate of
Designations, the meanings herein specified:
"Anniversary Date" shall mean JANUARY 25, 1997.
"Average Market Price" as of any Record Date or Special Record Date for a
dividend payment declared by the Board of Directors shall mean the average of
the daily Closing Prices of the Series A TCI Group Common Stock for the period
of ten (10) consecutive
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trading days ending on the tenth trading day prior to such Record date or
Special Record Date, appropriately adjusted in such manner as the Board of
Directors in good faith deems appropriate to take into account any stock
dividend on the Series A TCI Group Common Stock, or any subdivision, combination
or reclassification of the Series A TCI Group Common Stock that occurs, or the
Ex-Dividend date for which occurs, during the period following the first trading
day in such ten-trading day period and ending on the last full trading day
immediately preceding the Dividend Payment Date or other date fixed for the
payment of dividends to which such Record Date or Special Record Date relates.
"Board of Directors" shall mean the Board of Directors of the Company, and,
unless the context indicates otherwise, shall also mean, to the extent permitted
by law, any committee thereof authorized, with respect to any particular matter,
to exercise the power of the Board of Directors of the Company with respect to
such matter.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in The City of New York, New York are not required to
be open.
"capital stock" shall mean any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) corporate stock.
"Class B Preferred Stock" shall mean the Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock, par value $.01 per share, of the Company.
"Closing Price" of a share of Series A TCI Group Common Stock or of a share
of Series A Liberty Media Group Common Stock, or of a share of any other class
or series of capital stock of the Company into which the Series G Preferred
Stock may hereafter become convertible pursuant to paragraph 7, on any day shall
mean the last reported per share sale price (or, if no sale price is reported,
the average of the high and low bid prices) of the Series A TCI Group Common
Stock, the Series A Liberty Media Group Common Stock or such capital stock, as
the case may be, on such day on the Nasdaq Sock Market or as quoted by the
National Quotation Bureau Incorporated or, if the Series A TCI Group Common
Stock, the Series A Liberty Media Group Common Stock or such capital stock, as
applicable, is listed on an exchange, on the principal exchange on which the
Series A TCI Group Common Stock, the Series A Liberty Media Group Common Stock
or such capital stock, as the case may be, is listed. In the event that no such
quotation is available for any day, the Board of Directors shall be entitled to
determine the Closing Price on the basis of such quotations as it in good faith
considers appropriate.
"Contingency" shall have the meaning set forth in paragraph 3(a).
"Conversion Date" of a share of Series G Preferred Stock shall mean the
date on which the requirements for conversion of such share set forth in
paragraph 7(b) of this Certificate of designations have been satisfied by the
holder thereof.
"Conversion Rate" shall mean the kind and amount of securities, assets or
other property that as of any date are issuable or deliverable upon conversion
of a share of Series G Preferred Stock. The Conversion Rate of a share of
Series G Preferred Stock shall initially be 1.05 shares of Series A TCI Group
Common Stock for each share of Series G Preferred Stock, subject to adjustment
as set forth in paragraph 7 of this Certificate of Designations. In the event
that pursuant to paragraph 7 the Series G Preferred Stock becomes convertible
into more than one class or series of capital stock of the Company, the term
Conversion Rate, when used with respect to any such class or series, shall mean
the number or fraction of shares or other units of such capital stock that as of
any date would be issued upon conversion of a share of Series G Preferred Stock.
"Convertible Securities" shall mean any or all options, warrants,
securities and rights which are convertible into or exercisable or exchangeable
for Series A TCI Group Common Stock at the option of the holder thereof, or
which otherwise entitle the holder thereof to subscribe for, purchase or
otherwise acquire Series A TCI Group Common Stock; provided, however, that such
term shall not include the Series B TCI Group Common Stock.
"Career Market Price", on the Determination Date for any issuance of
rights, warrants or options or any distribution in respect of which the Current
Market Price is being calculated, shall mean the average of the daily Closing
Prices of the Series A TCI Group
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Common Stock for the shortest of:
(i) the period of 30 consecutive trading days commencing 45 trading
days before such Determination Date,
(ii) the period commencing on the date next succeeding the first
public announcement of the issuance of rights, warrants or options or the
distribution in respect of which the Current Market Price is being
calculated and ending on the last full trading day before such
Determination Date, and
(iii) the period, if any, commencing on the date next succeeding the
Ex-Dividend Date with respect to the next preceding issuance of rights,
warrants or options or distribution for which an adjustment is required by
the provisions of paragraph 7(c)(iv), 7(d) or 7(e), and ending on the last
full trading day before such Determination Date.
If the record date for an issuance of rights, warrants or options or a
distribution for which an adjustment is required by the provisions of paragraph
7(c)(iv), 7(d) or 7(e) (the "preceding adjustment event") precedes the record
date for the issuance or distribution in respect of which the Current Market
Price is being calculated and the Ex-Dividend Date for such preceding adjustment
event is on or after the Determination Date for the issuance or distribution in
respect of which the Current Market Price is being calculated, then the Current
Market Price shall be adjusted by deducting therefrom the fair market value (on
the record date for the issuance or distribution in respect of which the Current
Market Price is being calculated), as determined in good faith by the Board of
Directors, of the capital stock, rights, warrants or options, assets or debt
securities issued or distributed in respect of each share of Series A TCI Group
Common Stock in such preceding adjustment event. Further, in the event that the
Ex-Dividend Date (or in the case of a subdivision, combination or
reclassification, the effective date with respect thereto) with respect to a
dividend, subdivision, combination or reclassification to which paragraph
7(c)(i), (ii), (iii) or (v) applies occurs during the period applicable for
calculating the Current Market Price, then the Current Market Price shall be
calculated for such period in a manner determined in good faith by the Board of
Directors to reflect the impact of such dividend, subdivision, combination or
reclassification on the Closing Prices of the Series A TCI Group Common Stock
during such period.
"Determination Date" for any issuance of rights, warrants or options or any
distribution to which paragraph 7(d) or 7(e) applies shall mean the earlier of
(i) the record date for the determination of stockholders entitled to receive
the rights, warrants or options or the distribution to which such paragraph
applies and (ii) the Ex-Dividend date for such rights, warrants or options or
distribution.
"Dividend Payment Date" shall mean the FIRST day of each FEBRUARY and
AUGUST, commencing with AUGUST 1, 1997, or the next succeeding Business Day if
any such day is not a Business Day.
"Dividend Period" shall mean the period from the Anniversary Date to but
excluding the first Dividend Payment Date and, thereafter, each semi-annual
period from and including a Dividend Payment Date to but excluding the next
Dividend Payment Date.
"Exchange Preferred Stock" shall have the meaning set forth in paragraph
7(g).
"Ex-Dividend Date" shall mean the date on which "ex-dividend" trading
commences for a dividend, an issuance of rights, warrants or options or a
distribution to which any of paragraph 7(c), (d), or (e) applies in the
over-the-counter market or on the principal exchange on which the Series A TCI
Group Common Stock is then quoted or listed.
"Issue Date" shall mean the date on which shares of Series G Preferred
Stock are first issued.
"Junior Stock" shall mean (i) the TCI Group Common Stock, (ii) the Liberty
Media Group Common Stock, (iii) the Class B Preferred Stock, (iv) any other
class or series of capital stock, whether now existing or hereafter created, of
the Company, other than (A) the Series G Preferred Stock, (B) any class or
series of Parity Stock (except to the extent provided under clause (v) hereof)
and (C) any class or series of Senior Stock, and (v) any class or series of
Parity Stock to the extent that it ranks junior to the Series G Preferred Stock
as to dividend rights, rights of redemption or rights on liquidation, as the
case may be. For purposes of clause (v) above, a class or series of Parity Stock
shall rank junior to the Series G Preferred Stock as to dividend rights, rights
of redemption or rights on liquidation if the holders of shares of Series G
Preferred Stock shall be entitled to dividend payments, payments on
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redemption or payments of amounts distributable upon dissolution, liquidation or
winding up of the Company, as the case may be, in preference or priority to the
holders of shares of such class or series of Parity Stock.
"Liberty Media Group Common Stock" shall mean the Series A Liberty Media
Group Common Stock and the Series B Liberty Media Group Common Stock.
"Liquidation Preference" measured per share of the Series G Preferred Stock
as of any date in question (the "Relevant Date") shall mean an amount equal to
the sum of (a) the Stated Value of such share, plus (b) an amount equal to all
dividends accrued on such share which pursuant to paragraph 3(d) of this
Certificate of Designations have been added to and remain a part of the
Liquidation Preference as of the Relevant Date, plus (c) for purposes of
determining the amounts payable pursuant to paragraph 4 and paragraph 5 of this
Certificate of Designations and the definition of Redemption Price, an amount
equal to all unpaid dividends accrued on the sum of the amounts specified in
clauses (a) and (b) above during the period from and including the immediately
preceding Dividend Payment Date (or the Anniversary Date if the Relevant Date is
on or prior to the first Dividend Payment Date) to but excluding the Relevant
Date, and, in the case of clauses (b) and (c) hereof, whether or not such unpaid
dividends have been declared or there are any unrestricted funds of the Company
legally available for the payment of dividends. In connection with the
determination of the Liquidation Preference of a share of Series G Preferred
Stock upon redemption or upon liquidation, dissolution or winding up of the
Company, the Relevant Date shall be the applicable date of redemption or the
date of distribution of amounts payable to stockholders in connection with any
such liquidation, dissolution or winding up.
"Mirror Preferred Stock" shall have the meaning set forth in paragraph
7(g).
"1933 Act" shall mean the Securities Act of 1933, as amended from time to
time, or any successor statute, and the rules and regulations promulgated
thereunder.
"Officers' Certificate" shall mean a certificate signed by the Chairman of
the Board, President or any Senior Vice President of the Company and by the
Treasurer or an Assistant Treasurer of the Company.
"Parity Stock" shall mean any class or series of capital stock, whether now
existing or hereafter created, of the Company ranking on a parity basis with the
Series G Preferred Stock as to dividend rights, rights of redemption or rights
on liquidation. Capital stock of any class or series, whether now existing or
hereafter created, shall rank on a parity as to dividend rights, rights of
redemption or rights on liquidation with the Series G Preferred Stock, whether
or not the dividend rates, dividend payment dates, redemption or liquidation
prices per share or sinking fund or mandatory redemption provisions, if any, are
different from those of the Series G Preferred Stock, if the holders of shares
of such class or series shall be entitled to dividend payments, payments on
redemption or payments of amounts distributable upon dissolution, liquidation or
winding up of the Company, as the case may be, in proportion to their respective
accumulated and accrued and unpaid dividends, redemption prices or liquidations
prices, respectively, without preference or priority, one over the other, as
between the holders of shares of such class or series and the holders of Series
G Preferred Stock. No class or series of capital stock that ranks junior to the
Series G Preferred Stock as to rights on liquidation shall rank or be deemed to
rank on a parity basis with the Series G Preferred Stock as to dividend rights
or rights of redemption, unless the instrument creating or evidencing such class
or series of capital stock otherwise expressly so provides. The Series C
Preferred Stock, the Series D Preferred Stock, the Series F Preferred Stock and
the Series H Preferred Stock rank on a parity basis with the Series G Preferred
Stock as to dividend rights, rights of redemption and rights on liquidation and
constitute "Parity Stock" for purposes of this Certificate of Designations.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.
"Record Date" for the dividends payable on any Dividend Payment Date shall
mean the 15th day of the month preceding the month during which such Dividend
Payment Date shall occur as and if designated by the Board of Directors.
"Redeemable Capital Stock" shall have the meaning set forth in paragraph
7(c).
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"Redemption Date" as to any share of Series G Preferred Stock shall mean
the date fixed for redemption of such share pursuant to paragraph 5(a) or 5(b)
of this Certificate of Designations, provided that no such date will be a
Redemption Date unless the applicable Redemption Price is actually paid in full
on such date or the consideration sufficient for the payment thereof, and for no
other purpose, has been set apart or deposited in trust as contemplated by
paragraph 5(d) of this Certificate of Designations.
"Redemption Price", as to any share of Series G Preferred Stock that is to
be redeemed on any Redemption Date, shall mean the Liquidation Preference
thereof on such Redemption Date.
"Redemption Securities" shall have the meaning set forth in paragraph 7(g).
"Senior Stock" shall mean any class or series of capital stock of the
Company hereafter created ranking prior to the Series G Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation. Capital stock of
any class or series shall rank prior to the Series G Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation if the holders of
shares of such class or series shall be entitled to dividend payments, payments
on redemption or payments of amounts distributable upon dissolution, liquidation
or winding up of the Company, as the case may be, in preference or priority to
the holders of shares of Series G Preferred Stock. No class or series of capital
stock that ranks on a parity basis with or junior to the Series G Preferred
Stock as to rights on liquidation shall rank or be deemed to rank prior to the
Series G Preferred Stock as to dividend rights or rights of redemption,
notwithstanding that the dividend rate, dividend payment dates, sinking fund
provisions, if any, or mandatory redemption provisions thereof are different
from those of the Series G Preferred Stock, unless the instrument creating or
evidencing such class or series of capital stock otherwise expressly so
provides.
"Series A Liberty Media Group Common Stock" shall mean the Tele-
Communications, Inc. Series A Liberty Media Group Common Stock, par value $1.00
per share, which term shall include, where appropriate, in the case of any
reclassification, recapitalization or other change in the Series A Liberty Media
Group Common Stock, or in the case of a consolidation or merger of the Company
with or into another Person affecting the Series A Liberty Media Group Common
Stock, such capital stock to which a holder of Series A Liberty Media Group
Common Stock shall be entitled upon the occurrence of such event.
"Series A TCI Group Common Stock" shall mean the Tele-Communications, Inc.
Series A TCI Group Common Stock, par value $1.00 per share, which term shall
include, where appropriate, in the case of any reclassification,
recapitalization or other change in the Series A TCI Group Common Stock, or in
the case of a consolidation or merger of the Company with or into another Person
affecting the Series A TCI Group Common Stock, such capital stock to which a
holder of Series A TCI Group Common Stock shall be entitled upon the occurrence
of such event.
"Series B Liberty Media Group Common Stock" shall mean the Tele-
Communications, Inc. Series B Liberty Media Group Common Stock, par value $1.00
per share, which term shall include, where appropriate, in the case of any
reclassification, recapitalization or other change in the Series B Liberty Media
Group Common Stock, or in the case of a consolidation or merger of the Company
with or into another Person affecting the Series B Liberty Media Group Common
Stock, such capital stock to which a holder of Series B Liberty Media Group
Common Stock shall be entitled upon the occurrence of such event.
"Series B TCI Group Common Stock" shall mean the Tele-Communications, Inc.
Series B TCI Group Common Stock, par value $1.00 per share, which term shall
include, where appropriate, in the case of any reclassification,
recapitalization or other change in the Series B TCI Group Common Stock, or in
the case of a consolidation or merger of the Company with or into another Person
affecting the Series B TCI Group Common Stock, such capital stock to which a
holder of Series B TCI Group Common Stock shall be entitled upon the occurrence
of such event.
"Series C Preferred Stock" shall mean the Convertible Preferred Stock,
Series C, par value $.01 per share, of the Company.
"Series D Preferred Stock" shall mean the Convertible Preferred Stock,
Series D, par value $.01 per share, of the Company.
"Series F Preferred Stock" shall mean the Convertible Redeemable
Participating Preferred Stock, Series F, par value $.01 per
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share, of the Company.
"Series G Preferred Stock" shall have the meaning set forth in paragraph 1
of this Certificate of Designations.
"Series H Preferred Stock" shall mean the Redeemable Convertible Liberty
Media Group Preferred Stock, Series H, par value $.01 per share, of the Company.
"Special Record Date" hall have the meaning set forth in paragraph 3(d) of
this Certificate of Designations.
"Stated Value" of a share of Series G Preferred Stock shall have the
meaning set forth in paragraph 1 of this Certificate of Designations.
"Subsidiary" shall mean (i) a corporation (other than the Company) a
majority of the capital stock of which, having voting power under ordinary
circumstances to elect directors, is at the time, directly or indirectly, owned
by the Company and/or one or more Subsidiaries of the Company and (ii) any other
Person (other than a corporation) in which the Company and/or one or more
Subsidiaries of the Company, directly or indirectly, has (x) a majority
ownership interest and (y) the power to elect or direct the election of a
majority of the members of the governing body of such entity.
"Target Price" shall initially mean $27 and shall be appropriately adjusted
to take into account any stock dividends on the Series A TCI Group Common Stock
or the Series A Liberty Media Group Common Stock, or any stock splits,
reclassifications or combinations of the Series A TCI Group Common Stock or the
Series A Liberty Media Group Common Stock during the period following the Issue
Date and ending on the Anniversary Date or on such earlier date, if any, as of
which the Contingency is met.
"TCI Group Common Stock" shall mean the Series A TCI Group Common Stock and
the Series B TCI Group Common Stock.
3. Dividends.
(a) The Contingency. If the sum of (i) the Closing Price of the Series A
TCI Group Common Stock, plus (ii) one-fourth of the Closing Price of the Series
A Liberty Media Group Common Stock equals or exceeds the Target Price for any
ten (10) consecutive trading days during the period of sixty-five (65)
consecutive trading days ending on and including the last trading day
immediately preceding the Anniversary Date (the "Contingency"), no dividends
will accrue or be payable with respect to the Series G Preferred Stock.
(b) Payment. In the event that the Contingency is not met, and only in
such event, the holders of Series G Preferred Stock shall, subject to the prior
preferences and other rights of any Senior Stock and to the provisions of
paragraph 6 hereof, be entitled to receive, when and as declared by the Board of
Directors out of unrestricted funds legally available therefor, cumulative
dividends, in preference to dividends on any Junior Stock, which shall accrue as
provided herein. Except as otherwise provided in paragraph 3(d) of this
Certificate of Designations, dividends on each share of Series G Preferred Stock
will, if the Contingency is not met, accrue on a daily basis at the rate of 4%
per annum of the Liquidation Preference of such share from and including the
Anniversary Date to but excluding the date on which the Liquidation Preference
or Redemption Price of such share is made available pursuant to paragraph 4 or
5, respectively, of this Certificate of Designations or the date of conversion
of such share pursuant to paragraph 7 hereof, as applicable. Dividends shall
accrue as provided herein whether or not such dividends have been declared and
whether or not there are any unrestricted funds of the Company legally available
for the payment of dividends. Accrued dividends on the series G Preferred Stock
shall be payable semiannually on each Dividend Payment Date, commencing on
AUGUST 1, 1997, to the holders of record of the Series G Preferred Stock as of
the close of business on the applicable Record Date. For purposes of determining
the amount of dividends "accrued" (i) as of the first Dividend Payment Date and
as of any date that is not a Dividend Payment Date, such amount shall be
calculated on the basis of the rate per annum specified above in this paragraph
3(b) for the actual number of days elapsed from and including the Anniversary
Date (in the case of the first Dividend Payment Date and any date prior to the
first Dividend Payment Date) or the last preceding Dividend Payment Date (in the
case of any other date) to but excluding the date as of which such determination
is to be made, based on a 365-day year, and (ii) as of any Dividend Payment Date
after the first Dividend Payment Date, such amount shall be calculated on the
basis of such rate per annum based on a 360-day year of twelve 30-day months.
For so
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long as the Liquidation Preference of a share of Series G Preferred Stock is
equal to the Stated Value per share, the amount of the dividend payable per
share on the Dividend Payment Date for each full semi-annual Dividend Period
shall be $.432.
(c) Method of Payment. All dividends payable with respect to the shares of
Series G Preferred Stock may be declared and paid, in the sole discretion of the
Board of Directors, in cash, through the issuance of shares of Series A TCI
Group Common Stock or in any combination of the foregoing. If any dividend
payment declared by the Board of Directors with respect to the shares of Series
G Preferred Stock is to be paid in whole or in part through the issuance of
shares of Series A TCI Group Common Stock, the amount of such dividend payment
to be paid per share of Series G Preferred Stock in shares of Series A TCI Group
Common Stock (the "Stock Dividend Amount") shall be satisfied and paid by the
delivery to the holders of record of such shares of Series G Preferred Stock on
the Record Date or Special Record Date, as the case may be, for such dividend
payment, of a number of shares of Series A TCI Group Common Stock determined by
dividing the Stock Dividend Amount by the Average Market Price of a share of
Series A TCI Group Common Stock as of such Record Date or Special Record Date.
The Company shall not be required to issue any fractional share of Series A TCI
Group Common Stock to which any holder of Series G Preferred Stock may become
entitled pursuant to this paragraph 3(c). The Board of Directors may elect to
settle any final fraction of a share of Series A TCI Group Common Stock which a
holder of one or more shares of Series G Preferred Stock would otherwise be
entitled to receive pursuant to this paragraph 3(c) by having the Company pay to
such holder, in lieu of issuing such fractional share, cash in any amount
(rounded upward to the nearest whole cent) equal to the same fraction of the
Average Market Price of a share of Series A TCI Group Common Stock as of the
Record Date or Special Record Date, as the case may be, for the dividend payment
with respect to which such shares of Series A TCI Group Common Stock are being
delivered. Such election, if made, shall be made as to all holders of Series G
Preferred Stock who would otherwise be entitled to receive a fractional share of
Series A TCI Group Common Stock on the Dividend Payment Date or other date fixed
for the payment of such dividend.
All dividends paid with respect to the shares of Series G Preferred Stock
pursuant to this paragraph 3 shall be paid pro rata to all the holders of shares
of Series G Preferred Stock outstanding on the applicable Record Date or Special
Record Date, as the case may be.
(d) Unpaid Dividends. If on any Dividend Payment Date the Company,
pursuant to applicable law or otherwise, shall be prohibited or restricted from
paying the full dividends to which holders of Series G Preferred Stock, and any
Parity Stock ranking on a parity basis with the Series G Preferred Stock with
respect to the right to receive dividend payments, shall be entitled, the amount
available for such payment pursuant to applicable law and which is not otherwise
restricted (if any) shall be distributed among the holders of Series G Preferred
Stock and any such Parity Stock ratably in proportion to the full amounts to
which they would otherwise be entitled. On each Dividend Payment Date, all
dividends that have accrued on each share of Series G Preferred Stock during the
Dividend Period ending on such Dividend Payment Date shall, to the extent not
paid on such Dividend Payment Date for any reason (whether or not such unpaid
dividends have been declared or there are any unrestricted funds of the Company
legally available for the payment of dividends), be added cumulatively to the
Liquidation Preference of such share and will remain a part thereof until such
dividends are paid. The rate per annum at which dividends accrue in respect of
that portion of the Liquidation Preference of a share of Series G Preferred
Stock that consists of accrued unpaid dividends that have been added to the
Liquidation Preference of such share on a Dividend Payment Date pursuant to this
paragraph 3(d) and remain unpaid on the next succeeding Dividend Payment Date
shall increase to 8.625% per annum from and after such next succeeding Dividend
Payment Date to and including the date on which the Liquidation Preference or
Redemption Price of such share is made available pursuant to paragraph 4 or 5,
respectively, of this Certificate of Designations or the date of conversion of
such share pursuant to paragraph 7 hereof, as applicable, unless the portion of
the Liquidation Preference that consists of such accrued unpaid dividends is
earlier declared and paid or an amount sufficient to pay the same in full is
irrevocably set apart in trust for such purpose. That portion of the Liquidation
Preference of a share of Series G Preferred Stock that consists of accrued
unpaid dividends, together with all dividends accrued in respect thereof, may be
declared an paid at any time (subject to the rights of any Senior Stock and to
the concurrent satisfaction of any dividend arrearage then existing with respect
to any Parity Stock that ranks on a parity basis with the Series G Preferred
Stock as to the payment of dividends), without reference to any regular Dividend
Payment Date, to holders of record as of the close of business on such date, not
more than 45 days nor less than 10 days preceding the payment date thereof, as
may be fixed by the Board of Directors (the "Special Record Date"). Notice of
each Special Record Date shall be given, not more than 45 days nor less than 10
days prior thereto, to the holders of record of the shares of Series G Preferred
Stock.
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(e) Credit. Any dividend payment made on the shares of Series G Preferred
Stock shall first be credited against the earliest accrued but unpaid dividend
due with respect to the shares of Series G Preferred Stock.
(f) Authorized Shares. All shares of Series A TCI Group Common Stock
issued in payment of any dividend on the Series G Preferred Stock shall, when
issued, be duly and validly authorized, fully paid, nonassessable and free from
all preemptive or similar rights; the delivery of such shares shall be made in
compliance with all applicable Federal and state securities laws, and such
shares shall have been listed for trading on such national securities exchange
or national securities association, if any, on which the Series A TCI Group
Common Stock is then listed.
4. Distributions Upon Liquidation, Dissolution or Winding Up. Subject to
the prior payment in full of the preferential amounts to which any Senior Stock
is entitled, in the event of any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of Series G Preferred
Stock shall be entitled to receive from the assets of the Company available for
distribution to stockholders before any payment or distribution shall be made to
the holders of any Junior stock, an amount in cash (or, at the election of the
Company, property at its fair market value, as determined by the Board of
Directors in good faith) per share, equal to the Liquidation Preference of a
share of Series G Preferred Stock as of the date of payment or distribution,
which payment or distribution shall be made pari passu with, and if the Company
has elected to pay in property, in the same form of property as, any such
payment or distribution made to the holders of any Parity Stock ranking on a
parity basis with the Series G Preferred Stock with respect to distributions
upon liquidation, dissolution or winding up of the Company. The holders of
Series G Preferred Stock shall be entitled to no other or further distribution
of or participation in any remaining assets of the Company after receiving the
Liquidation Preference per share. If, upon distribution of the Company's assets
in liquidation, dissolution or winding up, the assets of the Company to be
distributed among the holders of the Series G Preferred Stock and to all holders
of any Parity Stock ranking on a parity basis with the Series G Preferred Stock
with respect to distributions upon liquidation, dissolution or winding up shall
be insufficient to permit payment in full to such holders of the respective
preferential amounts to which they are entitled, then the entire assets of the
Company to be distributed to holders of the Series G Preferred Stock and such
Parity Stock shall be distributed pro rata to such holders based upon the
aggregate of the full preferential amounts to which the shares of Series G
Preferred Stock and such Parity Stock would otherwise respectively be entitled.
Neither the consolidation or merger of the Company with or into any other
corporation or corporations nor the sale, transfer, or lease of all or
substantially all of the assets of the Company shall itself be deemed a
liquidation, dissolution or winding up of the Company within the meaning of this
paragraph 4. Notice of the liquidation, dissolution or winding up of the Company
shall be given, not less than twenty (20) days prior to the date on which such
liquidation, dissolution or winding up is expected to take place or become
effective to the holders of record of the shares of Series G Preferred Stock.
5. Redemption.
(a) Optional Redemption. Subject to the rights of any Senior Stock and the
provisions of paragraph 6 of this Certificate of Designations, the shares of
Series G Preferred Stock may be redeemed, at the option of the Company by action
of the Board of Directors, in whole or from time to time in part, on any
Business Day occurring on or after FEBRUARY 1, 2001, at the Redemption Price on
the Redemption Date. If fewer than all of the outstanding shares of Series G
Preferred Stock are to be redeemed on any Redemption Date, the shares of Series
G Preferred Stock to be redeemed shall be chosen by the Company pro rata (as
nearly as may be practicable) among all holders of Series G Preferred Stock. The
Company shall not be required to register a transfer of (i) any shares of Series
G Preferred Stock for a period of 15 days next preceding any selection of shares
of Series G Preferred Stock to be redeemed or (ii) any shares of Series G
Preferred Stock selected or called for redemption.
(b) Mandatory Redemption. Subject to the rights of any Senior Stock and
the provisions of paragraph 6 of this Certificate of Designations, the Company
shall redeem, out of funds legally available therefor, on FEBRUARY 1, 2016 (or,
if such day is not a Business Day, on the first Business Day thereafter) all
shares of Series G Preferred Stock remaining outstanding at the Redemption Price
on the Redemption Date. If the funds of the Company legally available for
redemption of shares of the Series G Preferred Stock and any Parity Stock then
required to be redeemed are insufficient to redeem the total number of such
shares remaining outstanding, those funds which are legally available shall,
subject to the rights of any Senior Stock and the provisions of paragraph 6, to
be used to redeem the maximum possible number of shares of Series G Preferred
Stock and each such other class or series of Parity Stock. Subject to the rights
of any Senior Stock and the provisions of paragraph 6 hereof, at any time and
from time to time thereafter when additional funds of the Company are legally
available for such purpose, such funds shall immediately be used to redeem the
shares of
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Series G Preferred Stock and of each such other class or series of Parity Stock
which were required to be redeemed that the Company failed to redeem until the
balance of such shares have been redeemed. The selection of shares to be
redeemed pursuant to the two immediately preceding sentences shall be made, as
nearly as practicable, on a pro rata basis as among the different classes or
series and as among the holders of shares of a particular class or series.
(c) Notice of Redemption. Notice of redemption shall be given by or on
behalf of the Company at least sixty (60) days prior to the Redemption Date, in
the case of a redemption pursuant to paragraph 5(a), and not more than sixty
(60) days nor less than thirty (30) days prior to the Redemption Date, in the
case of the redemption pursuant to paragraph 5(b), to the holders of record of
the shares of Series G Preferred Stock to be redeemed; but no defect in such
notice or in the mailing thereof shall affect the validity of the proceedings
for the redemption of any shares of Series G Preferred Stock. In addition to
any information required by law or by the applicable rules of any national
securities exchange or national interdealer quotation system on which the Series
G Preferred Stock may be listed or admitted to trading or quoted, such notice
shall set forth the Redemption Price, the Redemption Date, the number of shares
to be redeemed and the place at which the shares called for redemption will,
upon presentation and surrender of the stock certificates evidencing such
shares, be redeemed, and if the Company has elected to deposit the Redemption
Price with a Redemption Agent in accordance with paragraph 5(d), shall state the
name and address of the Redemption Agent and the date on which such deposit was
or will be made. Such notice shall also set forth the then current Conversion
Rate for the shares of Series G Preferred Stock and the place or places to which
a holder desiring to convert shares of Series G Preferred Stock should deliver
the certificate(s) evidencing such shares, together with such other documents
and instruments as are or may be required pursuant to paragraph 7 of this
Certificate of Designations. In the event that fewer than the total number of
shares of Series G preferred Stock represented by a certificate are redeemed, a
new certificate representing the number of unredeemed shares will be issued to
the holder thereof without cost to such holder. If the shares of series G
Preferred Stock evidenced by a certificate selected for partial redemption
pursuant to paragraph 5(a) of this Certificate of Designations are thereafter
converted in part pursuant to paragraph 7 hereof, the shares so converted (as
far as may be) will be deemed to be the shares selected for redemption.
(d) Deposit of Redemption Price. If notice of any redemption by the
Company pursuant to this paragraph 5 shall have been given as provided in
paragraph 5(c) of this Certificate of Designations and if on or before the
Redemption Date specified in such notice an amount in cash sufficient to redeem
in full on the Redemption Date at the Redemption Price all shares of Series G
Preferred Stock called for redemption or required to be redeemed shall have been
set apart so as to be available for such purpose and only for such purpose, then
effective as of the close of business on the Redemption Date, the shares of
Series G Preferred Stock called for redemption, notwithstanding that any
certificate therefor shall not have been surrendered for cancellation, shall no
longer be deemed outstanding, and the holders thereof shall cease to be
stockholders with respect to such shares and all remaining rights with respect
to such shares shall forthwith cease and terminate, except the right of the
holders thereof to receive the Redemption Price of such shares, without
interest, upon the surrender of certificates representing the same.
At its election, the Company on or prior to the Redemption Date (but no
more than ninety (90) days prior to the Redemption Date) may deposit immediately
available funds in an amount equal to the aggregate Redemption Price of the
shares of Series G Preferred Stock called for redemption in trust for the
holders thereof with any bank or trust company organized under the laws of the
United States of America or any state thereof having capital, undivided profits
and surplus aggregating at least $450 million (the "Redemption Agent"), with
irrevocable instructions and authority to the Redemption Agent, on behalf and at
the expense of the Company, to mail the notice of redemption as soon as
practicable after receipt of such irrevocable instructions (or to complete such
mailing previously commenced, if it has not already been completed) and to pay,
on and after the Redemption Date or prior thereto, the Redemption Price of the
shares of Series G Preferred Stock to be redeemed to their respective holders
upon the surrender of the certificates therefor. A deposit made in compliance
with the immediately preceding sentence shall be deemed to constitute full
payment for the shares of Series G Preferred Stock to be redeemed and from and
after the later of the close of business on the date of such deposit (although
prior to the Redemption Date) or the date notice of redemption is mailed, the
shares of Series G Preferred Stock to be redeemed shall no longer be deemed
outstanding and the holders thereof shall cease to be stockholders with respect
to such shares and shall have no rights with respect to such shares except (x)
the right of the holders thereof to receive the Redemption Price of such shares
(calculated through the Redemption Date), without interest, upon surrender of
the certificates therefor and (y) the right to convert such shares in accordance
with paragraph 7 prior to the close of business on the Business Day immediately
preceding the Redemption Date. Any funds so deposited which shall not be
required for the payment of the Redemption Price of any shares of Series G
Preferred Stock to be redeemed because of the conversion of such shares shall
after such conversion be repaid to the
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Company by the Redemption Agent. Any interest accrued on the funds so deposited
shall be paid to the Company from time to time. Any funds so deposited with the
Redemption Agent which shall remain unclaimed by the holders of such shares of
Series G Preferred Stock at the end of one year after the Redemption Date shall
be returned by the Redemption Agent to the Company, after which repayment the
holders of such shares of Series G Preferred Stock called for redemption shall
look only to the Company for the payment thereof, without interest, unless an
applicable escheat or abandoned property law otherwise requires.
6. Limitations on Dividends and Redemptions. If at any time the Company
shall have failed to pay, or declare and set aside the consideration sufficient
to pay, full cumulative dividends for all prior dividend periods on any Parity
Stock which by the terms of the instrument creating or evidencing such Parity
Stock is entitled to the payment of such cumulative dividends prior to the
redemption, exchange, purchase or other acquisition of the Series G Preferred
Stock, and until full cumulative dividends on such Parity Stock for all prior
dividend periods are paid, or declared and the consideration sufficient to pay
the same in full is set aside so as to be available for such purpose and no
other purpose, neither the Company nor any Subsidiary thereof shall redeem,
exchange, purchase or otherwise acquire any shares of Series G Preferred Stock,
Parity Stock or Junior Stock, or set aside any money or assets for any such
purpose pursuant to paragraph 5(d) hereof, any sinking fund or otherwise, unless
all then outstanding shares of Series G Preferred Stock, of such Parity Stock
and of any other class or series of parity Stock that by the terms of the
instrument creating or evidencing such parity Stock is required to be redeemed
under such circumstances are redeemed pursuant to the terms hereof and thereof.
If at any time the Company shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends on the
Series G Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, (i) neither the Company nor any
Subsidiary thereof shall redeem, exchange, purchase or otherwise acquire any
shares of Series G preferred Stock, Parity Stock, or Junior Stock, or set aside
any money or assets for any such purpose pursuant to paragraph 5(d) hereof, any
sinking fund or otherwise, unless all then outstanding shares of Series G
Preferred Stock and of any other class or series of Parity Stock that by the
terms of the instrument creating or evidencing such Parity Stock is required to
be redeemed under such circumstances are redeemed pursuant to the terms hereof
and thereof, and (ii) the Company shall not declare or pay any dividend on or
make any distribution with respect to any Junior stock or parity Stock or set
aside any money or assets for any such purpose, except that the Company may
declare and pay a dividend on any Parity Stock ranking on a parity basis with
the Series G Preferred Stock with respect to the right to receive dividend
payments, contemporaneously with the declaration and payment of a dividend on
the Series G Preferred Stock, provided that such dividends are declared and paid
pro rata so that the amount of dividends declared and paid per share of Series G
Preferred Stock and such Parity Stock shall in all cases bear to each other the
same ratio that accumulated and accrued and unpaid dividends per share on the
Series G Preferred Stock and such Parity Stock bear to each other.
If the Company shall fail to redeem on any date fixed for redemption
pursuant to paragraph 5(a) or 5(b) of this Certificate of Designations any
shares of Series G Preferred Stock called for redemption or required to be
redeemed on such date, and until such shares are redeemed in full, the Company
shall not (x) redeem any Junior Stock or, except as provided in paragraph 5(b)
hereof, Parity Stock or (y) declare or pay any dividend on or make any
distribution with respect to any Junior Stock or, except as provided in the
second paragraph of this paragraph 6, parity Stock, or set aside any money or
assets for any such purpose, and neither the Company nor any Subsidiary thereof
shall purchase or otherwise acquire any Series G Preferred Stock, Parity Stock
or Junior Stock, or set aside any money or assets for any such purpose.
Nothing contained in the first or third paragraph of this paragraph 6 shall
prevent (i) the payment of dividends on any Junior Stock solely in shares of
Junior Stock or the redemption, purchase or other acquisition of Junior Stock
solely in exchange for (together with a cash adjustment for fractional shares,
if any), or (but only in the case of the first paragraph of this paragraph 6)
through the application of the proceeds from the sale of, shares of Junior
Stock; (ii) the payment of dividends on any Parity Stock solely in shares of
Parity Stock and/or Junior Stock or the redemption, exchange, purchase or other
acquisition of Series G Preferred Stock or Parity Stock solely in exchange for
(together with a cash adjustment for fractional shares, if any), or (but only in
the case of the first paragraph of this paragraph 6) through the application of
the proceeds from the sale of, shares of Parity Stock and/or Junior Stock; or
(iii) the purchase or acquisition of shares of Series G Preferred Stock pursuant
to a purchase or exchange offer made to all holders of outstanding shares of
Series G Preferred Stock, provided that the terms of the purchase or exchange
offer shall be identical for all shares of Series G Preferred Stock and all
accrued dividends on such shares shall have been paid or shall have been
declared and irrevocably set apart in trust for the benefit of the holders of
shares of Series G Preferred Stock and for no other purpose.
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The provisions of the first paragraph of this paragraph 6 are for the sole
benefit of the holders of Series G Preferred Stock and Parity Stock having the
terms described therein and accordingly, at any time when there are no shares of
any such class or series of Parity Stock outstanding or if the holders of each
such class or series of Parity Stock have, by such vote or consent of the
holders thereof as may be provided for in the instrument creating or evidencing
such class or series, waived in whole or in part the benefit of such provisions
(either generally or in the specific instance), then the provisions of the first
paragraph of this paragraph 6 shall not (to the extent waived, in the case of
any partial waiver) restrict the redemption, exchange, purchase or other
acquisition of any shares of Series G Preferred Stock, Parity Stock or Junior
Stock. All other provisions of this paragraph 6 are for the sole benefit of the
holders of Series G Preferred Stock and accordingly, if the holders of shares of
Series G Preferred Stock shall have waived as provided in paragraph 10 of this
Certificate of Designations) in whole or in part the benefit of the applicable
provision, either generally or in the specific instance, such provision shall
not (to the extent of such waiver, in the case of a partial waiver) restrict the
redemption, exchange, purchase or other acquisition of, or declaration, payment
or making of any dividends or distributions on, the Series G Preferred Stock,
any Parity Stock or any Junior Stock.
7. Conversion of Series G Preferred Stock.
(a) Right to Convert. Unless previously redeemed as provided in paragraph
5 of this Certificate of Designations, shares of Series G Preferred Stock may be
converted at the option of the holder thereof, in the manner and upon the terms
and conditions set forth in this paragraph 7, into fully paid and nonassessable
whole shares of Series A TCI Group Common Stock at the Conversion Rate in effect
on the Conversion Date, at any time prior to the close of business on the
Business Day immediately preceding the Redemption Date for the redemption of
shares of Series G Preferred Stock pursuant to paragraph 5(a) or 5(b) of this
Certificate of Designations.
(b) Mechanics of Conversion. In order to convert shares of Series G
Preferred Stock, the holder thereof shall surrender the certificate or
certificates representing the shares of Series G Preferred Stock to be converted
at the office of the Company or the office of any transfer agent for the Series
G Preferred Stock, which certificate or certificates shall be duly endorsed to
the Company in blank (or accompanied by duly executed instruments of transfer to
the Company in blank) with signatures guaranteed (such endorsements or
instruments of transfer to be in form satisfactory to the Company), together
with a written notice to the Company at said office of the election to convert
the same, specifying the number of shares of Series G Preferred Stock to be
converted and the name or names (with addresses) in which the certificate or
certificates for shares of Series A TCI Group Common Stock are to be issued. If
any transfer is involved in the issuance or delivery of any certificate or
certificates for shares of Series A TCI Group Common Stock in a name other than
that of the registered holder of the shares of Series G Preferred Stock
surrendered for conversion, such holder shall also deliver to the Company a sum
sufficient to pay all taxes, if any, payable in respect of such transfer or
evidence satisfactory to the Company that such taxes have been paid. Except as
provided in the immediately preceding sentence, the Company shall pay any issue,
stamp or other similar tax in respect of such issuance or delivery.
The Company shall, as soon as practicable after the Conversion Date,
deliver to the holder of the shares of Series G Preferred Stock so surrendered
for conversion, or to such holder's nominee(s) or, subject to compliance with
applicable law, transferee(s), a certificate or certificates for the number of
whole shares of Series A TCI Group Common Stock to which such holder shall be
entitled, together with cash or its check in lieu of any fractional share as
provided in paragraph 7(o). If the shares of Series G Preferred Stock
represented by a certificate surrendered for conversion are converted only in
part, the Company will also issue and deliver to the holder, or to such holder's
nominee(s) or, subject to compliance with applicable law, transferee(s), without
charge therefor, a new certificate or certificates representing in the aggregate
the unconverted shares of Series G Preferred Stock.
The Person in whose name the certificate for shares of Series A TCI Group
Common Stock is issued upon such conversion shall be treated for all purposes as
the stockholder of record of such shares of Series A TCI Group Common Stock as
of the close of business on the Conversion Date; provided, however, that no
surrender of Series G Preferred Stock on any date when the stock transfer books
of the Company are closed for any purpose shall be effective to constitute the
Person or Persons entitled to receive the shares of Series A TCI Group Common
Stock on such date, but such surrender shall be effective (assuming all other
requirements of this paragraph 7 have been satisfied) to constitute such Person
or Persons as the record holders of such shares of Series A TCI Group Common
Stock for all purposes as of the opening of business on the next succeeding day
on which such stock transfer books are open, and such conversion shall be at the
Conversion Rate in effect on the date that such shares of Series G Preferred
Stock were
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surrendered for conversion (and such other requirements satisfied) as if the
stock transfer books of the Company had not been closed on such date. Upon
conversion of shares of Series G Preferred stock, the rights of the holder of
the shares so converted, as a holder thereof, will cease.
Notwithstanding the last sentence of the immediately preceding paragraph,
if the Board of Directors declares any dividend on the Series G Preferred Stock
pursuant to paragraph 3 of this Certificate of Designations, and the Conversion
Date for any shares of Series G Preferred Stock occurs on or after the Record
Date or Special Record Date, as the case may be, and before the Dividend Payment
Date for such dividend (or, in the case of a dividend declared pursuant to
Section 3(d), then the holder of such shares of Series G Preferred Stock on such
Record Date shall be entitled to receive such dividend on such Dividend Payment
Date (or such other date, as the case may be), as if such Conversion Date had
not occurred.
(c) Adjustments for Change in Capital Stock. If after the Issue Date, the
Company: (i) pays a dividend or makes a distribution on the Series A TCI Group
Common Stock in shares of Series A TCI Group Common Stock;
(ii) subdivides combines the outstanding shares of Series A TCI Group
Common Stock into a greater number of shares;
(iii) combines the outstanding shares of Series A TCI Group Common
Stock into a smaller number of shares;
(iv) pays a dividend or makes a distribution on the Series A TCI
Group Common Stock in shares of its capital stock (other than Series A TCI
Group Common Stock or rights, warrants or options for its capital stock);
or
(v) issues by reclassification of its shares of Series A TCI Group
Common Stock (other than a reclassification by way of merger or binding
share exchange that is subject to paragraph 7(f)) any shares of its capital
stock (other than rights, warrants or options for its capital stock),
then, subject to the following sentence and to paragraph 7(j), the conversion
privilege and the Conversion Rate in effect immediately prior to the opening of
businesses on the record date for such dividend or distribution or the effective
date of such subdivision, combination or reclassification shall be adjusted so
that the holder of any shares of Series G Preferred Stock thereafter converted
may receive the kind and number of shares of capital stock of the Company which
such holder would have owned immediately following such event if such holder had
converted his shares of Series G Preferred Stock immediately prior to the record
date for, or effective date of, as the case may be, such event. Notwithstanding
the foregoing, if an event listed in clause (iv) or (v) above would result in
the shares of Series G Preferred Stock being convertible into shares or units
(or a fraction thereof) of more than one class or series of capital stock of the
Company and any such class or series of capital stock provides by its terms a
right in favor the Company to call, redeem, exchange or otherwise acquire all of
the outstanding shares or units of such class or series (such class or series of
capital stock being herein referred to as "Redeemable Capital Stock") then, at
the option of the Company, the conversion privilege and Conversion Rate of the
Series G Preferred Stock shall not be adjusted pursuant to this paragraph 7(c)
and in lieu thereof, but subject to paragraph 7(j), the adjustment to the
Conversion Rate contemplated by paragraph 7(e) shall be made with the same
effect as if the dividend or distribution of Redeemable Capital Stock or the
issuance of the additional class or series of Redeemable Capital Stock by
reclassification had been a distribution of assets of the Company.
The adjustment contemplated by this paragraph 7(c) shall be made
successively whenever any event listed above shall occur. For a dividend or
distribution, the adjustment shall become effective immediately after the record
date for the dividend or distribution. For a subdivision, combination or
reclassification, the adjustment shall become effective immediately after the
effective date of the subdivision, combination or reclassification.
If after an adjustment a holder of Series G Preferred Stock would be
entitled to receive upon conversion thereof shares of two or more classes or
series of capital stock of the Company, the Conversion Rate shall thereafter be
subject to adjustment upon the occurrence of an action taken with respect to any
such class or series of capital stock as is contemplated by this paragraph 7
with respect to the Series A TCI Group Common Stock, on terms comparable to
those applicable to the Series A TCI Group Common Stock pursuant to this
paragraph 7.
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Any shares of Series A TCI Group Common Stock issuable in payment of a
dividend shall be deemed to have been issued immediately prior to the time of
the record date for such dividend for purposes of calculating the number of
outstanding shares of Series A TCI Group Common Stock under paragraphs 7(d) and
7(e) below.
(d) Adjustment for Rights Issue. If, after the Company distributes any
rights, warrants or options to holders of shares of Series A TCI Group Common
Stock entitling them, for a period expiring within 45 days after the record date
for the determination of stockholders entitled to receive such distribution, to
purchase shares of Series A TCI Group Common Stock (or Convertible Securities)
at a price per share (or having a conversion price per share, after adding
thereto an allocable portion of the exercise price of the right, warrant or
option to purchase such Convertible Securities, computed on the basis of the
maximum number of shares of Series A TCI Group Common Stock issuable upon
conversion of such Convertible Securities) less than the Current Market Price on
the Determination Date, the Conversion Rate shall be adjusted so that it shall
equal the rate determined by dividing the Conversion Rate in effect immediately
prior to the opening of business on such record date by a fraction, of which the
numerator shall be the number of shares of Series A TCI Group Common Stock
outstanding on such record date plus the number of shares of Series A TCI Group
Common Stock which the aggregate offering price of the total number of shares of
Series A TCI Group Common Stock so offered (or the aggregate conversion price of
the Convertible Securities to be so offered, after adding thereto the aggregate
exercise price of the rights, warrants or options to purchase such Convertible
Securities) to the holders of Series A TCI Group Common Stock (and to the
holders of Convertible Securities and Series B TCI Group Common Stock referred
to in the immediately succeeding paragraph of this paragraph 7(d) if the
distribution to which this paragraph 7(d) applies is also being made to such
holders) would purchase at such Current Market Price, and of which the
denominator shall be the number of shares of Series A TCI Group Common Stock
outstanding on such record date plus the number of additional shares of Series A
TCI Group Common Stock so offered to the holders of Series A TCI Group Common
Stock (and to such holders of Convertible Securities and Series B TCI Group
Common Stock) for subscription or purchase (or into which the Convertible
Securities so offered are convertible). Shares of Series A TCI Group Common
Stock owned by or held for the account of the Company shall not be deemed to be
outstanding the purpose of any such adjustment.
For purposes of this paragraph 7(d) the number of shares of Series A TCI
Group Common Stock outstanding on any record date shall be deemed to include (i)
the maximum number of shares of Series A TCI Group Common Stock the issuance of
which would be necessary to effect the full exercise, exchange or conversion of
all Convertible Securities outstanding on such record date which are then
exercisable, exchangeable or convertible at a price (before giving effect to any
adjustment to such price for the distribution to which this paragraph 7(d) is
being applied) equal or less than the Current Market Price per share of Series A
TCI Group Common Stock on the applicable Determination Date, if all of such
Convertible Securities were deemed to have been exercised, exchanged or
converted immediately prior to the opening of business on such record date and
(ii) if the Series B TCI Group Common Stock is then convertible into Series A
TCI Group Common Stock, the maximum number of shares of Series A TCI Group
Common Stock the issuance of which would be necessary to effect the full
conversion of all shares of Series B TCI Group Common Stock outstanding on such
record date, if all of such shares of Series B TCI Group Common Stock were
deemed to have been converted immediately prior to the opening of business on
such record date.
The adjustment contemplated by this paragraph 7(d) shall be made
successively whenever any such rights, warrants or options are issued, and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive the rights, warrants or options. If all of the
shares of Series A TCI Group Common Stock (or all of the Convertible Securities)
subject to such rights, warrants or options have not been issued when such
rights, warrants or options expire (or, in the case of rights, warrants or
options to purchase Convertible Securities which have been exercised, if all of
the shares of Series A TCI Group Common Stock issuable upon conversion of such
Convertible Securities have not been issued prior to the expiration of the
conversion right thereof), then the Conversion Rate shall promptly be readjusted
to the Conversion Rate which would then be in effect had the adjustment upon the
issuance of such rights, warrants or options been made on the basis of the
actual number of shares of Series A TCI Group Common Stock (or Convertible
Securities) issued upon the exercise of such rights, warrants or options (or
conversion of such Convertible Securities).
No adjustment shall be made under this paragraph 7(d) if the adjusted
Conversion Rate would be lower than the Conversion Rate in effect immediately
prior to such adjustment.
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(e) Adjustments for Other Distributions. If, after the Issue Date (i) the
Company distributes to all holders of shares of Series A TCI Group Common Stock
any assets or debt securities or any rights, warrants or options to purchase
securities (excluding (x) dividends or distributions referred to in paragraph
7(c) (except as otherwise provided in clause (ii) of this sentence) and
distributions of rights, warrants or options referred to in paragraph 7(d) and
(y) cash dividends or other cash distributions, unless such cash dividends or
cash distributions are Extraordinary Cash Dividends), or (ii) the Company makes
a dividend or distribution of Redeemable Capital Stock on, or issues Redeemable
Capital Stock by reclassification of, the Series A TCI Group Common Stock by
reclassification of, the Series A TCI Group Common Stock and determines pursuant
to paragraph 7(c) to treat the same as a distribution of assets of the Company
subject to this paragraph 7(e), then in each such event the Conversion Rate
shall be adjusted by dividing the Conversion Rate in effect immediately prior to
the opening of business on (A) the record date for the determination of
stockholders entitled to receive the distribution or (B) in the case of a
reclassification, the effective date of such reclassification by a fraction, of
which the numerator shall be the total number of shares of Series A TCI Group
Common Stock outstanding on such record date or immediately prior to such
effective date multiplied by the Current Market price on the Determination Date,
less the fair market value (as determined in good faith by the Board of
Directors) on such record date or effective date of said assets (or Redeemable
Capital Stock) or debt securities or rights, warrants or options so distributed
to the holders of Series A TCI Group Common Stock (and to the holders of
Convertible Securities and Series B TCI Group Common Stock referred to in the
immediately succeeding paragraph of this paragraph 7(e) if the distribution to
which this paragraph 7(e) applies is also being made to such holders), and of
which the denominator shall be the total number of shares of Series A TCI Group
Common Stock outstanding on such record date or immediately prior to such
effective date multiplied by such Current Market Price.
For purposes of this paragraph 7(e), the number of shares of Series A TCI
Group Common Stock outstanding on any relevant date shall be deemed to include
(i) the maximum number of shares of Series A TCI Group Common Stock the issuance
of which would be outstanding on such date which are then exercisable,
exchangeable or convertible at a price (before giving effect to any adjustment
to such price for the distribution to which this paragraph 7(e) is being
applied) equal to or less than the Current Market Price on the applicable
Determination Date, if all of such Convertible Securities were deemed to have
been exercised, exchanged or converted immediately prior to the opening of
business on such date and (ii) if the Series B TCI Group Stock is then
convertible into Series A TCI Group Common Stock the issuance of which would be
necessary to effect the full conversion of all shares of Series B TCI Group
Common Stock outstanding on such date, if all of such shares of Series B TCI
Group Common Stock were deemed to have been converted immediately prior to the
opening of business on such date.
For purposes of this paragraph 7(e), the term "Extraordinary Cash Dividend"
shall mean any cash dividend with respect to the Series A TCI Group Common Stock
the amount of which, together with the aggregate amount of cash dividends on the
Series A TCI Group Common Stock to be aggregated with such cash dividend in
accordance with the following provisions of this paragraph, equals or exceeds
the threshold percentage set forth below in the following sentence. If, upon
the date prior to the Ex-Dividend Date with respect to a cash dividend on Series
A TCI Group Common Stock, the aggregate of the amount of such cash dividend
together with the amounts of all cash dividends on the Series A TCI Group Common
Stock with Ex-Dividend Dates occurring in the 365 consecutive day period ending
on the date prior to the Ex-Dividend Date with respect to the cash dividend to
which this provision is being applied (other than any such other cash dividends
with Ex-Dividend Dates occurring in such period for which a prior adjustment in
the Conversion Rate was previously made under this paragraph 7(e)) equals or
exceeds on a per share basis 10% of the average of the Closing Prices during the
period beginning on the date after the first such Ex-Dividend Date in such
period and ending on the date prior to the Ex-Dividend Date with respect to the
cash dividend to which this provision is being applied (except that if no other
cash dividend has had an Ex-Dividend Date occurring in such period, the period
for calculating the average of the Closing Prices shall be the period commencing
365 days prior to the date immediately prior to the Ex-Dividend Date with
respect to the cash dividend to which this provision is being applied), such
cash dividend together with each other cash dividend with an Ex-Dividend Date
occurring in such 365-day period that is aggregated with such cash dividend in
accordance with this paragraph shall be deemed to be an Extraordinary Cash
Dividend.
The adjustment pursuant to the foregoing provisions of this paragraph 7(e)
shall be made successively whenever any distribution to which this paragraph
7(e) applies is made, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution
(or, in the case of a reclassification, the effective date). Shares of Series A
TCI Group Common Stock owned by or held for the account of the Company shall not
be deemed outstanding for the purpose of any such adjustment.
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No adjustment shall be made under this paragraph 7(e) if the adjusted
Conversion Rate would be lower than the Conversion Rate in effect prior to such
adjustment. In the event that, with respect to any distribution to which this
paragraph 7(e) would otherwise apply, the numerator of the fraction in the
formula set forth in the first paragraph of this paragraph 7(e) is zero or a
negative number, then the adjustment provided by this paragraph 7(e) shall not
be made. If the Company makes a distribution to all holders of its Series A TCI
Group Common Stock of any of its assets or debt securities or any rights,
warrants or options to purchase securities of the Company that, but for the
immediately preceding sentence, would otherwise result in an adjustment in the
Conversion Rate pursuant to the foregoing provisions of this paragraph 7(e),
then, from and after the record date for determining the holders of Series A TCI
Group Common Stock entitled to receive the distribution, a holder of Series G
Preferred Stock that converts such shares in accordance with the provisions of
this paragraph 7 will upon such conversion be entitled to receive, in addition
to the shares of Series A TCI Group Common Stock into which such shares of
Series G Preferred Stock are convertible, the kind and amount of securities,
cash or other assets comprising the distribution that such holder would have
received if such holder had converted such shares of Series G Preferred Stock
immediately prior to the record date for determining the holders of Series A TCI
Group Common Stock entitled to receive the distribution.
(f) Consolidation, Merger or Sale of the Company. If the Company
consolidates with or merges into, or transfers (other than by mortgage or
pledge) the properties and assets substantially as an entirety to, another
Person or the Company is a party to a merger or binding share exchange which
reclassifies or changes its outstanding Series A TCI Group Common Stock, the
Company (or its successor in such transaction) or the transferee of such
properties and assets shall make appropriate provision so that the holders of
the shares of Series G Preferred Stock then outstanding shall have the right
thereafter to convert such shares into the kind and amount of securities, cash
or other assets receivable upon such transaction by a holder of the number of
shares of Series A TCI Group Common Stock into which such shares of Series G
Preferred Stock could have been converted immediately before the effective date
of such transaction (assuming, to the extent applicable, that such holder failed
to exercise any rights of election with respect thereto and received per share
of Series A TCI Group Common Stock the kind and amount of securities, cash or
other assets received per share by a plurality of the non-electing shares of
Series A TCI Group Common Stock), and the holders of the Series G Preferred
Stock shall have no other conversion rights under these provisions; provided
that (i) effective provision shall be made, in the Articles or Certificate of
Incorporation of the resulting or surviving corporation or otherwise or in any
contracts of sale or transfer, so that the provisions set forth herein for the
protection of the conversion rights of Series G Preferred Stock shall thereafter
be made applicable, as nearly as reasonable may be, to any such other securities
and assets deliverable upon conversion of the Series G Preferred Stock remaining
outstanding or other convertible preferred stock or other securities received by
the holders of Series G Preferred Stock in place thereof; and (ii) any such
resulting or surviving corporation or transferee shall expressly assume the
obligation to deliver, upon the exercise of the conversion privilege, such
securities, cash or other assets as the holders of the Series G Preferred Stock
remaining outstanding, or other convertible preferred stock or other securities
received by the holders in place thereof, shall be entitled to receive pursuant
to the provisions hereof, and to make provision for the protection of the
conversion rights of the Series G Preferred Stock, or of any other convertible
preferred stock or other securities received by the holders in place thereof, as
provided in clause (i) of this sentence.
If this paragraph 7(f) applies, paragraphs 7(c), 7(d) and 7(e) shall not
apply.
(g) Effect of Redemption. Subject to paragraph 7(j) and to the remaining
provisions of this paragraph 7(g), in the event that a holder of Series G
Preferred Stock would be entitled to receive upon conversion thereof pursuant to
this paragraph 7 any Redeemable Capital Stock and the Company redeems, exchanges
or otherwise acquires all of the outstanding shares or other units of such
Redeemable Capital Stock (such event being a "Redemption Event"), then, from and
after the effective date of such Redemption Event, the holders of shares of
Series G Preferred Stock then outstanding shall be entitled to receive upon
conversion of such shares, in lieu of shares or units of such Redeemable Capital
Stock, the kind and amount of securities, cash or other assets receivable upon
the Redemption Event by a holder of the number of shares or units of such
Redeemable Capital Stock into which such shares of Series G Preferred Stock
could have been converted immediately prior to the effective date of such
Redemption Event (assuming, to the extent applicable, that such holder failed to
exercise any rights of election with respect thereto and received per share or
unit of such Redeemable Capital Stock the kind and amount of securities, cash or
other assets received per share or unit by a plurality of the non-electing
shares or units of such Redeemable Capital Stock), and (from and after the
effective date of such Redemption Event) the holders of the Series G Preferred
Stock shall have no other conversion rights under these provisions with respect
to such Redeemable
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Capital Stock.
Notwithstanding the foregoing, if the Redemption price for the shares of
such Redeemable Capital Stock is paid in whole or in part in Redemption
Securities, and the Mirror Preferred Stock Condition is met, the Series G
Preferred Stock shall not be convertible into such Redemption Securities and,
from and after the applicable redemption date, the holders of any shares of
Series G Preferred Stock that have not been exchanged for Mirror Preferred Stock
and Exchange Preferred Stock shall have no conversion rights under these
provisions except for any conversion right that may have existed immediately
prior to the effective date of the Redemption Event with respect to any
securities (including the Series A TCI Group Common Stock), cash or other assets
other than the Redeemable Capital Stock so Redeemed. The Mirror Preferred Stock
Condition will be met in connection with a redemption of any Redeemable Capital
Stock into which the Series G Preferred Stock is then convertible, if the
Company makes appropriate provision so that the holders of the Series G
Preferred Stock have the right to exchange their shares of Series G Preferred
Stock on the effective date of the Redemption Event for Exchange Preferred Stock
of the Company and Mirror Preferred Stock of the issuer of the Redemption
Securities. The sum of the initial liquidation preferences of the shares of
Exchange Preferred Stock and Mirror Preferred Stock delivered in exchange for a
share of Series G Preferred Stock will equal the Liquidation Preference of a
share of Series G Preferred Stock on the effective date of the Redemption Event.
The Mirror Preferred Stock will have an aggregate initial liquidation preference
equal to the product of the aggregate Liquidation Preference of the shares of
Series G Preferred Stock exchanged therefor and the quotient of (x) the product
of the Conversion Rate for the Redeemable Capital Stock to be Redeemed
(determined immediately prior to the effective date of the Redemption Event) and
the average of the daily Closing Prices of the Redeemable Capital Stock for the
period of ten consecutive trading days ending on the third trading day prior to
the effective date of the Redemption Event, divided by (y) the sum of the amount
determined pursuant to clause (x), plus the fair value of the securities (other
than those being Redeemed), cash or other assets that would have been receivable
by a holder of Series G Preferred Stock upon conversion thereof immediately
prior to the effective date of the Redemption Event (such fair value to be
determined in the case of securities with a Closing Price in the same manner as
provided in clause (x) and otherwise by the Board of Directors in the exercise
of its good faith judgment). The shares of Exchange Preferred Stock will have an
aggregate initial liquidation preference equal to the difference between the
aggregate Liquidation Preference of the shares of Series G Preferred Stock
exchanged therefore and the aggregate initial liquidation preference of the
Mirror Preferred Stock.
When used in connection with a redemption by the Company of any Redeemable
Capital Stock into which the Series G Preferred Stock is then convertible, the
following terms have the following meanings:
(i) "Redemption Securities" means securities of an issuer other than
the Company that are distributed by the Company in payment, in whole or in
part, of the redemption price for such Redeemable Capital Stock.
(ii) "Mirror Preferred Stock" means convertible preferred stock
issued by the issuer of the Redemption Securities and having terms,
conditions, designations, dividend rights, voting powers, rights on
liquidation and other preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions
thereof that are identical, or as nearly so as is practicable in the good
faith judgment of the Board of Directors, to those of the Series G
Preferred Stock for which such Mirror Preferred Stock is exchanged, except
that (x) the liquidation preference will be determined as provided above in
this paragraph 7(g), (y) the running of any time periods pursuant to the
terms of the Series G Preferred Stock shall be tacked to the corresponding
time periods in the Mirror Preferred Stock and (z) the Mirror Preferred
Stock shall be convertible into the kind and amount of Redemption
Securities, cash and other assets that the holder of a share of Series G
Preferred Stock in respect of which such Mirror Preferred Stock is issued
pursuant to the terms hereof would have received upon redemption of the
Redeemable Capital Stock had such shares of Series G Preferred Stock been
converted prior to the effective date of the Redemption Event.
(iii) "Exchange Preferred Stock" means a series of convertible
preferred stock of the Company having terms, conditions, designations,
dividend rights, voting powers, rights on liquidation and other preferences
and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof that are identical, or
as nearly so as is practicable in the good faith judgment of the Board of
Directors, to those of the Series G Preferred Stock for which such Exchange
Preferred Stock is exchanged, except that (x) the liquidation preference
will be determined as provided above in this paragraph 7(g), (y) the
running of any time periods pursuant to the terms of the Series G Preferred
Stock shall be tacked to the corresponding time period in the Exchange
Preferred Stock and (z) the Exchange Preferred Stock will not be
convertible into, and the holders will have no
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conversion rights thereunder with respect to, the Redeemable Capital Stock
redeemed in the Redemption Event.
Notwithstanding the second paragraph of this paragraph 7(g), the Mirror
Preferred Stock Condition shall only be deemed to have been satisfied in
connection with any Redemption Event if, in the good faith determination of the
Board of Directors: (i) receipt of Mirror Preferred Stock and/or Exchange
Preferred Stock in exchange for Series G Preferred Stock pursuant to the second
paragraph of this paragraph 7(g) would not result in the recognition of gain or
loss by the holders of such Series G Preferred Stock for United States federal
income tax purposes; (ii) an adjustment made in the Conversion Rate of the
Series G Preferred Stock with respect to such Redemption Event, as provided in
the first paragraph of this paragraph 7(g), would result in the recognition of
gain or loss by the holders of Series G Preferred Stock for United States
federal income tax purposes; or (iii) receipt of Redemption Securities in
redemption of the Redeemable Capital Stock to be redeemed in the Redemption
Event would result in the recognition of gain or loss by the holders of such
Redeemable Capital Stock, as the case may be.
(h) Simultaneous Adjustments. In the event that this paragraph 7 requires
adjustments to the Conversion Rate under more than one of paragraph 7(c)(iv),
(d) or (e), and the record dates for the distributions giving rise to such
adjustments shall occur on the same date, then such adjustments shall be made by
applying, first, the provisions of paragraph 7(c), second, the provisions of
paragraph 7(e) and, third, the provisions of paragraph 7(d).
(i) When Adjustment May Be Deferred. In any case in which this paragraph 7
shall require that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of such
event (x) issuing to the holder of any shares of Series G Preferred Stock
converted after such record date and before the occurrence of such event the
additional shares of Series A TCI Group Common Stock issuable upon such
conversion by reason of the adjustment required by such event over and above the
shares of Series A TCI Group Common Stock issuable upon such conversion before
giving effect to such adjustment and (y) paying to such holder cash or its check
in lieu of any fractional interest to which he is entitled pursuant to paragraph
7(o); provided, however, that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to receive
such additional shares of Series A TCI Group Common Stock, and such cash, upon
the occurrence of the event requiring such adjustment.
(j) De Minimis Adjustment; When Adjustment Is Not Required. No adjustments
in the Conversion Rate need be made unless the adjustment would require an
increase or decrease of at least one percent (1%) in the Conversion Rate. Any
adjustment which is not made shall be carried forward and taken into account in
any subsequent adjustment.
All calculations under this paragraph 7 shall be made to the nearest cent
or to the nearest 1/1000th of a share, as the case may be.
No adjustment need be made for rights to purchase shares of Series A TCI
Group Common Stock or for sales of shares of Series A TCI Group Common Stock
which in either case are made pursuant to a Company plan providing for
reinvestment of dividends or interest or pursuant to a bona fide employee stock
option or stock purchase plan of the Company. No adjustment need be made for a
change in the par value of the Series A TCI Group Common Stock.
No adjustment need be made under this paragraph 7 for a transaction
referred to in paragraph 7(c), 7(d), 7(e) or 7(g) if holders of the Series G
Preferred Stock are to participate in the transaction on a basis and with notice
that the Board of Directors in good faith determines to be fair and appropriate
in light of the basis and notice on which holders of Series A TCI Group Common
Stock participate in the transaction; provided that the basis on which the
holders of shares of Series G Preferred Stock are to participate in the
transaction shall not be deemed to be fair if it would require the holder to
convert his shares of Series G Preferred Stock, in order to participate, at any
time prior to the expiration of the conversion period specified for the shares
of Series G Preferred Stock pursuant to paragraph 7(a) of this Certificate of
Designations. The immediately preceding sentence shall apply to any transaction
referred to in paragraph 7(c), 7(d), 7(e) or 7(g) only if, in good faith
determination of the Board of Directors: (i) participation in such transaction
by the holders of the Series G Preferred Stock would not result in the
recognition of gain or loss by such holders of United States federal income tax
purposes; (ii) an adjustment made in the Conversion Rate of the Series G
Preferred Stock in lieu of participating in such transaction, pursuant to this
paragraph 7, would result in the recognition of gain or loss by holders of
Series G Preferred Stock for United States federal income tax purposes; or (iii)
participation in such transaction by the holders of the Series A TCI Group
Common Stock would result in the recognition of gain or loss by such holders for
United States federal income tax purposes.
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To the extent the shares of Series G Preferred Stock become convertible
into cash, no adjustment need be made thereafter as to the cash. Interest will
not accrue on the cash.
(k) Company Determination Final. Any determination required to be made
pursuant to paragraph 7(c), 7(d), 7(e), 7(f), 7(g), 7(h), 7(j) or 7(o) shall be
made by the Board of Directors (whether or not reference to the Board of
Directors is expressly made in any such paragraph) and any determination so made
in good faith shall be conclusive and binding, absent manifest error, on the
holders of shares of Series G Preferred Stock. In making any determination as
to the expected tax treatment of any action, transaction or event referred to
herein, including, without limitation, the determinations provided for in the
last paragraph of Paragraph 7(g) and the last sentence of the fourth paragraph
of paragraph 7(j), the Board of Directors shall be entitled to rely conclusively
on (i) an opinion of counsel rendered by a law firm acceptable to the Board of
Directors, acting in good faith, or (ii) a private letter ruling from the
Internal Revenue Service, to such effect, which opinion of counsel or private
letter ruling may be based upon such assumptions, and be subject to such
qualifications, conditions and limitations, as the Board of Directors shall in
good faith determine to be appropriate under the circumstances. Any such
determination by the Board of Directors shall be based on the expected United
States federal income tax consequences applicable to the transaction in
question, without regard to special tax rules such as those applicable to
dealers in securities, foreign persons, mutual funds, insurance companies, tax-
exempt entities and holders ho do not hold the securities or other property in
question as capital assets, or the personal circumstances of any particular
stockholder.
(l) Notice of Adjustment. Whenever the provisions of this paragraph 7
require an adjustment of the Conversion Rate, the Company shall promptly compute
such adjustment and (i) file with the transfer agent for the Series G Preferred
Stock (or with the books of the Company if there is no transfer agent) an
Officers' Certificate setting forth a description of the event requiring the
adjustment, the new Conversion Rate (including a reasonable detailed calculation
thereof), and the kind and amount of capital stock or other securities or cash
or other assets into which the Series G Preferred Stock shall be convertible
after such event, and (ii) cause a notice containing a summary of the
information set forth in said certificate to be given to the holders of Series G
Preferred Stock. Where appropriate, such notice may be given in advance and
included as a part of the notice required to be given under the provisions of
paragraph 7(m).
(m) Advance Notice of Certain Transactions. If the Company:
(i) takes any action which would require an adjustment in the
Conversion Rate;
(ii) is a party to a consolidation, merger or binding share exchange,
or transfers all or substantially all of its assets to another Person, and
any stockholders of the Company must approve the transaction; or
(iii) voluntarily or involuntarily dissolves, liquidates or winds up,
then, in any such event, the Company shall give the holders of the Series G
Preferred Stock, at least twenty (20) days prior to any record date or other
date set for definitive action if there shall be no record date, a notice
stating the record date for and the anticipated effective date of such action or
event and, if the event is a dividend or distribution or issuance by
reclassification of Redeemable Capital Stock, whether the Company has determined
to adjust the Conversion Rate pursuant to paragraph 7(c), or 7(e), provided,
however, that any notice required hereunder shall in any event be given no later
than the time that notice is given to the holders of Series A TCI Group Common
Stock. Without limiting the obligation of the Company to provide notice of
corporate actions hereunder, the failure to mail the notice or any defect in it
shall not affect the legality or validity or any corporate action or the vote
thereon.
(n) Reservation of Series A TCI Group Common Stock Issuable Upon
Conversion. The Company shall at all times on and after the Issue Date reserve
and keep available out of its authorized but unissued shares of Series A TCI
Group Common Stock, solely for the purpose of effecting the conversion of the
shares of Series G Preferred Stock, such number of its shares of Series A TCI
Group Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series G Preferred Stock; provided that
nothing contained herein shall be construed to preclude the Company from
satisfying its obligations in respect of the conversion of the outstanding
shares of Series G Preferred Stock by delivery of shares of Series A TCI Group
Common Stock which
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are held in the treasury of the Company. The Company shall take all such
corporate and other actions as from time to time may be necessary to insure that
all shares of Series A TCI Group Common Stock issuable upon conversion of shares
of Series G Preferred Stock at the Conversion Rate in effect from time to time
will, when issued, be duly and validly authorized and issued, fully paid and
nonassessable, and free from all preemptive or similar rights. in order that
the Company may issue shares of Company will in good faith and as expeditiously
as possible endeavor to comply with all applicable Federal and state securities
laws and will in good faith and as expeditiously as possible endeavor to list
such shares to be issued upon conversion on such national securities exchange or
national securities association, if any, on which the Series A TCI Group Common
Stock is then listed.
(o) Fractional Shares. No fractional shares of Series A TCI Group Common
Stock or scrip shall be issued upon conversion of the Series G Preferred Stock.
Whether or not fractional shares would otherwise be required to be issued to a
holder of Series G Preferred Stock upon such conversion shall be determined on
the basis of the total number of shares of Series G Preferred Stock the holder
is at the time converting into Series A TCI Group Common Stock and the total
number of shares of Series A TCI Group Common Stock issuable upon such
conversion. In lieu of the issuance of fractional shares of Series A TCI Group
Common Stock, the Company shall pay instead an amount in cash or by its check
equal to the same fraction of the Closing Price of a full share of Series A TCI
Group Common Stock on the last full trading day prior to the Conversion Date.
(p) Impairment. The Company will not, by amendment of this Certificate of
Designations or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, other than as expressly permitted by this Certificate of
Designations or approved by the requisite vote or written consent of the holders
of Series G Preferred Stock taken or given in accordance with this Certificate,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this paragraph 7 and
in the taking of all such action as may be necessary or appropriate in order to
protect the conversion rights of the holders of Series G Preferred Stock against
impairment.
8. Voting.
(a) Voting Rights. The holders of Series G Preferred Stock shall have no
voting rights whatsoever, except as required by law and except for the voting
rights described in this paragraph 8; provided, however, that the number of
authorized shares of Series G Preferred Stock may be increased or decreased (but
not below the number of shares of Series G Preferred Stock then outstanding) by
the affirmative vote of the holders of at least 66 2/3% of the total voting
power of the then outstanding Voting Securities (as defined in Section A of
Article VIII of the Restated Certificate of Incorporation of the Company (the
"Restated Certificate")), voting together as a single class as provided in
Article IX of the Restated Certificate. Without limiting the generality of the
foregoing, no vote or consent of the holders of Series G Preferred Stock shall
be required for (a) the creation of any indebtedness of any kind of the Company,
(b) the creation or designation of any class or series of Senior Stock, Parity
Stock or Junior Stock, or (c) any amendment to the Restated Certificate that
would increase the number of authorized shares of Preferred Stock or the number
of authorized shares of Series G Preferred Stock or that would decrease the
number of authorized shares of Preferred Stock or the number of authorized
shares of Series G Preferred Stock (but not below the number of shares of
Preferred Stock or Series G Preferred Stock, as the case may be, then
outstanding).
(b) Election of Directors. The holders of the Series G Preferred Stock
shall have the right to vote at any annual or special meeting of stockholders
for the purpose of electing directors. Each share of Series G Preferred Stock
shall have one vote for such purpose, and shall vote as a single class with all
other classes or series of capital stock of the Company that are entitled to
vote in any general election of directors, unless the instrument creating or
evidencing such class or series of capital stock otherwise expressly provides.
9. No Preemptive Rights. The holders of shares of Series G Preferred
Stock shall have no preemptive rights, including preemptive rights with respect
to any shares of capital stock or other securities of the Company convertible
into or carrying rights or options to purchase any such shares.
10. Waiver. Any provision of this Certificate of Designations which, for
the benefit of the holders of Series G Preferred Stock, prohibits, limits or
restricts actions by the Company, or imposes obligations on the Company,
including but not limited to provisions relating to the obligation of the
Company to redeem or convert such shares, may be waived in whole or in part, or
the application of
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all or any part of such provision in any particular circumstance or generally
may be waived, in each case by the affirmative vote or with the consent of the
holders of at least a majority of the number of shares of Series G Preferred
Stock then outstanding (or such greater percentage thereof as may be required by
applicable law or any applicable rules of any national securities exchange or
national interdealer quotation system), either in writing or by vote at an
annual meeting or a special meeting called for such purpose at which the holders
of Series G Preferred Stock shall vote as a separate class.
11. Method of Giving Notices. Any notice required or permitted by the
provisions of this Certificate of Designations to be given to the holders of
shares of Series G Preferred Stock shall be deemed duly given if deposited in
the United States mail, first class mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Company or
supplied by him in writing to the Company for the purpose of such notice.
12. Exclusion of Other Rights. Except as may otherwise be required by law
and except for the equitable rights and remedies which may otherwise be
available to holders of Series G Preferred Stock, the shares of Series G
Preferred Stock shall not have any designations, preferences, limitations or
relative rights other than those specifically set forth in this Certificate of
Designations.
13. Headings of Subdivisions. The headings of the various subdivisions of
this Certificate of Designations are for convenience of reference only and shall
not affect the interpretation of any of the provisions of this Certificate of
Designations.
FURTHER RESOLVED, that the appropriate officers of this Company are hereby
authorized to execute and acknowledge a certificate setting forth these
resolutions and to cause such certificate to be filed and recorded in accordance
with the requirements of Section 151(g) of the General Corporation Law of the
State of Delaware."
The undersigned has signed this Certificate of Designations on this 25th
day of January, 1996.
/s/ Stephen M. Brett
-------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
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State of Delaware
OFFICE OF THE SECRETARY OF STATE PAGE 1
_______________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE TWENTY-
FIFTH DAY OF JANUARY, A.D. 1996, AT 3:05 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OR DEEDS FOR RECORDING.
[SEAL]
/s/ EDWARD J. FREEL
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
2371729 8100 DATE: 7804670
960024231 01-25-96
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 03:05 PM 01/25/1996
980024220 - 2371729
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATIONS
_______________
SETTING FORTH A COPY OF RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED AS
"REDEEMABLE CONVERTIBLE LIBERTY MEDIA GROUP
PREFERRED STOCK, SERIES H"
ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
_______________
The undersigned, an executive Vice President of TELE-COMMUNICATIONS, INC.,
a Delaware corporation (the "Company"), HEREBY CERTIFIES that the Board of
Directors of the Company on December 13, 1995, duly adopted the following
resolutions creating a new series of the Company's Series Preferred Stock:
"BE IT RESOLVED, that pursuant to authority expressly granted by the
provisions of Article IV, Section D of the Restated Certificate of Incorporation
of the Company, the Board of Directors hereby creates and authorizes the
issuance of a new series of the Company's Series Preferred Stock, par value $.01
per share ("Series Preferred Stock"), and hereby fixes the powers, designations,
dividend rights, voting powers, rights on liquidation, conversion rights,
redemption rights and other preferences and relative, participating, optional or
other special rights and the qualifications, limitations or restrictions of the
shares of such series (in addition to the powers, designations, preferences and
relative, participating, optional or other special rights and the
qualifications, limitations or restrictions thereof set forth in the Restated
Certificate of Incorporation that are applicable to each class and series of the
Company's preferred stock, par value $.01 per share ("Preferred Stock")) as
follows:
1. Designation Number of Shares. The designation of the series of Series
Preferred Stock, par value $.01 per share, of the Company created hereby shall
be "Redeemable Convertible Liberty Media Group Common Stock, Series H" ("Series
H Preferred Stock"). The designated number of shares of Series H Preferred Stock
shall be 7,259,380. Each share of Series H Preferred Stock shall be 7,259,380.
Each share of Series H Preferred Stock shall have a stated value of $5.40
("Stated Value").
Any shares of Series H Preferred Stock redeemed, converted or otherwise
acquired by the Company shall be retired, shall not be reissued as shares of
Series H Preferred Stock and shall resume the status of authorized and unissued
shares of Series Preferred Stock, without designation as to series, until such
shares are once more designated as part of a particular series of Series
Preferred Stock by the Board of Directors.
2. Certain Definitions. Unless the context otherwise requires, the terms
defined in this paragraph 2 shall have, for all purposes of this Certificate of
Designations, the meanings herein specified:
"Anniversary Date" shall mean January 25, 1997.
"Average Market Price" as of any Record Date or Special Record Date for a
dividend payment declared by the Board of Directors
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shall mean the average of the daily Closing Prices of the Series A TCI Group
Common Stock for the period of ten (10) consecutive trading days ending on the
tenth trading day prior to such Record date or Special Record Date,
appropriately adjusted in such manner as the Board of Directors in good faith
deems appropriate to take into account any stock dividend on the Series A TCI
Group Common Stock, or any subdivision, combination or reclassification of the
Series A TCI Group Common Stock that occurs, or the Ex-Dividend date for which
occurs, during the period following the first trading day in such ten-trading
day period and ending on the last full trading day immediately preceding the
Dividend Payment Date or other date fixed for the payment of dividends to which
such Record Date or Special Record Date relates.
"Board of Directors" shall mean the Board of Directors of the Company, and,
unless the context indicates otherwise, shall also mean, to the extent permitted
by law, any committee thereof authorized, with respect to any particular matter,
to exercise the power of the Board of Directors of the Company with respect to
such matter.
"Business Day" shall mean any day other than a Saturday Sunday, or a day on
which banking institutions in The City of New York, New York are not required to
be open.
"capital stock" shall mean any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) corporate stock.
"Class B Preferred Stock" shall mean the Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock, par value $.01 per share, of the Company.
"Closing Price" of a share of Series A TCI Group Common Stock or of a share
of Series A Liberty Media Group Common Stock, or a share of any other class or
series of capital stock of the Company into which the Series H Preferred Stock
may hereafter become convertible pursuant to paragraph 7, on any day shall mean
the last reported per share sale price (or, if no sale price is reported, the
average of the high and low bid prices) of the Series A TCI Group Common Stock,
the Series A Liberty Media Group Common Stock or such capital stock, as the case
may be, on such day on the Nasdaq Stock Market or as quoted by the National
Quotation Bureau Incorporated or, if the Series A TCI Group Common Stock, the
Series A Liberty Media Group Common Stock or such capital stock, as applicable,
is listed on an exchange, on the principal exchange on which the Series A TCI
Group Common Stock, the Series A Liberty Media Group Common Stock or such
capital stock, as the case may be, is listed. In the event that no such
quotation is available for any day, the Board of Directors shall be entitled to
determine the Closing Price on the basis of such quotations as it in good faith
considers appropriate.
"Contingency" shall have the meaning set forth in paragraph 3(a.).
"Conversion Date" of a share of Series H Preferred Stock shall mean the
date on which the requirements for conversion of such share set forth in
paragraph 7(b) of this Certificate of designations have been satisfied by the
holder thereof.
"Conversion Rate" shall mean the kind and amount of securities, assets or
other property that as of any date are issuable or deliverable upon conversion
of a share of Series H Preferred Stock. The Conversion Rate of a share of
Series H Preferred Stock shall initially be .2625 shares of Series A Liberty
Media Group Common Stock for each share of Series H Preferred Stock, subject to
adjustment as set forth in paragraph 7 of this Certificate of Designations. In
the event that pursuant to paragraph 7 of the Series H Preferred Stock becomes
convertible into more than one class or series of capital stock of the Company,
the term Conversion Rate, when used with respect to any such class or series,
shall mean the number or fraction of shares or other units of such capital stock
that as of any date would be issued upon conversion of a share of Series H
Preferred Stock.
"Convertible Securities" shall mean any or all options, warrants,
securities and rights which are convertible into or exercisable or exchangeable
for Series A Liberty Media Group Common Stock at the option of the holder
thereof, or which otherwise entitle the holder thereof to subscribe for,
purchase or otherwise acquire Series A Liberty Media Group Common Stock;
provided, however, that such term shall not include the Series B Liberty Media
Group Common Stock.
"Career Market Price", on the Determination Date for any issuance of
rights, warrants or options or any distribution in respect of
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which the Current Market Price is being calculated, shall mean the average of
the daily Closing Prices of the Series A Liberty Media Group Common Stock for
the shortest of:
(i) the period of 30 consecutive trading days commencing 45 trading
days before such Determination Date.
(ii) the period commencing on the date next succeeding the first
public announcement of the issuance of rights, warrants or options or the
distribution in respect of which the Current Market Price is being
calculated and ending on the last full trading day before such
Determination Date, and
iii) the period, if any, commencing on the date next succeeding the
Ex-Dividend Date with respect to the next preceding issuance of rights,
warrants or options or distribution for which an adjustment is required by
the provisions of paragraph 7(c)(iv), 7(d) or 7(e), and ending on the last
full trading day before such Determination Date.
If the record date for an issuance of rights, warrants or options or a
distribution for which an adjustment is required by the provisions of paragraph
7(c)(iv), 7(d) or 7(e) (the "preceding adjustment event") precedes the record
date for the issuance or distribution in respect of which the Current Market
Price is being calculated and the Ex-Dividend Date for such preceding adjustment
event is on or after the Determination Date for the issuance or distribution in
respect of which the Current Market Price is being calculated, then the Current
Market Price shall be adjusted by deducting therefrom the fair market value (on
the record date for the issuance or distribution in respect of which the Current
Market Price is being calculated), as determined in good faith by the Board of
Directors, of the capital stock, rights, warrants or options, assets or debt
securities issued or distributed in respect of each share of Series A Liberty
Media Group Common Stock in such preceding adjustment event. Further, in the
event that the Ex-Dividend Date (or in the case of a subdivision, combination or
reclassification to which paragraph 7(c)(i), (ii), (iii) or (v) applies occurs
during the period in a manner determined in good faith by the Board of Directors
to reflect the impact of such dividend, subdivision, combination or
reclassification on the Closing prices of the Series A Liberty Media Group
Common Stock during such period.
"Determination Date" for any issuance of rights, warrants or options or any
distribution to which paragraph 7(d) or 7(e) applies shall mean the earlier of
(i) the record date for the determination of stockholders entitled to receive
the rights, warrants or options or the distribution to which such paragraph
applies and (ii) the Ex-Dividend date for such rights, warrants or options or
distribution.
"Dividend Payment Date" shall mean the first day of each February and
August, commencing with August 1, 1997, or the next succeeding Business Day if
any such day is not a Business Day.
"Dividend Period" shall mean the period from the Anniversary Date to but
excluding the first Dividend Payment Date and, thereafter, each semi-annual
period from and including a Dividend Payment Date to but excluding the next
Dividend Payment Date.
"Exchange Preferred Stock" shall have the meaning set forth in paragraph
7(g).
"Ex-Dividend Date: shall mean the date on which "ex-dividend" trading
commences for a dividend, an issuance of rights, warrants or options or a
distribution to which any of paragraph 7(c), (d), or (e) applies in the over-
the- counter market or on the principal exchange on which the Series A Liberty
Media Group Common Stock is then quoted or listed.
"Issue Date" shall mean the date on which shares of Series H Preferred
Stock are first issued.
"Junior Stock" shall mean (i) the TCI Group Common Stock, (ii) the Liberty
Media Group Common Stock, (iii) the Class B Preferred Stock, (iv) any other
class or series of capital stock, whether now existing or hereafter created, of
the Company, other than (A) the Series H Preferred Stock, (B) any class or
series of Parity Stock (except to the extent provided under clause (v) hereof)
and (C) any class or series of Senior Stock, and (v) above, a class or series of
Parity Stock shall rank junior to the Series H Preferred Stock as to dividend
rights, rights of redemption or rights on liquidation if the holders of shares
of Series H Preferred Stock shall be entitled to dividend payments, payments on
redemption or payments of amounts distributable upon dissolution, liquidation or
winding up of the Company, as the case may be, in preference or priority to the
holders of shares of such class or series of Parity Stock.
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"Liberty Media Group Common Stock" shall mean the Series A Liberty Media
Group Common Stock and the Series B Liberty Media Group Common Stock.
"Liquidation Preference" measured per share of the Series H Preferred Stock
as of any date in question (the "Relevant Date") shall mean an amount equal to
the sum of (a) the Stated Value of such share, plus (b) an amount equal to all
dividends accrued on such share which pursuant to paragraph 3(d) of this
Certificate of Designations have been added to and remain a part of the
Liquidation Preference as of the Relevant Date, plus (c) for purposes of
determining the amounts payable pursuant to paragraph 4 and paragraph 5 of this
Certificate of Designations and the definition of Redemption Price, an amount
equal to all unpaid dividends accrued on the sum of the amounts specified in
clauses (a) and (b) above during the period from and including the immediately
preceding Dividend Payment Date (or the Anniversary Date if the Relevant Date is
on or prior to the first Dividend Payment Date) to but excluding the Relevant
Date, and, in the case of clauses (b) and (c) hereof, whether or not such unpaid
dividends have been declared or there are any unrestricted funds of the Company
legally available for the payment of dividends, In connection with the
determination of the Liquidation Preference of a share of Series H Preferred
Stock upon redemption or upon liquidation, dissolution or winding up of the
company, the Relevant Date shall be the applicable date of redemption or the
date of distribution of amounts payable to stockholders in connection with any
such liquidation, dissolution or winding up.
"Mirror Preferred Stock" shall have the meaning set forth in paragraph
7(g).
"1933 Act" shall mean the Securities act of 1933, as amended from time to
time, or any successor statute, and the rules and regulations promulgated
thereunder.
"Officers' Certificate" shall mean a certificate signed by the chairman of
the Board, President or any Senior Vice President of the Company and by the
Treasurer or any Assistant Treasurer of the Company.
"Parity Stock" shall mean any class or series of capital stock, whether now
existing or hereafter created of the Company ranking on a parity basis with the
Series H Preferred Stock as to dividend rights, rights of redemption or rights
on liquidation. Capital stock of any class or series, whether now existing or
hereafter created, shall rank on a parity as to dividend rights, rights of
redemption or rights on liquidation with the Series H Preferred Stock, whether
or not the dividend rates, dividend payment dates, redemption or liquidation
prices per share or sinking fund or mandatory redemption provisions, if any, are
different form those of the Series H Preferred Stock, if the holders of shares
of such class or series shall be entitled to dividend payments, payments on
redemption or payments of amounts distributable upon dissolution, liquidation or
winding up of the Company, as the case may be, in proportion to their respective
accumulated and accrued and unpaid dividends, redemption prices or liquidation
prices, respectively, without preference or priority, one over the other, as
between the holders of shares of such class or series and the holders of Series
H Preferred Stock. No class or series of capital stock that ranks junior to the
Series H Preferred Stock as to rights on liquidation shall rank or be deemed to
rank on a parity basis with the Series H Preferred Stock as to dividend rights
or rights of redemption, unless the instrument creating or evidencing such class
or series of capital stock otherwise expressly so provides. The Series C
Preferred Stock, the Series D Preferred Stock, the Series F Preferred Stock and
the Series G Preferred Stock rank on a parity basis with the Series H Preferred
Stock as to dividend rights, rights of redemption and rights on liquidation and
constitute "Parity Stock" for purposes of this Certificate of Designations.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity, whether acting in an individual, fiduciary or other
capacity.
"Record Date" for the dividends payable on any Dividend Payment Date shall
mean the 15th day of the month preceding the month during which such Dividend
Payment Date shall occur as and if designated by the Board of Directors.
"Redeemable Capital Stock" shall have the meaning set forth in paragraph
7(c).
"Redemption Date" as to any share of Series H Preferred Stock shall mean
the date fixed for redemption of such share pursuant to paragraph 5(a) or 5(b)
of this Certificate of Designation, provided that no such date will be a
Redemption Date unless the applicable
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Redemption Price is actually paid in full on such date or the consideration
sufficient for the payment thereof, and for no other purpose, has been set apart
or deposited in trust as contemplated by paragraph 5(d) of this Certificate of
Designations.
"Redemption Price", as to any share of Series H Preferred Stock that is to
be redeemed on any Redemption Date, shall mean the Liquidation Preference
thereof on such Redemption Date.
"Redemption Securities" shall have the meaning set forth in paragraph 7(g).
"Senior Stock" shall mean any class or series of capital stock of the
Company hereafter created ranking prior the Series H Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation. Capital stock of
any class or series shall rank prior to the Series H Preferred Stock as to
dividend rights, rights of redemption or rights on liquidation if the holders of
shares of such class or series shall be entitled to dividend payments, payments
of the Company, as the case may be, in preference or priority to the holders of
shares of Series H Preferred Stock. No class or series of capital stock that
ranks on a parity basis with or junior to the Series H Preferred Stock as to
rights on liquidation shall rank or be deemed to rank prior to the Series H
Preferred Stock as to dividend rights or rights of redemption, notwithstanding
that the dividend rate, dividend payment dates, sinking fund provisions, if any,
or mandatory redemption provisions thereof are different from those of the
Series H Preferred Stock, unless the instrument creating or evidencing such
class or series of capital stock otherwise expressly so provides.
"Series A Liberty Media Group Common Stock" shall mean the Tele-
Communications, Inc. Series A Liberty Media Group Common Stock, par value $1.00
per share, which term shall include, where appropriate, in the case of any
reclassification, recapitalization or other change in the Series A Liberty Media
Group Common Stock, or in the case of a consolidation or merger of the Company
with or into another Person affecting the Series A Liberty Media Group Common
Stock, such capital stock to which a holder of Series A Liberty Media Group
Common Stock shall be entitled upon the occurrence of such event.
"Series A TCI Group Common Stock" shall mean the Tele-Communications, Inc.
Series A TCI Group Common Stock, par value $1.00 per share, which term shall
include, where appropriate, in the case of any reclassification,
recapitalization or other change in the Series A TCI Group Common Stock, or in
the case of a consolidation or merger of the Company with or into another Person
affecting the Series A TCI Group Common Stock, such capital stock to which a
holder of Series A TCI Group Common Stock shall be entitled upon the occurrence
of such event.
"Series B Liberty Media Group Common Stock" shall mean the Tele-
Communications, Inc. Series B Liberty Media Group Common Stock par value $1.00
per share, which term shall include, where appropriate, in the case of any
reclassification, recapitalization or other change in the Series B Liberty Media
Group Common Stock, or in the case of a consolidation or merger of the Company
with or into another Person affecting the Series B Liberty Media Group Common
Stock, such shall be entitled upon the occurrence of such event.
"Series B TCI Group Common Stock" shall mean the Tele-Communications, Inc.
Series B TCI Group Common Stock, par value $1.00 per share, which term shall
include, where appropriate, in the case of any reclassification,
recapitalization or other change in the Series B TCI Group Common Stock, or in
the case of a consolidation or merger of the Company with or into another Person
affecting the Series B TCI Group Common Stock, such capital stock to which a
holder of Series B TCI Group Common Stock shall be entitled upon the occurrence
of such event.
"Series C Preferred Stock" shall mean the Convertible Preferred Stock,
Series C, par value $.01 per share, of the Company.
"Series D Preferred Stock" shall mean the Convertible Preferred Stock,
Series D, par value $.01 per share, of the Company.
"Series F Preferred Stock" shall mean the Convertible Redeemable
Participating Preferred Stock, Series F, par value $.01 per share, of the
Company.
"Series G Preferred Stock" shall have the meaning set forth in paragraph 1
of this Certificate of Designations.
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"Series H Preferred Stock" shall mean the Redeemable Convertible Liberty
Media Group Preferred Stock, Series H, par value $.01 per share, of the Company.
"Special record Date" hall have the meaning set forth in paragraph 3(d) of
this Certificate of Designations.
"Shared Value" of a share of Series H Preferred Stock shall have the
meaning set forth in paragraph 1 of this Certificate of Designations.
"Subsidiary" shall mean (i) a corporation (other than the Company) a
majority of the capital stock of which, having voting power under ordinary
circumstances to elect directors, is at the time, directly or indirectly, owned
by the Company and/or one or more Subsidiaries of the Company and (ii) any other
Person (other than a corporation) in which the Company and/or one or more
Subsidiaries of the Company, directly or indirectly, has (x) a majority
ownership interest and (y) the power to elect or direct the election of a
majority of the members of the governing body of such entity.
"Target Price" shall initially mean $27 and shall be appropriately adjusted
to take into account any stock dividends on the Series A TCI Group Common Stock
or the Series A Liberty Media Group Common Stock, or any stock splits,
reclassifications or combinations of the Series A TCI Group Common Stock or the
Series A Liberty Media Group Common Stock during the period following the Issue
Date and ending on the Anniversary Date or on such earlier date, if any, as of
which the Contingency is met.
"TCI Group Common Stock" shall mean the Series A TCI Group Common Stock and
the Series B TCI Group Common Stock.
3. Dividends
(a) The Contingency. If the sum of (i) the Closing Price of the Series A
TCI Group Common Stock, plus (ii) one-fourth of the Closing Price of the Series
A Liberty Media Group Common Stock equals or exceeds the Target Price for any
ten (10) consecutive trading days during the period of sixty-five (65)
consecutive trading days ending on and including the last trading day
immediately preceding the Anniversary Date (the "Contingency"), no dividends
will accrue or be payable with respect to the Series H Preferred Stock.
(b) Payment. In the event that the Contingency is not met, and only in
such event, the holders of Series H Preferred Stock shall, subject to the prior
preferences and other rights of any Senior Stock and to the provisions of
paragraph 6 hereof, be entitled to receive, when and as declared by the Board of
Directors out of unrestricted funds legally available therefor, cumulative
dividends, in preference to dividends on any Junior Stock, which shall accrue as
provided herein. Except as otherwise provided in paragraph 3(d) of this
Certificate of Designations, dividends on each share of Series H Preferred Stock
will, if the Contingency is not met, accrue on a daily basis at the rate of 4%
per annum of the Liquidation Preference of such share from and including the
Anniversary Date to but excluding the date on which the Liquidation Preference
or Redemption Price of such share is made available pursuant to paragraph 4 or
5, respectively, of this Certificate of Designations or the date of conversion
of such share pursuant to paragraph 7 hereof, as applicable. Dividends shall
accrue as provided herein whether or not such dividends have been declared and
whether or not there are any unrestricted funds of the Company legally available
for the payment of dividends. Accrued dividends on the series H Preferred Stock
shall be payable semiannually on each Dividend Payment Date, commencing on
August 1, 1997, to the holders of record of the Series H Preferred Stock as of
the close of business on the applicable Record Date. For purposes of
determining the amount of dividends "accrued" (i) as of the first Dividend
Payment Date and as of any date that is not a Dividend Payment Date, such amount
shall be calculated on the basis of the rate per annum specified above in this
paragraph 3(b) for the actual number of days elapsed from and including the
Anniversary Date (in the case of the first Dividend Payment Date and any date
prior to the first Dividend Payment Date) or the last preceding Dividend Payment
Date (in the case of any other date) to but excluding the date as of which such
determination is to be made, based on a 365-day year, and (ii) as of any
Dividend Payment Date after the first Dividend payment Date, such amount shall
be calculated on the basis of such rate per annum based on a 360-day year of
twelve 30-day months. For so long as the Liquidation Preference of a share of
Series H Preferred Stock is equal to the Stated Value per share, the amount of
the dividend payable per share on the Dividend Payment Date for each full semi-
annual Dividend Period shall be $.108.
(c) Method of Payment. All dividends payable with respect to the shares of
Series H Preferred Stock may be declared and paid,
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in the sole discretion of the Board of Directors, in cash, through the issuance
of shares of Series A TCI Group Common Stock or in any combination of the
foregoing. If any dividend payment declared by the Board of Directors with
respect to the shares of Series H Preferred Stock is to be paid in whole or in
part through the issuance of shares of Series A TCI Group Common Stock, the
amount of such dividend payment to be paid per share of Series H Preferred Stock
in shares of Series A TCI Group Common Stock (the "Stock Dividend Amount") shall
be satisfied and paid by the delivery to the holders of record of such shares of
Series H Preferred Stock on the Record Date or Special Record Date, as the case
may be, for such dividend payment, of a number of shares of Series A TCI Group
Common Stock determined by dividing the Stock Dividend Amount by the Average
Market Price of a share of Series A TCI Group Common Stock as of such Record
Date or Special Record Date. The Company shall not be required to issue any
fractional share of Series A TCI Group Common Stock to which any holder of
Series H Preferred Stock may become entitled pursuant to this paragraph 3(c).
The Board of Directors may elect to settle any final fraction of a share of
Series A TCI Group Common Stock which a holder of one or more shares of Series H
Preferred Stock would otherwise be entitled to receive pursuant to this
paragraph 3(c) by having the Company pay to such holder, in lieu of issuing such
fractional share, cash in an amount (rounded upward to the nearest whole cent)
equal to the same fraction of the Average Market Price of a share of Series A
TCI Group Common Stock as of the Record Date or Special Record Date, as the case
may be, for the dividend payment with respect to which such shares of Series A
TCI Group Common Stock who would otherwise be entitled to receive a fractional
share of Series A TCI Group Common Stock on the Dividend payment Date or other
date fixed for the payment of such dividend.
All dividends paid with respect to the shares of Series H Preferred Stock
pursuant to this paragraph 3 shall be paid pro rata to all the holders of shares
of Series H Preferred Stock outstanding on the applicable Record Date or Special
Record Date, as the case may be.
(d) Unpaid Dividends. If an any Dividend Payment Date the Company,
pursuant to applicable law or otherwise, shall be prohibited or restricted from
paying the full dividends of which holders of Series H Preferred Stock, and any
Parity Stock ranking on a parity basis with the Series H Preferred Stock with
respect to the right to receive dividend payments, shall be entitled, the amount
available for such payment pursuant to applicable law and which is not otherwise
restricted (if any) shall be distributed among the holders of Series H Preferred
Stock and any such Parity Stock ratably in proportion to the full amounts to
which they would otherwise be entitled. On each Dividend Payment Date, all
dividends that have accrued ton each share of Series H Preferred Stock during
the Dividend Period ending on such Dividend Payment Date shall, to the extent
not paid on such Dividend Payment Date for any reason (whether or not such
unpaid dividends have been declared or there are any unrestricted funds of the
Company legally available for the payment of dividends), be added cumulatively
to the Liquidation Preference of such share and will remain a part thereof until
such dividends are paid. The rate per annum at which dividends accrue in respect
of that portion of the Liquidation Preference of a share of Series H Preferred
Stock that consists of accrued unpaid dividends that have been added to the
Liquidation Preference of such share on a Dividend Payment Date pursuant to this
paragraph 3(d) and remain unpaid on the next succeeding Dividend Payment Date
shall increase to 8.625% per annum from and after such next succeeding Dividend
Payment Date to and including the date on which the Liquidation Preference or
Redemption Price of such share is made available pursuant to paragraph 4 or 5,
respectively, of this Certificate of Designations or the date of conversion of
such share pursuant to paragraph 7 hereof, as applicable, unless the portion of
the Liquidation Preference that consists of such accrued unpaid dividends is
earlier declared and paid or an amount sufficient to pay the same in full is
irrevocably set apart in trust for such purpose. That portion of the Liquidation
Preference of a share of Series H Preferred Stock that consists of accrued
unpaid dividends, together with all dividends accrued in respect thereof, may be
declared an paid at any time (subject to the rights of any Senior Stock and to
the concurrent satisfaction of any dividend arrearages that existing with
respect to any Parity Stock that ranks on a parity basis with the Series H
Preferred Stock as to the payment of dividends), without reference to any
regular Dividend Payment Date, to holders of record as of the close of business,
on such date, not more than 45 days nor less than 10 days prior thereto, to the
holders of record of the shares of Series H Preferred Stock.
(e) Credit. Any dividend payment made on the shares of Series H Preferred
Stock shall first be credited against the earliest accrued but unpaid dividend
due with respect to the shares of Series H Preferred Stock.
(f) Authorized Shares. All shares of Series A TCI Group Common Stock
issued in payment of any dividend on the Series H Preferred Stock shall, when
issued, be duly and validly authorized, fully paid, nonassessable and free from
all preemptive or similar rights; the delivery of such shares shall be made in
compliance with all applicable Federal and state securities losses, and such
shares shall have been listed for trading on such national securities exchange
or national securities association, if any, on which the Series A
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TCI Group Common Stock is then listed.
4. Distributions Upon Liquidation, Dissolution or Winding Up. Subject to
the prior payment in full of the preferential amounts to which any Senior Stock
is entitled, in the event of any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, the holders of Series H Preferred
Stock shall be entitled to receive from the assets of the company available for
distribution to stockholders before any payment or distribution shall be made to
the holders of any Junior Stock, an amount in cash (or, at the election of the
Company, property at its fair market value, as determined by the Board of
Directors in good faith) per share, equal to the Liquidation Preference of a
share of Series H Preferred Stock as of the date of payment or distribution,
which payment or distribution shall be made pari passu with, and if the Company
has elected to pay in property, in the same form of property as, any such
payment or distribution made to the holders of any Parity Stock ranking on a
parity basis with the Series H Preferred Stock with respect to distributions
upon liquidation, dissolution or winding up of the Company. The holders of
Series H Preferred Stock shall be entitled to no other or further distribution
of or participation in any remaining assets of the Company after receiving the
Liquidation Preference per share. If, upon distribution of the Company's assets
in liquidation, dissolution or winding up, the assets of the company to be
distributed among the holders of the Series H Preferred Stock and to all holders
of any Parity Stock ranking on a parity basis with the Series H Preferred Stock
with respect to distributions upon liquidation, dissolution or winding up shall
be insufficient to permit payment in full to such holders of the respective
preferential amounts to which they are entitled, then the entire assets of the
Company to be distributed to holders of the Series H Preferred Stock and such
Parity Stock shall be distributed pro rata to such holders based upon the
aggregate of the full preferential amounts to which the shares of Series H
Preferred Stock and such Parity Stock would otherwise respectively be entitled.
Neither the consolidation or merger of the Company with or into any other
corporation or corporations nor the sale, transfer, or lease of all or
substantially all of the assets of the Company shall itself be deemed a
liquidation, dissolution or winding up of the Company within the meaning of this
paragraph 4. Notice of the liquidation, dissolution or winding up of the Company
shall be given, not less than twenty (20) days prior to the date on which such
liquidation, dissolution or winding up is expected to take place or become
effective to the holders of record of the shares of Series H Preferred Stock.
5. Redemption.
(a) Optional Redemption. Subject to the rights of any Senior Stock and the
provisions of paragraph 6 of this Certificate of Designation, the shares of
Series H Preferred Stock may be redeemed, at the option of the Company by action
of the Board of Directors, in whole or from time to time in part, on any
Business Day occurring on or after February 1, 2001, at the Redemption Price on
the Redemption Date. If fewer than all of the outstanding shares of Series H
Preferred Stock are to be redeemed on any Redemption Date, the shares of Series
H Preferred Stock to be redeemed shall be chosen by the Company pro rata (as
nearly as may be practicable) among all holders of Series H Preferred Stock. The
Company shall not be required to register a transfer of (i) any shares of Series
H Preferred stock for a period of 15 days next preceding any selection of shares
of Series H Preferred Stock to be redeemed or (ii) any shares of Series H
Preferred Stock selected or called for redemption.
(b) Mandatory Redemption. Subject to the rights of any Senior Stock and
the provisions of paragraph 6 of this Certificate of Designations, the Company
shall redeem, out of funds legally available therefor, on February 1, 2016 (or,
if such day is not a Business Day, on the first Business Day thereafter) all
shares of Series H Preferred Stock remaining outstanding at the Redemption Price
on the Redemption Date. If the funds of the Company legally available for
redemption of shares of the Series H Preferred Stock and any Parity Stock then
required to be redeemed are insufficient to redeem the total number of such
shares remaining outstanding, those funds which are legally available shall,
subject to the rights of any Senior Stock and the provisions of paragraph 6, to
be used to redeem the maximum possible number of shares of Series H Preferred
Stock and each such other class or series of Parity Stock. Subject to the rights
of any Senior Stock and the provisions of paragraph 6 hereof, at any time and
from time to time thereafter when additional funds of the Company are legally
available for such purpose, such funds shall immediately be used to redeem the
shares of Series H Preferred Stock and of each such other class or series of
Parity Stock which were required to be redeemed that the Company failed to
redeem until the balance of such shares have been redeemed. The selection of
shares to be redeemed pursuant to the two immediately preceding sentences shall
be made, as nearly as practicable, on a pro rata basis as among the different
classes or series and as among the holders of shares of a particular class or
series.
(c) Notice of Redemption. Notice of redemption shall be given by or on
behalf other the Company at least sixty (60) days prior to the Redemption Date,
in the case of a redemption pursuant to paragraph 5(a) and not more than sixty
(60) days nor less than thirty
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(30) days prior to the Redemption Date, in the case of the redemption pursuant
to paragraph 5(b), to the holders of record of the shares of Series H Preferred
Stock to be redeemed; but no defect in such notice or in the mailing thereof
shall affect the validity of the proceedings for the redemption of any shares of
Series H Preferred Stock. In addition to any information required by law or by
the applicable rules of an national securities exchange or national interdealer
quotation system on which the Series H Preferred Stock may be listed or admitted
to trading or quoted, such notice shall set forth the Redemption Price, the
Redemption Date, the number of shares to be redeemed and the place at which the
shares called for redemption will, upon presentation and surrender of the stock
certificates evidencing such shares, be redeemed, and if the Company has elected
to deposit the Redemption Price with a Redemption Agent in accordance with
paragraph 5(d), shall state the name and address of the Redemption Agent and the
date on which such deposit was or will be made. Such notice shall also set forth
the then current Conversion Rate for the shares of Series H Preferred Stock and
the place or places to which a holder desiring to convert shares of Series H
Preferred Stock should deliver the certificate(s) evidencing such shares,
together with such other documents and instruments as are or may be required
pursuant to paragraph 7 of this Certificate of Designations. In the event that
fewer than the total number of shares of Series H preferred Stock represented by
a certificate are redeemed, a new certificate representing the number of
unredeemed shares will be issued to the holder thereof without cost to such
holder. If the shares of Series H Preferred Stock evidenced by a certificate
selected for partial redemption pursuant to paragraph 5(a) of this Certificate
of Designations are thereafter converted in part pursuant to paragraph 7 hereof,
the shares so converted (as far as may be) will be deemed to be the shares
selected for redemption.
(d) Deposit of Redemption Price. If notice of any redemption by the
Company pursuant to this paragraph 5 shall have been given as provided in
paragraph 5(c) of this Certificate of Designations and if on or before the
Redemption Date specified in such notice an amount in cash sufficient to redeem
in full on the Redemption Date at the Redemption Price all shares of Series H
Preferred Stock call for redemption or required to be redeemed shall have been
set apart so as to be available for such purpose and only for such purpose, then
effective as of the close of business on the Redemption Date, the shares of
Series H Preferred Stock called for redemption, notwithstanding that any
certificate therefor shall not have been surrendered for cancellation, shall no
longer be deemed outstanding, and the holders thereof shall cease to be
stockholders with respect to such shares and all remaining rights with respect
to such shares shall forthwith cease and terminate, except the right of the
holders thereof to receive the Redemption Price of such shares, without
interest, upon the surrender of certificates representing the same.
At its election, the Company on or prior to the Redemption Date (but no
more than ninety (90) days prior to the Redemption Date) may deposit immediately
available funds in an amount equal to the aggregate Redemption Price of the
shares of Series H Preferred Stock called for redemption in trust for the
holders thereof with any bank of trust company organized under the laws of the
United States of America or any state thereof having capital, undivided profits
and surplus aggregating at least $50 million (the "Redemption Agent"), with
irrevocable instructions and authority to the Redemption Agent on behalf and at
the expense of the Company, to mail the notice of redemption as soon as
practicable after receipt of such irrevocable instructions (or to complete such
mailing previously commenced, if it has not already been completed) and to pay,
on and after the Redemption Date or prior thereto, the Redemption Price of the
shares of Series H Preferred Stock to be redeemed to their respective holders
upon the surrender of the certificates therefor. A deposit made in compliance
with the immediately receding sentence shall be deemed to constitute full
payment for the shares of Series H Preferred Stock to be redeemed and from and
after the later of the close of business on the date of such deposit (although
prior to the Redemption Date) or the date notice of redemption is mailed, the
shares of Series H Preferred Stock to be redeemed shall no longer be deemed
outstanding and the holders thereof shall cease to be stockholders with respect
to such shares and shall have no rights with respect to such shares except (x)
the right of the holders thereof to receive the Redemption Price of such shares
(calculated through the Redemption date), without interest, upon surrender of
the certificates therefor and (y) the right to convert such shares in accordance
with paragraph 7 prior to the close of business on the Business Day immediately
preceding the Redemption Date. Any funds so deposited which shall not be
required for the payment of the Redemption Price of any shares of Series H
Preferred Stock to be redeemed because of the conversion of such shares shall
after such conversion be repaid to the Company by the Redemption Agent. Any
interest accrued on the funds so deposited shall be paid to the Company from
time to time. Any funds so deposited with the Redemption Agent which shall
remain unclaimed by the holders of such shares of Series H Preferred Stock at
the end of one year after the Redemption Date shall be returned by the
Redemption Agent to the Company, after which repayment the holders of such
shares of Series H Preferred Stock called for redemption shall look only to the
Company for the payment thereof, without interest, unless an applicable escheat
or abandoned property law otherwise requires.
6. Limitations on Dividends and Redemptions. If at any time the Company
shall have failed to pay, or declare and set aside the
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consideration sufficient to pay, full cumulative dividends for all prior
dividend periods on any Parity Stock which by the terms of the instrument
creating or evidencing such Parity Stock which by the terms of the instrument
creating or evidencing such Parity Stock is entitled to the payment of such
cumulative dividends prior to the redemption, exchange, purchase or other
acquisition of the Series H Preferred Stock, and until full cumulative dividends
on such Parity Stock for all prior dividend periods are paid, or declared and
the consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, neither the Company nor any
Subsidiary thereof shall redeem, exchange, purchase or otherwise acquire any
shares of Series H Preferred Stock, Parity Stock or Junior Stock, or set aside
any money or assets for any such purpose pursuant to paragraph 5(d) hereof, any
sinking fund or otherwise, unless all then outstanding shares of Series H
Preferred Stock, of such Parity Stock and of any other class or series of Parity
Stock that by the terms of the instrument creating or evidencing such Parity
Stock is required to be redeemed under such circumstances are redeemed pursuant
to the terms hereof and thereof.
If at any time the Company shall have failed to pay, or declare and set
aside the consideration sufficient to pay, full cumulative dividends on the
Series H Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Series H Preferred Stock for all Dividend Periods ending on or before the
immediately preceding Dividend Payment Date, and until full cumulative dividends
on the Series H Preferred Stock for all dividend Periods ending before the
immediately preceding Dividend Payment Date are paid, or declared and the
consideration sufficient to pay the same in full is set aside so as to be
available for such purpose and no other purpose, (i) neither the Company nor any
Subsidiary thereof shall redeem, exchange, purchase or otherwise acquire any
shares of Series H Preferred Stock, Parity Stock, or Junior Stock, or set aside
any money or assets for any such purpose pursuant to paragraph 5(d) hereof, any
sinking fund or otherwise, unless all then outstanding shares of Series H
Preferred Stock and of any other class or series of Parity Stock that by the
terms of the instrument creating or evidencing such Parity Stock is required to
be redeemed under such circumstances are redeemed or exchanged pursuant to the
terms hereof and thereof, and (ii) the Company shall not declare or pay any
dividend on or make any distribution with respect to any Junior Stock or Parity
Stock or set aside any money or assets for any such purpose, except that the
Company may declare and pay a dividend on any Parity Stock ranking on a parity
basis with the Series H Preferred Stock with respect to the right to receive
dividend payments, contemporaneously with the declaration and payment of a
dividend on the Series H Preferred Stock, provided that such dividends are
declared and paid pro rata so that the amount of dividends declared and paid per
share of Series H Preferred Stock and such Parity Stock shall in all cases bear
to each other the same ratio that accumulated and accrued and unpaid dividends
per share on the Series H Preferred Stock and such Parity Stock bear to each
other.
If the Company shall fail to redeem on any date fixed for redemption
pursuant to paragraph 5(a) or 5(b) of this Certificate of Designations any
shares of Series H Preferred Stock called for redemption or required to be
redeemed on such date, and until such shares are redeemed in full, the Company
shall not (x) redeem any Junior Stock or, except as provided in paragraph 5(b)
hereof, Parity Stock or (y) declare or pay any dividend on or make any
distribution with respect to any Junior Stock or, except as provided in the
second paragraph of this paragraph 6, Parity Stock, or set aside any money or
assets for any such purpose, and neither the Company nor any Subsidiary thereof
shall purchase or otherwise acquire any Series H Preferred Stock, Parity Stock
or Junior Stock, or set aside any money or assets for any such purpose.
Nothing contained in the first or third paragraph of this paragraph 6 shall
prevent (i) the payment of dividends on any Junior Stock solely in shares of
Junior Stock or the redemption, purchase or other acquisition of Junior Stock
solely in exchange for (together with a cash adjustment for fractional shares,
if any), or (but only in the case of the first paragraph of this paragraph 6)
through the application of the proceeds from the sale of shares of Junior Stock;
(ii) the payment of dividends on any Parity Stock solely in shares of Parity
Stock and/or Junior Stock or the redemption, exchange, purchase or other
acquisition of Series H Preferred Stock or Parity Stock solely in exchange for
(together with a cash adjustment for fractional shares, if any), or (but only in
the case of the first paragraph of this paragraph 6) through the application of
the proceeds from the sale of, shares of Parity Stock and/or Junior Stock; or
(iii) the purchase or acquisition of shares of Series H Preferred Stock pursuant
to a purchase or exchange offer made to all holders of outstanding shares of
Series H Preferred Stock, provided that the terms of the purchase or exchange
offer shall be identical for all shares of Series H Preferred Stock and all
accrued dividends on such shares shall have been paid or shall have been
declared and irrevocably set apart in trust for the benefit of the holders of
shares of Series H Preferred Stock and for no other purpose.
The provisions of the first paragraph of this paragraph 6 are for the sole
benefit of the holders of Series H Preferred Stock and Parity Stock having the
terns described therein and accordingly, at any time when there are no shares of
any such class or series of
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Parity Stock outstanding or if the holders of each such class or series of
Parity Stock have, by such vote or consent of the holders thereof as may be
provided for in the instrument creating or evidencing such class or series,
waived in whole or in part the benefit of such provisions (either generally or
in the specific instance), then the provisions of the first paragraph of this
paragraph 6 shall not (to the extent waived, in the case of any partial waiver)
restrict the redemption, exchange, purchase or other acquisition of any shares
of Series H Preferred Stock, Parity Stock or Junior Stock. All other provisions
of this paragraph 6 are for the sole benefit of the holders of Series H
Preferred Stock and accordingly, if the holders of shares of Series H Preferred
Stock shall have waived as provided in paragraph 10 of this Certificate of
Designations) in whole or in part the benefit of the applicable provision,
either generally or in the specific instance, such provision shall not (to the
extent of such waiver, in the case of a partial waiver) restrict the redemption,
exchange, purchase or other acquisition of, or declaration, payment or making of
any dividends or distributions on, the Series H Preferred Stock, any Parity
Stock or any Junior Stock.
7. Conversion of Series H Preferred Stock.
(a) Right to Convert. Unless previously redeemed as provided in paragraph
5 of this Certificate of Designations, shares of Series H Preferred Stock may be
converted at the option of the holder thereof, in the manner and upon the terms
and conditions set forth in this paragraph 7, into fully paid and nonassessable
whole shares of Series A Liberty Media Group Common Stock at the Conversion Rate
in effect on the Conversion Date, at any time prior to the close of business on
the Business Day immediately preceding the Redemption Date for the redemption of
shares of Series H Preferred Stock pursuant to paragraph 5(a) or 5(b) of this
Certificate of Designations.
(b) Mechanics of Conversion. In order to convert shares of Series H
Preferred Stock, the holder thereof shall surrender the certificate or
certificates representing the shares of Series H Preferred Stock to be converted
at the office of the Company or the office of any transfer agent for the Series
H Preferred Stock, which certificate or certificates shall be duly endorsed to
the Company in blank (or accompanied by duly executed instruments of transfer to
the Company in blank) with signatures guaranteed (such endorsements or
instruments of transfer to be in form satisfactory to the Company), together
with a written notice to the Company at said office of the election to convert
the same, specifying the number of shares of Series H Preferred Stock to be
converted and the name or names (with addresses) in which the certificate or
certificates for shares of Series A Liberty Media Group Common Stock are to be
issued. If any transfer certificates for shares of Series A Liberty Media Group
Common Stock are to be issued. If any transfer is involved in the issuance or
delivery of any certificate or certificates for shares of Series A Liberty Media
Group Common Stock in a name other than that of the registered holder of the
shares of Series H Preferred Stock surrendered for conversion, such holder shall
also deliver to the Company a sum sufficient to pay all taxes, if any, payable
is respect of such transfer or evidence satisfactory to the company that such
taxes have been paid. Except as provided in the immediately preceding sentence,
the Company shall pay any issue, stamp or other similar tax in respect of such
issuance or delivery.
The Company shall, as soon as practicable after the Conversion Date,
deliver to the holder of the shares of Series H Preferred Stock so surrendered
for conversion, or to such holder's nominee(s) or, subject to compliance with
applicable law, transferee(s), a certificate or certificates for the number of
whole shares of Series A Liberty Media Group Common Stock to which such holder
shall be entitled, together with cash or its check in lieu of any fractional
share as provided in paragraph 7(o). If the shares of Series H Preferred Stock
represented by a certificate surrendered for conversion are converted only in
part, the Company will also issue and deliver to the holder, or to such holder's
nominee(s) or, subject to compliance with applicable law, transferee(s), without
charge therefor, a new certificate or certificates representing in the aggregate
the unconverted shares of Series H Preferred Stock.
The Person in whose name the certificate for shares of Series A Liberty
Media Group Common Stock is issued upon such conversion shall be treated for all
purposes as the stockholder of record of such shares of Series A Liberty Media
Group Common Stock as of the close of business on the Conversion Date; provided,
however, that no surrender of Series H Preferred Stock on any date when the
stock transfer books of the Company are closed for any purpose shall be
effective to constitute the Person or Persons entitled to receive the shares of
Series A Liberty Media Group Common Stock on such date, but such surrender shall
be effective (assuming all other requirements of this paragraph 7 have been
satisfied) to constitute such Person or Persons as the record holders of such
shares of Series A Liberty Media Group Common Stock for all purposes as of the
opening of business on the next succeeding day on which such stock transfer
books are open, and such conversion shall be at the Conversion Rate in effect on
the date that such shares of Series H Preferred Stock were surrendered for
conversion (and such other requirements satisfied) as if the stock transfer
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books of the Company had not been closed on such date. upon conversion of shares
of Series H Preferred stock, the rights of the holder of the shares so converted
as a holder thereof, will cease.
Notwithstanding the last sentence of the immediately preceding paragraph,
if the Board of Directors declares any dividend on the Series H Preferred Stock
pursuant to paragraph 3 of this Certificate of Designations, and the Conversion
Date for any shares of Series H Preferred Stock occurs on or after the Record
Date or Special Record Date, as the case may be, and before the Dividend payment
Date for such dividend (or, in the case of a dividend declared pursuant to
Section 3(d), then the holder of such shares of Series H Preferred Stock on such
Record Date shall be entitled to receive such dividend on such Dividend Payment
Date (or such other date, as the case may be), as if such Conversion Date had
not occurred.
(c) Adjustments for Change in Capital Stock. If after the Issue Date, the
Company:
(i) pays a dividend or makes a distribution on the Series A Liberty
Media Group Common Stock in shares of Series A Liberty Media Group Common
Stock;
(ii) subdivides the outstanding shares of Series A Liberty Media Group
Common Stock into a greater number of shares;
(iii) combines the outstanding shares of Series A Liberty Media Group
Common Stock into a smaller number of shares;
(iv) pays a dividend or makes a distribution on the Series A Liberty
Media Group Common Stock in shares of its capital stock (other than Section
A Liberty Media Group Common Stock or rights, warrants or options for its
capital stock), or
(v) issues by reclassification of its shares of Series A Liberty
Media Group Common Stock (other than a reclassification by way of merger or
binding share exchange that is subject to paragraph 7(f)) any shares of its
capital stock (other than rights, warrants or options for its capital
stock).
then, subject to the following sentence and to paragraph 7(j), the conversion
privilege and the Conversion Rate in effect immediately prior to the opening of
business on the record date for such dividend or distribution or the effective
date of such subdivision, combination or reclassification shall be adjusted so
that the holder of any shares of Series H Preferred Stock thereafter converted
may receive the kind and number of shares of capital stock of the Company which
such holder would have owned immediately following such event if such holder had
converted his shares of Series H Preferred Stock immediately prior to the record
date for, or effective date of, as the case may be, such event. Notwithstanding
the foregoing, if an event listed in clause (iv) of (v) above would result in
the shares of Series H Preferred Stock being convertible into shares or units
(or a fraction thereof) of more than one class or series of capital stock of the
Company and any such class or series of capital stock (other than Series A
Liberty Media Group Stock) provides by its terms a right in favor the Company to
call, redeem, exchange or otherwise acquire all of the outstanding shares or
units of such class or series (such class or series of capital stock being
herein referred to as "Redeemable Capital Stock") then, at the option of the
Company, the conversion privilege and Conversion Rate of the Series H Preferred
Stock shall not be adjusted pursuant to this paragraph 7(c) and in lieu thereof,
but subject to paragraph (j), the adjustments to the Conversion Rate
contemplated by paragraph 7(e) shall be made with the same effect as if the
dividend or distribution of Redeemable Capital Stock or the issuance of the
additional class or series of Redeemable Capital stock by reclassification had
been a distribution of assets of the Company.
The adjustment contemplated by this paragraph 7(c) shall be made
successively whenever any event listed above shall occur. For a dividend or
distribution, the adjustment shall become effective immediately after the record
date for the dividend or distribution. For a subdivision, combination or
reclassification, the adjustment shall become effective immediately after the
effective date of the subdivision, combination or reclassification.
If after an adjustment a holder of Series H Preferred Stock would be
entitled to receive upon conversion thereof shares of two or more classes or
series of capital stock of the Company, the Conversion Rate shall thereafter be
subject to adjustment upon the occurrence of an action taken with respect to any
such class or series of capital stock as is contemplated by this paragraph 7
with respect to the Series A Liberty Media Group Common Stock, on terms
comparable to those applicable to the Series A Liberty Media Group Common Stock
pursuant to this paragraph 7.
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Any shares of Series A Liberty Media Group Common Stock issuable in payment
of a dividend shall be deemed to have been issued immediately prior to the time
of the record date for such dividend for purposes of calculated the number of
outstanding shares of Series A Liberty Media Group Common Stock under paragraphs
7(d) and 7(e) below.
(d) Adjustment for Rights Issue. If, after the Company distributes any
rights, warrant or options to holders of shares of Series A Liberty Media Group
Common Stock entitling them for a period expiring within 45 days after the
record date of the determination of stockholders entitled to receive such
distribution, to purchase shares of Series A Liberty Media Group Common Stock
(or Convertible Securities) as a price per share (or having a conversion price
per share, after adding thereto an allocable portion of the exercise price of
the right, warrant or option to purchase such Convertible Securities, computed
on the basis of the maximum number of shares of Series A Liberty Media Group
Common Stock issuable upon conversion of such Convertible Securities) less than
the Current Market Price on the Determination Date, the Conversion Rate in
effect immediately prior to the opening of business on such record date by a
fraction, of which the numerator shall be the number of shares of Series A
Liberty Media Group Common Stock outstanding on such record date plus the number
of shares of Series A Liberty Media Common Stock which the aggregate offering
price of the total number of shares of Series A Liberty Media Group Common Stock
so offered (or the aggregate conversion price of the Convertible Securities to
be so offered, after adding thereto the aggregate exercise price of the rights,
warrants or options to purchase such Convertible Securities) to the holders of
Series A Liberty Media Group Common Stock (and to the holders of Convertible
Securities and Series B Liberty Media Group Common Stock referred to in the
immediately succeeding paragraph of this paragraph 7(d) if the distribution to
which this paragraph 7(d) applies is also being made to such holders) would
purchase at such Current Market Price, and of which the denominator shall be the
number of shares of Series A Liberty Media Group Common Stock outstanding on
such record date plus the number of additional shares of Series A Liberty Media
Group Common Stock so offered to the holders of Series A Liberty Media Group
Common Stock (and to such holders of Convertible Securities and Series B Liberty
Media Group Common Stock) for subscription or purchase (or into which the
Convertible Securities so offered are convertible). Shares of Series A Liberty
Media Group Common Stock owned by or held for the account of the Company shall
not be deemed to be outstanding the propose of any such adjustment.
For purposes of this paragraph 7(d) the number of shares of Series A
Liberty Media Group Common Stock outstanding on any record date shall be deemed
to include (i) the maximum number of shares of Series A Liberty Media Group
Common Stock the issuance of which would be necessary to effect the full
exercise, exchange or conversion of all Convertible Securities outstanding on
such record date which are then exercisable, exchangeable or convertible at a
price (before giving effect to any adjustment to such price for the distribution
to which this paragraph 7(d) is being applied) equal or less than the Current
Market Price per share of Series A Liberty Media Group Common Stock on the
applicable Determination Date, if all of such Convertible Securities were deemed
to have been exercised, exchanged or converted immediately prior to the opening
of business on such record date and (ii) if the Series B Liberty Media Group
Common Stock is then convertible into Series A Liberty Media Group Common Stock,
the maximum number of shares of Series A Liberty Media Group Common Stock the
issuance of which would be necessary to effect the full conversion of all shares
of Series B Liberty Media Group Common Stock outstanding on such record date, if
all of such shares of Series B Liberty Media Group Common Stock were deemed to
have been converted immediately prior to the opening of business on such record
date.
The adjustment contemplated by this paragraph 7(d) shall be made
successively whenever any such rights, warrants or options are issued, and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive the rights, warrants or options. If all of the
share of Series A Liberty Media Group Common Stock (or all of the Convertible
Securities) subject to such rights, warrants or options have not been issued
when such rights, warrants or options expire (or, in the case of rights,
warrants or options to purchase Convertible Securities which have been
exercised, if all of the shares of Series A Liberty Media Group Common Stock
issuable upon conversion of such Convertible Securities have not been issued
prior to the expiration of the conversion right hereof), then the Conversion
Rate shall promptly be readjusted to the Conversion Rate which would then be in
effect had the adjustment upon the issuance of such rights, warrants or options
been made on the basis of the actual number of shares of Series A Liberty Media
Group Common Stock (or Convertible Securities) issued upon the exercise of such
rights, warrants or options (or conversion of such Convertible Securities).
No adjustment shall be made under this paragraph 7(d) if the adjusted
Conversion Rate would be lower than the Conversion Rate in effect immediately
prior to such adjustment.
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(e) Adjustments for Other Distributions. If, after the Issue Date (i) the
Company distributes to all holders of shares of Series A Liberty Media Group
Common Stock any assets or debt securities or any rights, warrants or options to
purchase securities (excluding (x) dividends or distributions referred to in
paragraph 7(c) (except as otherwise provide in clause (ii) of this sentence) and
distributions of rights, warrants or options referred to in paragraph 7(d) and
(y) cash dividends or other cash distributions, unless such cash dividends or
cash distributions are Extraordinary Cash Dividends), or (ii) the Company makes
a dividend or distribution of Redeemable Capital Stock on, or issues Redeemable
Capital Stock by reclassification of, the Series A Liberty Media Group Common
Stock by reclassification of, the Series A Liberty Media Group Common Stock and
determines pursuant to paragraph 7(c) to treat the same as a distribution of
assets of the Company subject to this paragraph 7(e), then in each such event
the Conversion Rate shall be adjusted by dividing the Conversion Rate in effect
immediately prior to the opening of business on (A) the record date for the
determination of stockholders entitled to receive the distribution or (B) in the
case of a reclassification, the effective date of such reclassification by a
fraction, of which the numerator shall be the total number of shares or Series A
Liberty Media Group Common Stock outstanding on such record date or immediately
prior to such effective date multiplied by the Current Market price on the
Determination Date, less the fair market value (as determined in good faith by
the Board of Directors) on such record date or effective date of said assets (or
Redeemable Capital Stock) or debt securities or rights, warrants or options so
distributed to the holders of Series A Liberty Media Group Common Stock (and to
the holders of Convertible Securities and Series B Liberty Media Group Common
Stock referred to in the immediately succeeding paragraph of this paragraph 7(e)
if the distribution to which this paragraph 7(e) applies is also being made to
such holders), and of which the denominator shall be the total number of shares
of Series A Liberty Media Group Common Stock outstanding on such record date or
immediately prior to such effective date multiplied by such Current Market
Price.
For purposes of this paragraph 7(e), the number of shares of Series A
Liberty Media Group Common Stock outstanding on any relevant date shall be
deemed to include (i) the maximum number of shares of Series A Liberty Media
Group Common Stock the issuance of which would be outstanding on such date which
are then exercisable, exchangeable or convertible at a price (before giving
effect to any adjustment to such price for the distribution to which this
paragraph 7(e) is being applied) equal to or less than the Current Market Price
on the applicable Determination Date, if all of such Convertible Securities were
deemed to have been exercised, exchanged or converted immediately prior to the
opening of business on such date and (ii) if the Series B Liberty Media Group
Stock is then convertible into Series A Liberty Media Group Common Stock the
issuance of which would be necessary to effect the full conversion of all shares
of Series B Liberty Media Group Common Stock outstanding on such date, if all of
such shares of Series B Liberty Media Group Common Stock were deemed to have
been converted immediately prior to the opening of business on such date.
For purposes of this paragraph 7(e), the term "Extraordinary Cash Dividend"
shall mean any cash dividend with respect to the Series A Liberty Media Group
Common Stock the amount of which, together with the aggregate amount of cash
dividends on the Series A Liberty Media Group Common Stock to be aggregated with
such cash dividend in accordance with the following provisions of this
paragraph, equals or exceeds the threshold percentage set forth below in the
following sentence. If, upon the date prior to the Ex-Dividend Date with
respect to a cash dividend on Series A Liberty Media Group Common Stock, the
aggregate of the amount of such cash dividend together with the amounts of all
cash dividends on the Series A Liberty Media Group Common Stock with Ex-Dividend
Dates occurring in the 365 consecutive day period ending on the date prior to
the Ex-Dividend Date with respect to the cash dividend to which this provision
is being applied (other than any such other cash dividends with Ex-Dividend
Dates occurring in such period for which a prior adjustment in the Conversion
Rate was previously made under this paragraph 7(e)) equals or exceeds on a per
share basis 10% of the average of the Closing Prices during the period beginning
on the date after the first such Ex-Dividend Date in such period and ending on
the date prior to the Ex-Dividend Date with respect to the cash dividend to
which this provision is being applied (except that if no other cash dividend has
had an Ex-Dividend Date occurring in such period, the period for calculating the
average of the Closing Prices shall be the period commencing 365 days prior to
the date immediately prior to the Ex-Dividend Date with respect to the cash
dividend to which this provision has been applied), such cash dividend together
with each other cash dividend to which this provision is being applied), such
cash dividend with an Ex-Dividend Date occurring in such 365-day period that is
aggregated with such cash dividend in accordance with this paragraph shall be
deemed to be an Extraordinary Cash Dividend.
The adjustment pursuant to the foregoing provisions of this paragraph 7(e)
shall be made successively whenever any distribution to which this paragraph
7(e) applies is made, and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution
(or, in the case of a reclassification, the effective date). Shares of Series A
Liberty
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Media Group Common Stock owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such adjustment.
No adjustment shall be made under this paragraph 7(e) if the adjusted
Conversion Rate would be lower than the conversion rate in effect prior to such
adjustment. In the event that, with respect to any distribution to which this
paragraph 7(e) would otherwise apply, the numerator of the fraction in the
formula set forth in the first paragraph of this paragraph 7(e) is zero or a
negative number, then the adjustment provided by this paragraph 7(e) shall not
be made. If the Company makes a distribution to all holders of its Series A
Liberty Media Group Common Stock of any of its assets or debt securities or any
rights, warrants or options to purchase securities of the Company that, but for
the immediately preceding sentence, would otherwise result in an adjustment in
the Conversion Rate pursuant to the foregoing provisions of this paragraph 7(e),
then, from and after the record date for determining the holders of Series A
Liberty Media Group Common Stock entitled to receive the distribution, a holder
of Series H Preferred Stock that converts such shares in accordance with the
provisions of this paragraph 7 will upon such conversion be entitled to receive,
in addition to the shares of Series A Liberty Media Group Common Stock into
which such shares of Series H Preferred Stock are convertible, the kind and
amount of securities, cash or other assets comprising the distribution that such
holder would have received if such holder had converted such shares of Series H
Preferred Stock immediately prior to the record date for determining the holders
of Series A Liberty Media Group Common Stock entitled to receive the
distribution.
(f) Consolidation, Merger or Sale of the Company. If the Company
consolidates with or merges into, or transfers (other than by mortgage or
pledge) its properties and assets substantially as an entirety to, another
Person or Company is a party to a merger or binding share exchange which
reclassifies or changes its outstanding Series A Liberty Media Group Common
Stock, the Company (or its successor in such transaction) or the transferee of
such properties and assets shall make appropriate provision so that the holders
of the shares of Series H Preferred Stock then outstanding shall have the right
thereafter to convert such shares into the kind and amount of securities, cash
or other assets receivable upon such transaction by a holder of the number of
shares of Series A Liberty Media Group Common Stock, the Company (or its
successor in such transaction) or the transferee of such properties and assets
shall make appropriate provision so that the holders of the shares of Series H
Preferred Stock then outstanding shall have the right thereafter to convert such
shares into the kind and amount of securities, cash or other assets receivable
upon such transaction by a holder of the number of shares of Series A Liberty
Media Group Common Stock into which such shares of Series H Preferred Stock
could have been converted immediately before the effective date of such
transaction (assuming, to the extent applicable, that such holder failed to
exercise any rights of election with respect thereto and received per share of
Series A Liberty Media Group Common Stock the kind and amount of securities,
cash or other assets received per share by a plurality of the non-electing
shares of Series A Liberty Media Group Common Stock), and the holders of the
Series H Preferred Stock shall have no other conversion rights under these
provisions; provided that (i) effective provision shall be made, in the Articles
or Certificate of Incorporation of the resulting or surviving corporation or
otherwise or in any contracts of sale or transfer, so that the provisions set
forth herein for the protection of the conversion rights of Series H Preferred
Stock shall thereafter be made applicable, as nearly as reasonable may be, to
any such other securities and assets deliverable upon conversion of the Series H
Preferred Stock remaining outstanding or other convertible preferred stock or
other securities received by the holders of Series H Preferred Stock in place
thereof, and (ii) any such resulting or surviving corporation or transferee
shall expressly assume the obligation to deliver, upon the exercise of the
conversion privilege, such securities, cash or other assets as the holders of
the Series H Preferred Stock remaining outstanding, or other convertible
preferred stock or other securities received by the holders in place thereof,
shall be entitled to receive pursuant to the provisions hereof, and to make
provision for the protection of the conversion rights of the Series H Preferred
Stock, or of any other convertible preferred stock or other securities received
by the holders in place thereof, as provided in clause (i) of this sentence.
If this paragraph 7(f) applies, paragraphs 7(c), 7(d) and 7(e) apply.
(g) Effect of Redemption. Subject to paragraph 7(j) and to the remaining
provisions of this paragraph 7(g), in the event that (i) the Company redeems
all, and not less than all, of the outstanding shares of Series A Liberty Media
Group Common Stock in accordance with the terms thereof or (ii) a holder of
Series H Preferred Stock would be entitled to receive upon conversion thereof
pursuant to this paragraph 7 any Redeemable Capital Stock and the Company
redeems, exchanges or otherwise acquires all of the outstanding shares or other
units of such Redeemable Capital Stock (such event referred to in clause (i) and
(ii) being a "Redemption Event"), then, from and after the effective date of
such Redemption Event, the holders of shares of Series H Preferred Stock then
outstanding shall be entitled to receive upon conversion of such shares, in lieu
of shares or units of such Redeemable Capital Stock,
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the kind and amount of securities cash or other assets receivable upon the
redemption Event by a holder of the number of shares or units of such Redeemable
Capital Stock into which such shares of Series H Preferred Stock could have been
converted immediately prior to the effective date of such Redemption Event
(assuming, to the extent applicable, that such holder failed to exercise any
rights of election with respect thereto and received per share or unit of such
Redeemable Capital Stock the kind and amount of securities, cash or other assets
received per shares or unit by a plurality of the non-electing shares or units
of such Redeemable Capital Stock), and (from and after the effective date of
such Redemption Event) the holders of the Series H Preferred Stock shall have no
other conversion rights under these provisions with respect to such Redeemable
Capital Stock, as the case may be.
Notwithstanding the foregoing, if the redemption price for the shares of
Series A Liberty Media Group Common Stock or Redeemable Capital Stock is paid in
whole or in part in Redemption Securities, and the Mirror Preferred Stock
Condition is met, the Series H Preferred Stock shall not be convertible into
such Redemption Securities and, from and after the applicable redemption date,
the holders of any shares of Series H Preferred Stock that have not been
exchanged for Mirror Preferred Stock shall have no conversion rights under these
provisions except for any conversion right that may have existed immediately
prior to the effective date of the Redemption Event with respect to any
securities, cash or other assets other than the Series A Liberty Media Group
Common Stock or Redeemable Capital Stock so redeemed. The Mirror Preferred Stock
Condition will be met in connection with a redemption of the Series A Liberty
Media Group Common Stock or the Redeemable Capital Stock into which the Series H
Preferred Stock is then convertible, assuming that the Series H Preferred Stock
is not then convertible into any other security, cash or other assets, if the
Company makes appropriate provision so that the holders of the Series H
Preferred Stock have the right to exchange their shares of Series H Preferred
Stock on the effective date of the Redemption Event for shares of Mirror
Preferred Stock of the issuer of the Redemption Securities, which Mirror
Preferred Stock shall have an aggregate initial liquidation preference equal to
the aggregate Liquidation Preference of the shares of Series H Preferred Stock
exchanged therefor.
If before giving effect to a Redemption Even, a holder of Series H
Preferred Stock would be entitled to receive upon conversion of such Series H
Preferred Stock any Securities, cash (other than cash in lieu of fractional
securities) or other assets in addition to the Series A Liberty Media Group
Common Stock or Redeemable Capital Stock being redeemed, and the redemption
price payable upon such Redemption Event will include Redemption Securities,
then to satisfy the Mirror Preferred Stock Condition, the Company would be
required to make appropriate provision so that the holders of the Series H
Preferred Stock have the right to exchange their shares of Series H Preferred
Stock on the effective date of the Redemption Event for Exchange Preferred Stock
of the Company and Mirror Preferred Stock of the issuer of the Redemption
Securities. The sum of the initial liquidation preferences of the shares of
Exchange Preferred Stock and Mirror Preferred Stock delivered in exchange for a
share of Series H Preferred Stock will equal the Liquidation Preference of a
share of Series H Preferred Stock on the effective date of the Redemption Event.
The Mirror Preferred Stock will have an aggregate initial liquidation preference
equal to the product of the aggregate Liquidation Preference of the shares of
Series H Preferred Stock exchanged therefor and the quotient of (x) the product
of the Conversion Rate for the Series A Liberty Media Group Common Stock or
Redeemable Capital stock to be redeemed (determined immediately prior to the
effective date of the Redemption Event) and the average of the daily Closing
Prices of the Series A Liberty Media Group Common Stock or Redeemable Capital
Stock, as the case may be, for the period of ten consecutive trading days ending
on the third trading day prior to the effective date of the Redemption event,
divided by (y) the sum of the amount determined pursuant to clause (x), plus the
fair value of the securities (other than those being redeemed), cash or other
assets that would have been receivable by a holder of Series H Preferred Stock
upon conversion thereof immediately prior to the effective date of the
Redemption event (such fair value to be determined in the case of securities
with a Closing Price in the same manner as provided in clause (x) and otherwise
by the Board of Directors in the exercise of its good faith judgment). The
shares of exchange Preferred stock will have an aggregate initial liquidation
preference equal to the difference between the aggregate Liquidation Preference
of the shares of Series H Preferred Stock exchanged therefore and the aggregate
initial liquidation preference of the Mirror Preferred Stock.
When used in connection with a redemption by the Company of any redeemable
Capital Stock into which the Series H Preferred stock is then convertible, the
following terms have the following meanings:
(i) "Redemption Securities' means securities of an issuer other
than the Company that are distributed by the company, in payment, in whole
or in part, of the redemption price for the Series A Liberty Media Group
Common Stock or such Redeemable Capital Stock.
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(ii) "Mirror Preferred Stock" means convertible preferred stock
issued by the issuer of the Redemption Securities and having terms,
conditions, designations, dividend rights, voting powers, rights on
liquidation and other preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions
thereof that are identical, or as nearly so as is practicable in the good
faith judgment of the Board of Directors, to those of the Series H
Preferred Stock for which such Mirror Preferred Stock is exchanged, except
that (x) the liquidation preference will be determined as provided above in
this paragraph 7(g), (y) the running of any time periods pursuant to the
terms of the Series H Preferred Stock shall be tacked to the corresponding
time periods in the Mirror Preferred stock and (z) the Mirror Preferred
stock shall be convertible into the kind and amount of Redemption
Securities, cash and other assets that the holder of a share of Series H
Preferred Stock in respect of which such Mirror Preferred Stock is issued
pursuant to the terms hereof would have received upon redemption of the
Series A Liberty Media Group Common Stock or Redeemable Capital Stock, as
the case may be, had such shares of Series H Preferred Stock been converted
prior to the effective date of the Redemption Event.
(iii) "Exchange Preferred Stock" means a series of convertible
preferred stock of the company having terms, conditions, designations,
dividend rights, voting powers, rights on liquidation and other preferences
and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof that are identical, or
as nearly so as is practicable in the good faith judgment of the Board of
Directors, to those of the Series H Preferred Stock for which such Exchange
Preferred Stock is exchanged, except that (x) the liquidation preference
will be determined as provided above in this paragraph 7 (g), (y) the
running of any time periods pursuant to the terms of the Series H Preferred
Stock and (z) the Exchange Preferred Stock will not be convertible into,
and the holders will have no conversion rights thereunder with respect to,
the Redeemable Capital Stock redeemed in the Redemption Event.
Notwithstanding the second paragraph of this paragraph 7(g), the Mirror
Preferred Stock condition shall only be deemed to have been satisfied in
connection with any Redemption Event if, in the good faith determination of the
Board of Directors: (i) receipt of Mirror Preferred stock and/or Exchange
Preferred Stock in exchange for Series H Preferred Stock pursuant to the second
paragraph of this paragraph 7(g) would not result in the recognition of gain or
loss by the holders of such Series H Preferred Stock for United States federal
income tax purposes; (ii) an adjustment made in the Conversion Rate of the
Series H Preferred Stock with respect to such Redemption Event, as provided in
the first paragraph of this paragraph of this paragraph 7(g), would result in
the recognition of gain or loss by the holders of Series H Preferred Stock for
United States federal income tax purposes; or (iii) receipt of Redemption
Securities in redemption of the Series A Liberty Media Group Common Stock or the
Redeemable Capital Stock to be redeemed in the Redemption Event would result in
the recognition of gain or loss by the holders of such Redeemable Capital Stock,
as the case may be.
(h) Simultaneous Adjustments. In the event that this paragraph 7 requires
adjustments to the conversion Rate under more than one of paragraph 7(c)(iv),
(d) or (e), and the record dates of the distributions giving rise to such
adjustments shall occur on the same date, then such adjustments shall be made by
applying, first, the provisions of paragraph 7(c), second, the provisions of
paragraph 7(e) and, third, the provisions of paragraph 7(d).
(i) When Adjustment May be Deferred. In any case in which this paragraph 7
shall require that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of such
event (x) issuing to the holder of any shares of Series H Preferred Stock
converted after such record date and before the occurrence of such event the
additional shares of Series A Liberty Media Group Common Stock issuable upon
such Series A Liberty Media Group Common Stock issuable upon such conversion
before giving effect to such adjustment and (y) paying to such holder cash or
its check in lieu of any fractional interest to which he is entitled pursuant to
paragraph 7(o); provided, however, that the Company shall deliver to such holder
a due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares of Series A Liberty Media Common Stock and such
cash, upon the occurrence of the event requiring such adjustment.
(j) De Minimis Adjustment; When Adjustment is Not Required. No adjustments
in the Conversion Rate need be made unless the adjustment would require an
increase or decrease of at least one percent (1%) in the Conversion Rate. Any
adjustment which is not made shall be carried forward and taken into account in
any subsequent adjustment.
All calculations under this paragraph 7 shall be made to the nearest cent
or to the nearest 1/1000th of a share, as the case may be.
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No adjustment need be made for rights to purchase shares of Series A
Liberty Media Group Common Stock or for sales of shares of Series A Liberty
Media Group Common Stock which in either case are made pursuant to a Company
plan providing for reinvestment of dividends or interest or pursuant to a bona
fide employee stock option or stock purchase plan of the Company. No adjustment
need be made for a change in the par value of the Series A Liberty Media Group
Common Stock.
No adjustment need be made under this paragraph 7 for a transaction
referred to in paragraph 7(c), 7(d), 7(e), or 7(g) if holders of the Series H
Preferred stock are to participate in the transaction on a basis and with the
notice that the Board of Directors in good faith determines to be fair and
appropriate in light of the basis and notice on which holders of Series A
Liberty Media Group Common Stock participate in the transaction; provided that
the basis on which the holders of shares of Series H Preferred Stock are to
participate in the transaction shall not be deemed to be fair if it would
require the holder to convert his shares of Series H Preferred Stock, in order
to participate, at any time prior to the expiration of the conversion period
specified for the share of Series H Preferred Stock pursuant to paragraph 7(a)
of this Certificate of Designations. The immediately preceding sentence shall
apply to any transaction referred to in paragraph 7(c), 7(d), 7(e) or 7(g) only
if, in good faith determination of the Board of Directors: (i) participation in
such transaction by the holders of the Series H Preferred stock would not result
in the recognition of gain or loss by such holders of United States federal
income tax purposes, (ii) an adjustment made in the Conversion Rate of the
Series H Preferred Stock in lieu of participating in such transaction, pursuant
to this paragraph 7, would result in the recognition of gain or loss by holders
of Series H Preferred Stock for United States federal income tax purposes; or
(iii) participation in such transaction by the holders of the Series A Liberty
Media Group Common Stock would result in the recognition of gain or loss by such
holders for United States federal income tax purposes.
To the extent the shares of Series H Preferred stock become convertible
into cash, no adjustment need be made thereafter as to the cash. Interest will
not accrue on the cash.
(k) Company Determination Final. Any determination required to be made
pursuant to paragraph 7(c), 7(d), 7(e), 7(f), 7(g), 7(g), 7(j) or 7(o) shall be
made by the Board of Directors (whether or not reference to the Board of
directors is expressly made in any such paragraph) and any determination so made
in good faith shall be conclusive and binding, absent manifest error, on the
holders of shares of Series H Preferred stock. In making any determination as
to the expected tax treatment of any action, transaction or event referred to
herein, including, without limitation, the determinations provided for in the
last paragraph of Paragraph 7(g) and the last sentence of the fourth paragraph
of paragraph 7(j), the Board of Directors shall be entitled to rely conclusively
on (i) an opinion of counsel rendered by a law firm acceptable to the Board of
Directors, acting in good faith, or (ii) a private letter ruling from the
Internal Revenue Service, to such effect, which opinion of counsel or private
letter ruling may be based upon such assumptions, and be subject to such
qualifications, conditions and limitations, as the Board of Directors shall in
good faith determine to be appropriate under the circumstances. Any such
determination by the Board of Directors shall be based on the expected United
States federal income tax consequences applicable to the transaction, in
question, without regard to special tax rules such as those applicable to
dealers in securities, foreign persons, mutual funds, insurance companies, tax-
exempt entities and holders ho do not hold the securities or other property in
question as capital assets, or the personal circumstances of any particular
stockholder.
(l) Notice of Adjustment. Whenever the provisions of this paragraph 7
require an adjustment of the Conversion rate, the Company shall promptly compute
such adjustment and (i) file with the transfer agent for the Series H Preferred
Stock (or with the books of the Company if there is no transfer agent) an
Officers' Certificate setting forth a description of the event requiring the
adjustment, the new Conversion Rate (including a reasonable detailed calculation
thereof), and the kind and amount of capital stock or other securities or cash
or other assets into which the Series H Preferred Stock shall be convertible
after such event, and (ii) cause a notice containing a summary of the
information set forth in said certificate to be given to the holders of Series H
Preferred Stock. Where appropriate, such notice may be given in advance and
included as a part of the notice required to be given under the provisions of
paragraph 7(m).
(m) Advance Notice of Certain Transactions. If the Company:
(i) takes any action which would require an adjustment in the
Conversion Rate;
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(ii) is a party to a consolidation, merger or binding share
exchange, or transfers all or substantially all of its assets to another
Person, and any stockholders of the Company must approve the transaction;
or
(iii) voluntarily or involuntarily dissolves, liquidates or winds up.
then, in any such event, the Company shall give the holders of the Series H
Preferred Stock, at least twenty (20) days prior to any record date or other
date set for definitive action if there shall be no record date, a notice
stating the record date for and the anticipated effective date of such action or
event and, if the event is a dividend or distribution or issuance by
reclassification of Redeemable Capital Stock, whether the Company has determined
to adjust the Conversion Rate pursuant to paragraph 7(c), or 7(e), provided,
however, that any notice required hereunder shall in any event be given no later
than the time that notice is given to the holders of Series A Liberty Media
Group Common Stock. Without limiting the obligation of the Company to provide
notice of corporate actions hereunder, the failure to mail the notice or any
defect in it shall not affect the legality or validity or any corporate action
or the vote thereon.
(n) Reservation of Series A Liberty Media Group Common Stock Issuable Upon
Conversion. The Company shall at all times on and after the Issue Date reserve
and keep available out of its authorized but unissued shares of Series A Liberty
Media Group Common Stock, solely for the purpose of effecting the conversion of
the shares of Series H Preferred Stock, such number of its shares of Series A
Liberty Media Group Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of Series H Preferred Stock;
provided that nothing contained herein shall be construed to preclude the
Company from satisfying its obligations in respect of the conversion of the
outstanding shares of Series H Preferred Stock by delivery of shares of Series A
Liberty Media Group Common Stock which are held in the treasury of the Company.
The Company shall take all such corporate and other actions as from time to time
may be necessary to insure that all shares of Series A Liberty Media Group
Common Stock issuable upon conversion of shares of Series H Preferred Stock at
the Conversion Rate in effect from time to time will, when issued, be duly and
validly authorized and issued, fully paid and nonassessable, and free from all
preemptive or similar rights. in order that the Company may issue shares of
Series A Liberty Media Group Common Stock upon conversion of the Series H
Preferred Stock, the Company will in good faith and as expeditiously as possible
endeavor to comply with all applicable Federal and state securities laws and
will in good faith and as expeditiously as possible endeavor to list such shares
to be issued upon conversion on such national securities exchange or national
securities association, if any, on which the Series A Liberty Media Group Common
Stock is then listed.
(o) Fractional Shares. No fractional shares of Series A Liberty Media
Group Common Stock or scrip shall be issued upon conversion of the Series H
Preferred Stock. Whether or not fractional shares would otherwise be required to
be issued to a holder of Series H Preferred Stock upon such conversion shall be
determined on the basis of the total number of shares of Series H Preferred
Stock the holder is at the time converting into Series A Liberty Media Group
Common Stock and the total number of shares of Series A Liberty Media Group
Common Stock issuable upon such conversion. In lieu of the issuance of
fractional shares of Series A Liberty Media Group Common Stock, the Company
shall pay instead an amount in cash or by its check equal to the same fraction
of the Closing Price of a full share of Series A Liberty Media Group Common
Stock on the last full trading day prior to the Conversion Date.
(p) Impairment. The Company will not, by amendment of this Certificate of
Designations or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
other than as expressly permitted by this Certificate of Designations or
approved by the requisite vote or written consent of the holders of Series H
Preferred Stock taken or given in accordance with this Certificate, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this paragraph 7 and in the
taking of all such action as may be necessary or appropriate in order to protect
the conversion rights of the holders of Series H Preferred Stock against
impairment.
8. Voting.
(a) Voting Rights. The holders of Series H Preferred Stock shall have no
voting rights whatsoever, except as required by law and except for the voting
rights described in this paragraph 8; provided, however, that the number of
authorized shares of Series H
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Preferred Stock may be increased or decreased (but not below the number of
shares of Series H Preferred Stock then outstanding) by the affirmative vote of
the holders of at least 66 2/3% of the total voting power of the then
outstanding Voting Securities (as defined in Section A of Article VIII of the
Restated Certificate of Incorporation of the Company (the "Restated
Certificate")), voting together as a single class as provided in Article IX of
the Restated Certificate. Without limiting the generality of the foregoing, no
vote or consent of the holders of Series H Preferred Stock shall be required for
(a) the creation of any indebtedness of any kind of the Company, (b) the
creation or designation of any class or series of Senior Stock, Parity Stock or
Junior Stock, or (c) any amendment to the Restated Certificate that would
increase the number of authorized shares of Preferred Stock or the number of
authorized shares of Series H Preferred Stock or that would decrease the number
of authorized shares of Preferred Stock or the number of authorized shares of
Series H Preferred stock (but not below the number of shares of Preferred Stock
or Series H Preferred Stock, as the case may be, then outstanding).
(b) Election of Directors. The holders of the Series H Preferred Stock
shall have the right to vote at any annual or special meeting of stockholders
for the purpose of electing director. Each shares of Series H Preferred Stock
shall have one vote for such purpose, and shall vote as a single class with all
other classes or series of capital stock of the Company that are entitled to
vote in any general election of directors, unless the instrument creating or
evidencing such class or series of capital stock otherwise expressly provides.
9. No Preemptive Rights. The holders of shares of Series H Preferred
Stock shall have no preemptive rights, including preemptive rights with respect
to any shares of capital stock or other securities of the Company convertible
into or carrying rights or options to purchase any such shares.
10. Waiver. Any provision of this Certificate of Designations which, for
the benefit of the holders of Series H Preferred Stock, prohibits, limits or
restricts actions by the Company, or imposes obligations on the Company,
including but not limited to provisions relating to the obligation of the
Company to redeem or convert such shares, may be waived in whole or in part, or
the application of all or any part of such provision in any particular
circumstance or generally may be waived, in each case by the affirmative vote or
with the consent of the holders of at least a majority of the number of shares
of Series H Preferred Stock then outstanding (or such greater percentage thereof
as may be required by applicable law or any applicable rules of any national
securities exchange or national interdealer quotation system), either in writing
or by vote at an annual meeting or a special meeting called for such purpose at
which the holders of Series H Preferred Stock shall vote as a separate class.
11. Method of Giving Notices. Any notice required or permitted by the
provisions of this Certificate of Designations to be given to the holders of
shares of Series H Preferred Stock shall be deemed duly given if deposited in
the United States mail, first class mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Company or
supplied by him in writing to the Company for the purpose of such notice.
12. Exclusion of Other Rights. Except as may otherwise be required by law
and except for the equitable rights and remedies which may otherwise be
available to holders of Series H Preferred Stock, the shares of Series H
Preferred Stock shall not have any designations, preferences, limitations or
relative rights other than those specifically set forth in this Certificate of
Designations.
13. Headings of Subdivisions. The headings of the various subdivisions of
this Certificate of Designations are for convenience of reference only and shall
not affect the interpretation of any of the provisions of this Certificate of
Designations.
FURTHER RESOLVED, that the appropriate officers of this Company are hereby
authorized to execute and acknowledge a certificate setting forth these
resolutions and to cause such certificate to be filed and recorded in accordance
with the requirements of section 151(g) of the General Corporation Law of the
State of Delaware."
The undersigned has signed this Certificate of Designations on this 25th
day of January, 1996.
/s/ STEPHEN M. BRETT
--------------------------
Name: Stephen M. Brett
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Title: Executive Vice President
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STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
__________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE SEVENTH
DAY OF APRIL, A.D. 1997, AT 8:30 O'CLOCK A.M.
/s/ EDWARD J. FREEL
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8526540
DATE: 06-24-97
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CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
TELE-COMMUNICATIONS, INC.
TELE-COMMUNICATIONS, INC., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
FIRST: That the Restated Certificate of Incorporation of the Corporation is
hereby amended as follows:
(I) THE FIRST PARAGRAPH OF ARTICLE IV OF THE RESTATED CERTIFICATE OF
INCORPORATION OF THE CORPORATION IS HEREBY AMENDED TO READ IN ITS ENTIRETY
AS FOLLOWS:
"AUTHORIZED STOCK
The total number of shares of capital stock which the Corporation shall
have authority to issue is three billion six hundred two million three hundred
seventy-five thousand ninety-six (3,602,375,096) shares, which shall be divided
into the following classes:
(a) Three billion five hundred fifty million (3,550,000,000) shares
shall be of a class designated Common Stock, par value $1.00 per share
("Common Stock"), such class to be divided into series as provided in
Section E of this Article IV;
(b) Seven hundred thousand (700,000) shares shall be of a class
designated Class A Preferred Stock, par value $.01 per share ("Class A
Preferred Stock");
(c) One million six hundred seventy-five thousand ninety-six
(1,675,096) shares shall be of a class designated Class B 6% Cumulative
Redeemable Exchangeable Junior Preferred Stock, par value $.01 per share
("Class B 6% Cumulative Redeemable Exchangeable Junior Preferred Stock");
and
(d) Fifty million (50,000,000) shares shall be of a class designated
Series Preferred Stock, par value $.01 per share ("Series Preferred
Stock"), such class to be issuable in series as provided in Section D of
this Article IV.
The Class A Preferred Stock, the Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock and the Series Preferred Stock are
collectively referred to as "Preferred Stock.""
(II) SECTION E OF ARTICLE IV OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE
CORPORATIONS IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
"SECTION E
SERIES A TCI GROUP COMMON STOCK, SERIES B TCI GROUP COMMON STOCK, SERIES A
LIBERTY MEDIA GROUP COMMON STOCK, SERIES B LIBERTY MEDIA GROUP COMMON STOCK,
SERIES A TELEPHONY GROUP COMMON STOCK AND SERIES B TELEPHONY GROUP COMMON STOCK
One billion seven hundred fifty million (1,750,000,000) shares of Common
Stock shall be of a series designated Tele-Communications, Inc. Series A TCI
Group Common Stock (the "Series A TCI Group Common Stock"), one hundred fifty
million (150,000,000) shares of Common Stock shall be of a series designated
Tele-Communications, Inc. Series B TCI Group Common Stock (the "Series B TCI
Group Common Stock"), seven hundred fifty million (750,000,000) shares of Common
Stock shall be of a series designated Tele-Communications, Inc. Series A Liberty
Media Group Common Stock (the "Series A Liberty Media Group
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Common Stock"), seventy-five million (75,000,000) shares of Common Stock shall
be of a series designated Tele-Communications, Inc. Series B Liberty Media Group
Common Stock (the "Series B Liberty Media Group Common Stock"), seven hundred
fifty million (750,000,000) shares of Common Stock shall be of a series
designated Tele-Communications, Inc. Series A Telephony Group Common Stock (the
"Series A Telephony Group Common Stock") and seventy five million (75,000,000)
shares of Common Stock shall be of a series designated Tele-Communications, Inc.
Series B Telephony Group Common Stock (the "Series B Telephony Group Common
Stock").
Each share of Series A TCI Group Common Stock and each share of Series B
TCI Group Common Stock shall, except as otherwise provided in this Section E, be
identical in all respects and shall have equal rights, powers and privileges.
Each share of Series A Liberty Media Group Common Stock and each share of
Series B Liberty Media Group Common Stock shall, except as otherwise provided in
this Section E, be identical in all respects and shall have equal rights, powers
and privileges.
Each share of Series A Telephony Group Common Stock and each share of
Series B Telephony Group Common Stock shall, except as otherwise provided in
this Section E, be identical in all respects and shall have equal rights, powers
and privileges.
1. Voting Rights.
Holders of Series A TCI Group Common Stock shall be entitled to one vote
for each share of such stock held, holders of Series B TCI Group Common Stock
shall be entitled to ten votes for each share of such stock held, holders of
Series A Liberty Media Group Common Stock shall be entitled to one vote for each
share of such stock held, holders of Series B Liberty Media Group Common Stock
shall be entitled to ten votes for each share of such stock held, holders of
Series A Telephony Group Common Stock shall be entitled to one vote for each
share of such stock held, and holders of Series B Telephony Group Common Stock
shall be entitled to ten votes for each share of such stock held, on all matters
presented to such stockholders. Except as may otherwise be required by the laws
of the State of Delaware or, with respect to any class of Preferred Stock or any
series of such a class, in this Certificate (including any resolution or
resolutions providing for the establishment of such class or series pursuant to
authority vested in the Board of Directors by this Certificate), the holders of
shares of Series A TCI Group Common Stock, the holders of shares of Series B TCI
Group Common Stock, the holders of shares of Series A Liberty Media Group Common
Stock, the holders of shares of Series B Liberty Media Group Common Stock, the
holders of shares of Series A Telephony Group Common Stock, the holders of
shares of Series B Telephony Group Common Stock and the holders of shares of
each class or series of Preferred Stock, if any, entitled to vote thereon, shall
vote as one class with respect to the election of directors and with respect to
all other matters to be voted on by stockholders of the Corporation (including,
without limitation, any proposed amendment to this Certificate that would
increase the number of authorized shares of Common Stock or any series thereof
or of any other class or series of stock or decrease the number of authorized
shares of any class or series of stock (but not below the number of shares
thereof then outstanding)), and no separate vote or consent of the holders of
shares of Series A TCI Group Common Stock, the holders of shares of Series B TCI
Group Common Stock, the holders of shares of Series A Liberty Media Group Common
Stock, the holders of shares of Series B Liberty Media Group Common Stock, the
holders of shares of Series A Telephony Group Common Stock, the holders of
shares of Series B Telephony Group Common Stock, or the holders of shares of any
such class or series of Preferred Stock shall be required for the approval of
any such matter.
2. Conversion Rights.
(a) CONVERSION OF SERIES B TCI GROUP COMMON STOCK INTO SERIES A TCI GROUP
COMMON STOCK. Each share of Series B TCI Group Common Stock shall be
convertible, at the option of the holder thereof, into one share of Series A TCI
Group Common Stock. Any such conversion may be effected by any holder of Series
B TCI Group Common Stock by surrendering such holder's certificate or
certificates for the Series B TCI Group Common Stock to be converted, duly
endorsed, at the office of the Corporation or any transfer agent for the Series
B TCI Group Common Stock, together with a written notice to the Corporation at
such office that such holder elects to convert all or a specified number of
shares of Series B TCI Group Common Stock represented by such certificate and
stating the name or names in which such holder desires the certificate or
certificates for Series A TCI Group Common Stock to be issued. If so required by
the Corporation, any certificate for shares surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder of such shares or the
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duly authorized representative of such holder. Promptly thereafter, the
Corporation shall issue and deliver to such holder or such holder's nominee or
nominees, a certificate or certificates for the number of shares of Series A TCI
Group Common Stock to which such holder shall be entitled as herein provided.
Such conversion shall be deemed to have been made at the close of business on
the date of receipt by the Corporation or any such transfer agent of the
certificate or certificates, notice and, if required, instruments of transfer
referred to above, and the person or persons entitled to receive the Series A
TCI Group Common Stock issuable on such conversion shall be treated for all
purposes as the record holder or holders of such Series A TCI Group Common Stock
on that date. A number of shares of Series A TCI Group Common Stock equal to the
number of shares of Series B TCI Group Common Stock outstanding from time to
time shall be set aside and reserved for issuance upon conversion of shares of
Series B TCI Group Common Stock. Shares of Series A TCI Group Common Stock shall
not be convertible into shares of Series B TCI Group Common Stock.
(b) CONVERSION OF SERIES B LIBERTY MEDIA GROUP COMMON STOCK INTO SERIES A
LIBERTY MEDIA GROUP COMMON STOCK. Each share of Series B Liberty Media Group
Common Stock shall be convertible, at the option of the holder thereof, into one
share of Series A Liberty Media Group Common Stock. Any such conversion may be
effected by any holder of Series B Liberty Media Group Common Stock by
surrendering such holder's certificate or certificates for the Series B Liberty
Media Group Common Stock to be converted, duly endorsed, at the office of the
Corporation or any transfer agent for the Series B Liberty Media Group Common
Stock, together with a written notice to the Corporation at such office that
such holder elects to convert all or a specified number of shares of Series B
Liberty Media Group Common Stock represented by such certificate and stating the
name or names in which such holder desires the certificate or certificates for
Series A Liberty Media Group Common Stock to be issued. If so required by the
Corporation, any certificate for shares surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder of such shares or the duly authorized representative
of such holder. Promptly thereafter, the Corporation shall issue and deliver to
such holder or such holder's nominee or nominees, a certificate or certificates
for the number of shares of Series A Liberty Media Group Common Stock to which
such holder shall be entitled as herein provided. Such conversion shall be
deemed to have been made at the close of business on the date of receipt by the
Corporation or any such transfer agent of the certificate or certificates,
notice and, if required, instruments of transfer referred to above, and the
person or persons entitled to receive the Series A Liberty Media Group Common
Stock issuable on such conversion shall be treated for all purposes as the
record holder or holders of such Series A Liberty Media Group Common Stock on
that date. A number of shares of Series A Liberty Media Group Common Stock equal
to the number of shares of Series B Liberty Media Group Common Stock outstanding
from time to time shall be set aside and reserved for issuance upon conversion
of shares of Series B Liberty Media Group Common Stock. Shares of Series A
Liberty Media Group Common Stock shall not be convertible into shares of Series
B Liberty Media Group Common Stock.
(c) CONVERSION OF SERIES B TELEPHONY GROUP COMMON STOCK INTO SERIES A
TELEPHONY GROUP COMMON STOCK. Each share of Series B Telephony Group Common
Stock shall be convertible, at the option of the holder thereof, into one share
of Series A Telephony Group Common Stock. Any such conversion may be effected by
any holder of Series B Telephony Group Common Stock by surrendering such
holder's certificate or certificates for the Series B Telephony Group Common
Stock to be converted, duly endorsed, at the office of the Corporation or any
transfer agent for the Series B Telephony Group Common Stock, together with a
written notice to the Corporation at such office that such holder elects to
convert all or a specified number of shares of Series B Telephony Group Common
Stock represented by such certificate and stating the name or names in which
such holder desires the certificate or certificates for Series A Telephony Group
Common Stock to be issued. If so required by the Corporation, any certificate
for shares surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by the holder
of such shares or the duly authorized representative of such holder. Promptly
thereafter, the Corporation shall issue and deliver to such holder or such
holder's nominee or nominees, a certificate or certificates for the number of
shares of Series A Telephony Group Common Stock to which such holder shall be
entitled as herein provided. Such conversion shall be deemed to have been made
at the close of business on the date of receipt by the Corporation or any such
transfer agent of the certificate or certificates, notice and, if required,
instruments of transfer referred to above, and the person or persons entitled to
receive the Series A Telephony Group Common Stock issuable on such conversion
shall be treated for all purposes as the record holder or holders of such Series
A Telephony Group Common Stock on that date. A number of shares of Series A
Telephony Group Common Stock equal to the number of shares of Series B Telephony
Group Common Stock outstanding from time to time shall be set aside and reserved
for issuance upon conversion of shares of Series B Telephony Group Common Stock.
Shares of Series A Telephony Group Common Stock shall not be convertible into
shares of Series B Telephony Group Common Stock.
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(d) CONVERSION OF SERIES A LIBERTY MEDIA GROUP COMMON STOCK INTO SERIES A
TCI GROUP COMMON STOCK AND SERIES B LIBERTY MEDIA GROUP COMMON STOCK INTO SERIES
B TCI GROUP COMMON STOCK AT THE OPTION OF THE CORPORATION. (i) At the option of
the Corporation by action of its Board of Directors, (A) all shares of Series A
Liberty Media Group Common Stock shall be convertible into a number (or
fraction) of fully paid and nonassessable shares of Series A TCI Group Common
Stock equal to the Liberty Media Group Optional Conversion Ratio, and (B) all
shares of Series B Liberty Media Group Common Stock shall be convertible into a
number (or fraction) of fully paid and nonassessable shares of Series B TCI
Group Common Stock equal to the Liberty Media Group Optional Conversion Ratio.
(ii) For purposes of this paragraph 2(d), the "Liberty Media Group
Optional Conversion Ratio" shall mean the quotient (calculated to the nearest
five decimal places) obtained by dividing (A) the Liberty Media Group Common
Stock Per Share Value by (B) the average Market Value of one share of Series A
TCI Group Common Stock over the 20-Trading Day period ending on the Trading Day
preceding the Appraisal Date.
(iii) In the event that the Corporation determines to establish the Liberty
Media Group Private Market Value, the Corporation shall designate the First
Appraiser, and the Independent Committee shall designate the Second Appraiser.
Not later than 20 days after the Selection Date, the First Appraiser and the
Second Appraiser shall each determine its initial view as to the private market
value of the Liberty Media Group as of the Appraisal Date and shall consult with
one another with respect thereto. Not later than the 30th day after the
Selection Date, the First Appraiser and the Second Appraiser shall each have
determined its final view as to such private market value. If the Higher
Appraised Amount is not more than 120% of the Lower Appraised Amount, the
Liberty Media Group Private Market Value (subject to any adjustment provided in
subparagraph (iv) of this paragraph 2(d)) shall be the average of those two
amounts. If the Higher Appraised Amount is more than 120% of the Lower Appraised
Amount, the First Appraiser and the Second Appraiser shall agree upon and
jointly designate the Mutually Designated Appraiser to determine such private
market value. The Mutually Designated Appraiser shall not be provided with any
of the work of the First Appraiser and Second Appraiser. The Mutually Designated
Appraiser shall, no later than the 20th day after the date the Mutually
Designated Appraiser is designated, determine the Mutually Appraised Amount, and
the Liberty Media Group Private Market Value (subject to any adjustment provided
in subparagraph (iv) of this paragraph 2(d)) shall be (A) if the Mutually
Appraised Amount is between the Lower Appraised Amount and the Higher Appraised
Amount, (I) the average of (1) the Mutually Appraised Amount and (2) the Lower
Appraised Amount or the Higher Appraised Amount, whichever is closer to the
Mutually Appraised Amount, or (II) the Mutually Appraised Amount, if neither the
Lower Appraised Amount nor the Higher Appraised Amount is closer to the Mutually
Appraised Amount, or (B) if the Mutually Appraised Amount is greater than the
Higher Appraised Amount or less than the Lower Appraised Amount, the average of
the Higher Appraised Amount and the Lower Appraised Amount. For these purposes,
if any such Appraiser expresses its final view of the private market value of
the Liberty Media Group as a range of values, such Appraiser's final view of
such private market value shall be deemed to be the midpoint of such range of
values.
(iv) Following the determination of the Liberty Media Group Private Market
Value, the Appraiser or Appraisers whose final views of the private market value
of the Liberty Media Group were used in the calculation of the Liberty Media
Group Private Market Value shall determine the Adjusted Outstanding Shares of
Telephony Group Common Stock together with any further appropriate adjustments
to the Telephony Group Private Market Value resulting from such determination.
The "Adjusted Outstanding Shares of Telephony Group Common Stock" shall mean a
number, as determined by such Appraiser(s) as of the Appraisal Date, equal to
the sum of the number of shares of Series A Telephony Group Common Stock and
Series B Telephony Group Common Stock outstanding, the Number of Shares Issuable
with Respect to the Telephony Group Inter-Group Interest, and the number of
shares of Series A Telephony Group Common Stock and Series B Telephony Group
Common Stock issuable upon the conversion, exercise or exchange of those
Convertible Securities the holders of which would derive an economic benefit
from conversion, exercise or exchange of such Convertible Securities which
exceeds the economic benefit of not converting, exercising or exchanging such
Convertible Securities. The "Telephony Group Common Stock Per Share Value" shall
mean the quotient obtained by dividing the Telephony Group Private Market Value
by the Adjusted Outstanding Shares of Telephony Group Common Stock, provided
that if such Appraiser(s) do not agree on the determinations provided for in
this subparagraph (iv), the Telephony Group Common Stock Per Share Value shall
be the average of the quotients
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so obtained on the basis of the respective determinations of such firms.
(v) If the Corporation determines to convert shares of Series A Liberty
Media Group Common Stock into Series A TCI Group Common Stock and shares of
Series B Liberty Media Group Common Stock into Series B TCI Group Common Stock
at the Liberty Media Group Optional Conversion Ratio, such conversion shall
occur on a Conversion Date on or prior to the 120th day following the Appraisal
Date. If the Corporation determines not to undertake such conversion, the
Corporation may at any time thereafter undertake to reestablish the Liberty
Media Group Common Stock Per Share Value as of a subsequent date.
(vi) The Corporation shall not convert shares of Series A Liberty Media
Group Common Stock into shares of Series A TCI Group Common Stock without
converting shares of Series B Liberty Media Group Common Stock into shares of
Series B TCI Group Common Stock, and the Corporation shall not convert shares of
Series B Liberty Media Group Common Stock into shares of Series B TCI Group
Common Stock without converting shares of Series A Liberty Media Group Common
Stock into shares of Series A TCI Group Common Stock. The Series A Liberty Media
Group Common Stock and the Series B Liberty Media Group Common Stock shall also
be convertible at the option of the Corporation in accordance with paragraph
5(b)(iii) of this Section E.
(e) CONVERSION OF SERIES A TELEPHONY GROUP COMMON STOCK INTO SERIES A TCI
GROUP COMMON STOCK AND SERIES B TELEPHONY GROUP COMMON STOCK INTO SERIES B TCI
GROUP COMMON STOCK AT THE OPTION OF THE CORPORATION. (i) At the option of the
Corporation by action of its Board of Directors, (A) all shares of Series A
Telephony Group Common Stock shall be convertible into a number (or fraction) of
fully paid and nonassessable shares of Series A TCI Group Common Stock equal to
the Telephony Group Optional Conversion Ratio, and (B) all shares of Series B
Telephony Group Common Stock shall be convertible into a number (or fraction) of
fully paid and nonassessable shares of Series B TCI Group Common Stock equal to
the Telephony Group Optional Conversion Ratio.
(ii) For purposes of this paragraph 2(e), the "Telephony Group Optional
Conversion Ratio" shall mean the quotient (calculated to the nearest five
decimal places) obtained by dividing (A) the Telephony Group Common Stock Per
Share Value by (B) the average Market Value of one share of Series A TCI Group
Common Stock over the 20-Trading Day period ending on the Trading Day preceding
the Appraisal Date.
(iii) In the event that the Corporation determines to establish the
Telephony Group Private Market Value, the Corporation shall designate the First
Appraiser, and the Independent Committee shall designate the Second Appraiser.
Not later than 20 days after the Selection Date, the First Appraiser and the
Second Appraiser shall each determine its initial view as to the private market
value of the Telephony Group as of the Appraisal Date and shall consult with one
another with respect thereto. Not later than the 30th day after the Selection
Date, the First Appraiser and the Second Appraiser shall each have determined
its final view as to such private market value. If the Higher Appraised Amount
is not more than 120% of the Lower Appraised Amount, the Telephony Group Private
Market Value (subject to any adjustment provided in subparagraph (iv) of this
paragraph 2(e)) shall be the average of those two amounts. If the Higher
Appraised Amount is more than 120% of the Lower Appraised Amount, the First
Appraiser and the Second Appraiser shall agree upon and jointly designate the
Mutually Designated Appraiser to determine such private market value. The
Mutually Designated Appraiser shall not be provided with any of the work of the
First Appraiser and Second Appraiser. The Mutually Designated Appraiser shall,
no later than the 20th day after the date the Mutually Designated Appraiser is
designated, determine the Mutually Appraised Amount and the Telephony Group
Private Market Value (subject to any adjustment provided in subparagraph (iv) of
this paragraph 2(e)) shall be (A) if the Mutually Appraised Amount is between
the Lower Appraised Amount and the Higher Appraised Amount, (I) the average of
(1) the Mutually Appraised Amount and (2) the Lower Appraised Amount or the
Higher Appraised Amount, whichever is closer to the Mutually Appraised Amount,
or (II) the Mutually Appraised Amount, if neither the Lower Appraised Amount nor
the Higher Appraised Amount is closer to the Mutually Appraised Amount, or (B)
if the Mutually Appraised Amount is greater than the Higher Appraised Amount or
less than the Lower Appraised Amount, the average of the Higher Appraised Amount
and the Lower Appraised Amount. For these purposes, if any such Appraiser
expresses its final view of the private market value of the Telephony Group as a
range of values, such Appraiser's final view of such private market value shall
be deemed to be the midpoint of such range of values.
(iv) Following the determination of the Telephony Group Private Market
Value, the Appraiser or Appraisers whose final views of the private market value
of the Telephony Group were used in the calculation of the Telephony Group
Private Market Value shall
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determine the Adjusted Outstanding Shares of Telephony Group Common Stock
together with any further appropriate adjustments to the Telephony Group Private
Market Value resulting from such determination. The "Adjusted Outstanding Shares
of Telephony Group Common Stock" shall mean a number, as determined by such
Appraiser(s) as of the Appraisal Date, equal to the sum of the number of shares
of Series A Telephony Group Common Stock and Series B Telephony Group Common
Stock outstanding, the Number of Shares Issuable with Respect to the Telephony
Group Inter-Group Interest, and the number of shares of Series A Telephony Group
Common Stock and Series B Telephony Group Common Stock issuable upon the
conversion, exercise or exchange of those Convertible Securities the holders of
which would derive an economic benefit form conversion, exercise or exchange of
such Convertible Securities which exceeds the economic benefit of not
converting, exercising or exchanging such Convertible Securities. The "Telephony
Group Common Stock Per Share Value" shall mean the quotient obtained by dividing
the Telephony Group Private Market Value by the Adjusted Outstanding Shares of
Telephony Group Common Stock, provided that if such Appraiser(s) do not agree on
the determinations provided for in this subparagraph (iv), the Telephony Group
Common Stock Per Share Value shall be the average of the quotients so obtained
of the basis of the respective determinations of such firms.
(v) If the Corporation determines to convert shares of Series A Telephony
Group Common Stock into Series A TCI Group Common Stock and shares of Series B
Telephony Group Common Stock into Series B TCI Group Common Stock at the
Telephony Group Optional Conversion Ratio, such conversion shall occur on a
Conversion Date on or prior to the 120th day following the Appraisal Date. If
the Corporation determines not to undertake such conversion, the Corporation may
at any time thereafter undertake to reestablish the Telephony Group Common Stock
Per Share Value as of a subsequent date.
(vi) The Corporation shall not convert shares of Series A Telephony Group
Common Stock into shares of Series A TCI Group Common Stock without converting
shares of Series B Telephony Group Common Stock into shares of Series B TCI
Group Common Stock, and the Corporation shall not convert shares of Series B
Telephony Group Common Stock into shares of Series B TCI Group Common Stock
without converting shares of Series A Telephony Group Common Stock into shares
of Series A TCI Group Common Stock. The Series A Telephony Group Common Stock
and the Series B Telephony Group Common Stock shall also be convertible at the
option of the Corporation in accordance with paragraph 6(b)(iii) of this Section
E.
3. Dividends.
(a) DIVIDENDS ON SERIES A TCI GROUP COMMON STOCK AND SERIES B TCI GROUP
COMMON STOCK. Dividends on the Series A TCI Group Common Stock and the Series B
TCI Group Common Stock may be declared and paid only out of the lesser of (i)
assets of the Corporation legally available therefor and (ii) the TCI Group
Available Dividend Amount. Subject to paragraph 4 of this Section E, whenever a
dividend is paid to the holders of Series A TCI Group Common Stock, the
Corporation shall also pay to the holders of Series B TCI Group Common Stock a
dividend per share equal to the dividend per share paid to the holders of Series
A TCI Group Common Stock, and whenever a dividend is paid to the holders of
Series B TCI Group Common Stock, the Corporation shall also pay to the holders
of Series A TCI Group Common Stock a dividend per share equal to the dividend
per share paid to the holders of Series B TCI Group Common Stock.
(b) DIVIDENDS ON SERIES A LIBERTY MEDIA GROUP COMMON STOCK AND SERIES B
LIBERTY MEDIA GROUP COMMON STOCK. Dividends on the Series A Liberty Media Group
Common Stock and the Series B Liberty Media Group Common Stock may be declared
and paid only out of the lesser of (i) assets of the Corporation legally
available therefor and (ii) the Liberty Media Group Available Dividend Amount.
Subject to paragraph 4 and the last sentence of paragraph 5(b) of this Section
E, whenever a dividend is paid to the holders of Series A Liberty Media Group
Common Stock, the Corporation shall also pay to the holders of Series B Liberty
Media Group Common Stock a dividend per share equal to the dividend per share
paid to the holders of Series A Liberty Media Group Common Stock, and whenever a
dividend is paid to the holders of Series B Liberty Media Group Common Stock,
the Corporation shall also pay to the holders of Series A Liberty Media Group
Common Stock a dividend per share equal to the dividend per share paid to the
holders of Series B Liberty Media Group Common Stock.
(c) DIVIDENDS ON SERIES A TELEPHONY GROUP COMMON STOCK AND SERIES B
TELEPHONY GROUP COMMON STOCK. Dividends on the Series A Telephony Group Common
Stock and the Series B Telephony Group Common Stock may be declared and paid
only out of the lesser of (i) assets of the Corporation legally available
therefor and (ii) the Telephony Group Available Dividend Amount. Subject to
paragraph 4 and the last sentence of paragraph 6(b) of this Section E, whenever
a dividend is
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paid to the holders of Series A Telephony Group Common Stock, the Corporation
shall also pay to the holders of Series B Telephony Group Common Stock a
dividend per share equal to the dividend per share paid to the holders of Series
A Telephony Group Common Stock, and whenever a dividend is paid to the holders
of Series B Telephony Group Common Stock, the Corporation shall also pay to the
holders of Series A Telephony Group Common Stock a dividend per share equal to
the dividend per share paid to the holders of Series B Telephony Group Common
Stock.
(d) DISCRIMINATION BETWEEN OR AMONG SERIES OF COMMON STOCK. The Board of
Directors, subject to the provisions of paragraph 3(a), 3(b) and 3(c) of this
Section E, shall have the authority and discretion to declare and pay dividends
on (i) the Series A TCI Group Common Stock and Series B TCI Group Common Stock,
(ii) the Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock, or (iii) the Series A Telephony Group Common Stock and
Series B Telephony Group Common Stock, in equal or unequal amounts,
notwithstanding the relationship between the TCI Group Available Dividend
Amount, the Liberty Media Group Available Dividend Amount and the Telephony
Group Available Dividend Amount, the respective amounts of prior dividends
declared on, or the liquidation rights of, the Series A TCI Group Common Stock
and Series B TCI Group Common Stock, the Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock, or the Series A Telephony
Group Common Stock and the Series B Telephony Group Common Stock, or any other
factor.
4. Share Distributions.
The Corporation may declare and pay a distribution consisting of shares of
Series A TCI Group Common Stock, Series B TCI Group Common Stock, Series A
Liberty Media Group Common Stock, Series B Liberty Media Group Common Stock,
Series A Telephony Group Common Stock, Series B Telephony Group Common Stock or
any other securities of the Corporation or any other Person (hereinafter
sometimes called a "share distribution") to holders of the Common Stock only in
accordance with the provisions of this paragraph 4.
(a) DISTRIBUTIONS ON SERIES A TCI GROUP COMMON STOCK AND SERIES B TCI
GROUP COMMON STOCK. If at any time a share distribution is to be made with
respect to the Series A TCI Group Common Stock or Series B TCI Group Common
Stock, such share distribution may be declared and paid only as follows:
(i) a share distribution consisting of shares of Series A TCI Group
Common Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock, on an
equal per share basis; or consisting of shares of Series B TCI Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series B TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock, on an
equal per share basis; or consisting of shares of Series A TCI Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and, on an equal per share basis, shares of
Series B TCI Group Common Stock (or like Convertible Securities convertible
into or exercisable or exchangeable for shares of Series B TCI Group Common
Stock) to holders of Series B TCI Group Common Stock;
(ii) subsequent to the Liberty Media Group Distribution, a share
distribution consisting of shares of Series A Liberty Media Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A Liberty Media Group Common Stock) to
holders of Series A TCI Group Common Stock and Series B TCI Group Common
Stock, on an equal per share basis; provided that the sum of (A) the
aggregate number of shares of Series A Liberty Media Group Common Stock to
be so issued (or the number of such shares which would be issuable upon
conversion, exercise or exchange of any Convertible Securities to be so
issued) and (B) the number of shares of such series that are subject to
issuance upon conversion, exercise or exchange of any Convertible
Securities then outstanding that are attributed to the TCI Group (other
than Pre-Distribution Convertible Securities and other than Convertible
Securities convertible into or exercisable or exchangeable for Committed
Acquisition Shares) is less than or equal to the Number of Shares Issuable
with Respect to the Liberty Media Group Inter-Group Interest;
(iii) a share distribution consisting of shares of Series A Telephony
Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A Telephony Group Common
Stock) to holders of Series A
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TCI Group Common Stock and Series B TCI Group Common Stock, on an equal per
share basis; or consisting of shares of Series B Telephony Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series B Telephony Group Common Stock) to
holders of Series A TCI Group Common Stock and Series B TCI Group Common
Stock, on an equal per share basis; or consisting of shares of Series A
Telephony Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A Telephony Group Common
Stock) to holders of Series A TCI Group Common Stock and, on an equal per
share basis, shares of Series B Telephony Group Common Stock (or like
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series B Telephony Group Common Stock) to holders of Series B TCI
Group Common Stock; provided that the sum of (A) the aggregate number of
shares of Series A Telephony Group Common Stock and Series B Telephony
Group Common Stock to be so distributed (or the number of such shares of
Series A Telephony Group Common Stock and Series B Telephony Group Common
Stock which would be issuable upon conversion, exercise or exchange of any
Convertible Securities to be so distributed) and (B) the number of shares
of Series A Telephony Group Common Stock and Series B Telephony Group
Common Stock that are subject to issuance upon conversion, exercise or
exchange of any Convertible Securities then outstanding that are attributed
to the TCI Group, is less than or equal to the Number of Shares Issuable
with Respect to the Telephony Group Inter-Group Interest.
(iv) a share distribution consisting of any class or series of securities
of the Corporation or any other Person other than Series A TCI Group Common
Stock, Series B TCI Group Common Stock, Series A Liberty Media Group Common
Stock, Series B Liberty Media Group Common Stock, Series A Telephony Group
Common Stock or Series B Telephony Group Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for shares of
Series A TCI Group Common Stock, Series B TCI Group Common Stock, Series A
Liberty Media Group Common Stock, Series B Liberty Media Group Common
Stock, Series A Telephony Group Common Stock or Series B Telephony Group
Common Stock), either on the basis of a distribution of identical
securities, on an equal per share basis, to holders of Series A TCI Group
Common Stock and Series B TCI Group Common Stock or on the basis of a
distribution of one class or series of securities to holders of Series A
TCI Group Common Stock and another class or series of securities to holders
of Series B TCI Group Common Stock, provided that the securities so
distributed (and, if the distribution consists of Convertible Securities,
the securities into which such Convertible Securities are convertible or
for which they are exercisable or exchangeable) do not differ in any
respect other than their relative voting rights and related differences in
designation, conversion, redemption and share distribution provisions, with
holders of shares of Series B TCI Group Common Stock receiving the class or
series having the higher relative voting rights (without regard to whether
such rights differ to a greater or lesser extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Group Common Stock and the
Series B TCI Group Common Stock), provided that if the securities so
distributed constitute capital stock of a Subsidiary of the Corporation,
such rights shall not differ to a greater extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Group Common Stock and the
Series B TCI Group Common Stock, and provided in each case that such
distribution is otherwise made on an equal per share basis.
The Corporation shall not reclassify, subdivide or combine the Series A TCI
Group Common Stock without reclassifying, subdividing or combining the Series B
TCI Group Common Stock, on an equal per share basis, and the Corporation shall
not reclassify, subdivide or combine the Series B TCI Group Common Stock without
reclassifying, subdividing or combining the Series A TCI Group Common Stock, on
an equal per share basis.
(b) DISTRIBUTIONS ON SERIES A LIBERTY MEDIA GROUP COMMON STOCK AND SERIES
B LIBERTY MEDIA GROUP COMMON STOCK. If at any time a share distribution is to be
made with respect to the Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock, such share distribution may be declared and
paid only as follows (or as permitted by paragraph 5 of this Section E with
respect to the redemptions and other distributions referred to therein):
(i) a share distribution consisting of shares of Series A Liberty
Media Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A Liberty Media Group
Common Stock) to holders of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock, on an equal per share basis; or
consisting of shares of Series B Liberty Media Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series B Liberty Media Group Common Stock) to holders of Series A
Liberty Media Group Common Stock and Series B Liberty
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Media Group Common Stock, on an equal per share basis; or consisting of
shares of Series A Liberty Media Group Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for shares of
Series A Liberty Media Group Common Stock) to holders of Series A Liberty
Media Group Common Stock and, on an equal per share basis, shares of Series
B Liberty Media Group Common Stock (or like Convertible Securities
convertible into or exercisable or exchangeable for shares of Series B
Liberty Media Group Common Stock) to holders of Series B Liberty Media
Group Common Stock; and
(ii) a share distribution consisting of any class or series of
securities of the Corporation or any other Person other than as described
in clause (i) of this paragraph 4(b) and other than Series A TCI Group
Common Stock, Series B TCI Group Common Stock, Series A Telephony Group
Common Stock or Series B Telephony Group Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for shares of
Series A TCI Group Common Stock, Series B TCI Group Common Stock, Series A
Telephony Group Common Stock or Series B Telephony Group Common Stock)
either on the basis of a distribution of identical securities, on an equal
per share basis, to holders of Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock or on the basis of a
distribution of one class or series of securities to holders of Series A
Liberty Media Group Common Stock and another class or series of securities
to holders of Series B Liberty Media Group Common Stock, provided that the
securities so distributed (and, if the distribution consists of Convertible
Securities, the securities into which such Convertible Securities are
convertible or for which they are exercisable or exchangeable) do not
differ in any respect other than their relative voting rights and related
differences in designation, conversion, redemption and share distribution
provisions, with holders of shares of Series B Liberty Media Group Common
Stock receiving the class or series having the higher relative voting
rights (without regard to whether such rights differ to a greater or lesser
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series
A Liberty Media Group Common Stock and the Series B Liberty Media Group
Common Stock), provided that if the securities so distributed constitute
capital stock of a Subsidiary of the Corporation, such rights shall not
differ to a greater extent than the corresponding differences in voting
rights, designation, conversion, redemption and share distribution
provisions between the Series A Liberty Media Group Common Stock and the
Series B Liberty Media Group Common Stock, and provided in each case that
such distribution is otherwise made on an equal per share basis.
The Corporation shall not reclassify, subdivide or combine the Series A
Liberty Media Group Common Stock without reclassifying, subdividing or combining
the Series B Liberty Media Group Common Stock, on an equal per share basis, and
the Corporation shall not reclassify, subdivide or combine the Series B Liberty
Media Group Common Stock without reclassifying, subdividing or combining the
Series A Liberty Media Group Common Stock, on an equal per share basis.
(c) DISTRIBUTIONS ON SERIES A TELEPHONY GROUP COMMON STOCK AND SERIES B
TELEPHONY GROUP COMMON STOCK. If at any time a share distribution is to be made
with respect to the Series A Telephony Group Common Stock or Series B Telephony
Group Common Stock, such share distribution may be declared and paid only as
follows (or as permitted by paragraph 6 of this Section E with respect to the
redemptions and other distributions referred to therein):
(i) a share distribution consisting of shares of Series A Telephony
Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A Telephony Group Common
Stock) to holders of Series A Telephony Group Common Stock and Series B
Telephony Group Common Stock, on an equal per share basis; or consisting of
shares of Series B Telephony Group Common Stock (or Convertible Securities
convertible into or exercisable or exchangeable for shares of Series B
Telephony Group Common Stock) to holders of Series A Telephony Group Common
Stock and Series B Telephony Group Common Stock, on an equal per share
basis; or consisting of shares of Series A Telephony Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series A Telephony Group Common Stock) to holders of Series A
Telephony Group Common Stock and, on an equal per share basis, shares of
Series B Telephony Group Common Stock (or like Convertible Securities
convertible into or exercisable or exchangeable for shares of Series B
Telephony Group Common Stock) to holders of Series B Telephony Group Common
Stock; and
(ii) a share distribution consisting of any class or series of
securities of the Corporation or any other Person other than as described
in clause (i) of this paragraph 4(c) and other than Series A TCI Group
Common Stock, Series B TCI Group Common Stock, Series A Liberty Media Group
Common Stock or Series B Liberty Media Group Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for shares of
Series A TCI Group Common Stock, Series B TCI Group Common
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Stock, Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock) either on the basis of a distribution of identical
securities, on an equal per share basis, to holders of Series A Telephony
Group Common Stock and Series B Telephony Group Common Stock, or on the
basis of a distribution of one class or series of securities to holders of
Series A Telephony Group Common Stock and another class or series of
securities to holders of Series B Telephony Group Common Stock, provided
that the securities so distributed (and, if the distribution consists of
Convertible Securities, the securities into which such Convertible
Securities are convertible or for which they are exercisable or
exchangeable) do not differ in any respect other than their relative voting
rights and related differences in designation, conversion, redemption and
share distribution provisions, with holders of shares of Series B Telephony
Group Common Stock receiving the class or series having the higher relative
voting rights (without regard to whether such rights differ to a greater or
lesser extent than the corresponding differences in voting rights,
designation, conversion, redemption and share distribution provisions
between the Series A Telephony Group Common Stock and the Series B
Telephony Group Common Stock), provided that if the securities so
distributed constitute capital stock of a Subsidiary of the Corporation,
such rights shall not differ to a greater extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A Telephony Group Common Stock
and the Series B Telephony Group Common Stock, and provided in each case
that such distribution is otherwise made on an equal per share basis.
The Corporation shall not reclassify, subdivide or combine the Series A
Telephony Group Common Stock without reclassifying, subdividing or combining the
Series B Telephony Group Common Stock, on an equal per share basis, and the
Corporation shall not reclassify, subdivide or combine the Series B Telephony
Group Common Stock without reclassifying, subdividing or combining the Series A
Telephony Group Common Stock, on an equal per share basis.
5. Redemption and Other Provisions Relating to the Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock.
(a) REDEMPTION IN EXCHANGE FOR STOCK OF LIBERTY MEDIA GROUP SUBSIDIARIES.
At any time at which all of the assets and liabilities attributed to the Liberty
Media Group have become and continue to be held directly or indirectly by any
one or more corporations all of the capital stock of which is owned by the
Corporation (the "Liberty Media Group Subsidiaries"), the Board of Directors
may, subject to the availability of assets of the Corporation legally available
therefor, redeem, on a pro rata basis, all of the outstanding shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common Stock
in exchange for an aggregate number of outstanding fully paid and nonassessable
shares of common stock of each Liberty Media Group Subsidiary equal to the
product of the Adjusted Liberty Media Group Outstanding Interest Fraction and
the number of outstanding shares of common stock of such Liberty Media Group
Subsidiary held by the Corporation. Any such redemption shall occur on a
Redemption Date set forth in a notice to holders of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock and Convertible
Securities convertible into or exercisable or exchangeable for shares of either
such series (unless provision for notice is otherwise made pursuant to the terms
of such Convertible Securities) pursuant to paragraph 5(d)(vi). In effecting
such a redemption, the Board of Directors may determine either to (i) redeem
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock in exchange for shares of separate classes or series of
common stock of each Liberty Media Group Subsidiary with relative voting rights
and related differences in designation, conversion, redemption and share
distribution provisions not greater than the corresponding differences in voting
rights, designation, conversion, redemption and share distribution provisions
between the Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock, with holders of shares of Series B Liberty Media Group
Common Stock receiving the class or series having the higher relative voting
rights, or (ii) redeem shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock in exchange for shares of a single
class of common stock of each Liberty Media Group Subsidiary without distinction
between the shares distributed to the holders of the Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock. If the
Corporation determines to undertake a redemption as described in clause (i) of
the preceding sentence, the outstanding shares of common stock of each Liberty
Media Group Subsidiary not distributed to holders of Series A Liberty Media
Group Common Stock or Series B Liberty Media Group Common Stock shall consist
solely of the class or series having the lower relative voting rights.
(b) MANDATORY DIVIDEND, REDEMPTION OR CONVERSION IN CASE OF DISPOSITION
OF LIBERTY MEDIA GROUP ASSETS. In the event of the Disposition, in one
transaction or a series of related transactions, by the Corporation and its
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subsidiaries of all or substantially all of the properties and assets of the
Liberty Media Group to one or more persons, entities or groups (other than (w)
in connection with the Disposition by the Corporation of all of the
Corporation's properties and assets in one transaction or a series of related
transactions in connection with the liquidation, dissolution or winding up of
the Corporation within the meaning of paragraph 7 of this Section E, (x) a
dividend, other distribution or redemption in accordance with any provision of
paragraph 3, paragraph 4, paragraph 5(a) or paragraph 7 of this Section E, (y)
to any person, entity or group which the Corporation, directly or indirectly,
after giving effect to the Disposition, controls or (z) in connection with a
Related Business Transaction), the Corporation shall, on or prior to the 85th
Trading Day following the consummation of such Disposition, either:
(i) subject to paragraph 3(b) of this Section E, declare and pay a
dividend in cash and/or in securities or other property (other than a
dividend or distribution of Common Stock) to the holders of the outstanding
shares of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock equally on a share for share basis (subject to the
last sentence of this Section 5(b)), in an aggregate amount equal to the
product of the Liberty Media Group Outstanding Interest Fraction as of the
record date for determining the holders entitled to receive such dividend
and the Liberty Media Group Net Proceeds of such Disposition; or
(ii) provided that there are assets of the Corporation legally
available therefor and the Liberty Media Group Available Dividend Amount
would have been sufficient to pay a dividend in lieu thereof pursuant to
clause (i) of this paragraph 5(b), then:
(A) if such Disposition involves all (not merely substantially
all) of the properties and assets of the Liberty Media Group,
redeem all outstanding shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock in
exchange for cash and/or securities or other property (other
than Common Stock) in an aggregate amount equal to the product
of the Adjusted Liberty Media Group Outstanding Interest
Fraction as of the date of such redemption and the Liberty
Media Group Net Proceeds, such aggregate amount to be allocated
(subject to the last sentence of this paragraph 5(b)) to shares
of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock in the ratio of the number of
shares of each such series outstanding (so that the amount of
consideration paid for the redemption of each share of Series A
Liberty Media Group Common Stock and each share of Series B
Liberty Media Group Common Stock is the same); or
(B) if such Disposition involves substantially all (but not
all) of the properties and assets of the Liberty Media Group,
apply an aggregate amount of cash and/or securities or other
property (other than Common Stock) equal to the product of the
Liberty Media Group Outstanding Interest Fraction as of the
date shares are selected for redemption and the Liberty Media
Group Net Proceeds to the redemption of outstanding shares of
Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock, such aggregate amount to be allocated
(subject to the last sentence of this paragraph 5(b)) to shares
of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock in the ratio of the number of
shares of each such series outstanding, and the number of
shares of each such series to be redeemed to equal the lesser
of (x) the whole number nearest the number determined by
dividing the aggregate amount so allocated to the redemption of
such series by the average Market Value of one share of Series
A Liberty Media Group Common Stock during the ten-Trading Day
period beginning on the 16th Trading Day following the
consummation of such Disposition and (y) the number of shares
of such series outstanding (so that the amount of consideration
paid for the redemption of each share of Series A Liberty Media
Group Common Stock and each share of Series B Liberty Media
Group Common Stock is the same);
such redemption to be effected in accordance with the applicable provisions of
paragraph 5(d) of this Section E; or
(iii) convert (A) each outstanding share of Series A Liberty Media
Group Common Stock into a number (or fraction) of fully paid and
nonassessable shares of Series A TCI Group Common Stock and (B) each
outstanding share of Series B Liberty Media Group Common Stock into a
number (or fraction) of fully paid and nonassessable shares of Series B TCI
Group Common Stock, in each case equal to 110% of the average daily ratio
(calculated to the nearest five decimal places) of the Market Value of one
share of Series A Liberty Media Group Common Stock to the Market Value of
one share of Series A TCI Group Common Stock during the ten-Trading Day
period referred to in clause (ii)(B) of this paragraph 5(b).
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For purposes of this paragraph 5(b):
(x) as of any date, "substantially all of the properties and assets
of the Liberty Media Group" shall mean a portion of such properties and
assets that represents at least 80% of the then-current market value (as
determined by the Board of Directors) of the properties and assets of the
Liberty Media Group as of such date;
(y) in the case of a Disposition of properties and assets in a
series of related transactions, such Disposition shall not be deemed to
have been consummated until the consummation of the last of such
transactions; and
(z) the Corporation may pay the dividend or redemption price
referred to in clause (i) or (ii) of this subparagraph 5(b) either in the
same form as the proceeds of the Disposition were received or in any other
combination of cash or securities or other property (other than Common
Stock) that the Board of Directors determines will have an aggregate market
value on a fully distributed basis, of not less than the amount of the
Liberty Media Group Net Proceeds. If the dividend or redemption price is
paid in the form of securities of an issuer other than the Corporation, the
Board of Directors may determine either to (1) pay the dividend or
redemption price in the form of separate classes or series of securities,
with one class or series of such securities to holders of Series A Liberty
Media Group Common Stock and another class or series of securities to
holders of Series B Liberty Media Group Common Stock, provided that such
securities (and, if such securities are convertible into or exercisable or
exchangeable for shares of another class or series of securities, the
securities so issuable upon such conversion, exercise or exchange) do not
differ in any respect other than their relative voting rights and related
differences in designation, conversion, redemption and share distribution
provisions, with holders of shares of Series B Liberty Media Group Common
Stock receiving the class or series having the higher relative voting
rights (without regard to whether such rights differ to a greater or lesser
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series
A Liberty Media Group Common Stock and the Series B Liberty Media Group
Common Stock), provided that if such securities constitute capital stock of
a Subsidiary of the Corporation, such rights shall not differ to a greater
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series
A Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock, and otherwise such securities shall be distributed on an equal per
share basis, or (2) pay the dividend or redemption price in the form of a
single class of securities without distinction between the shares received
by the holders of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock.
(c) CERTAIN PROVISIONS RESPECTING CONVERTIBLE SECURITIES. Unless the
provisions of any class or series of Pre-Distribution Convertible Securities or
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares provide specifically to the contrary, after any
Conversion Date or Redemption Date on which all outstanding shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common Stock
were converted or redeemed, any share of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock that is issued on conversion,
exercise or exchange of any Pre-Distribution Convertible Securities or any
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares shall, immediately upon issuance pursuant to
such conversion, exercise or exchange and without any notice or any other action
on the part of the Corporation or its Board of Directors or the holder of such
share of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock, be converted into (in case all such outstanding shares were
converted) or redeemed in exchange for (in case all such outstanding shares were
redeemed) the kind and amount of shares of capital stock, cash and/or other
securities or property that a holder of such Pre-Distribution Convertible
Securities or any Convertible Securities which are convertible into or
exercisable or exchangeable for Committed Acquisition Shares would have been
entitled to receive pursuant to the terms of such securities had such terms
provided that the conversion, exercise or exchange privilege in effect
immediately prior to any such conversion or redemption of all outstanding shares
of Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock would be adjusted so that the holder of any such Pre-Distribution
Convertible Securities or any Convertible Securities which are convertible into
or exercisable or exchangeable for Committed Acquisition Shares thereafter
surrendered for conversion, exercise or exchange would be entitled to receive
the kind and amount of shares of capital stock, cash and/or other securities or
property such holder would have received as a result of such action had such
securities been converted, exercised or exchanged immediately prior thereto.
With respect to any Convertible Securities which are created, established or
otherwise first authorized for issuance subsequent to the record date for the
Liberty Distribution (other than Pre-Distribution Convertible Securities and
Convertible Securities which are convertible
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into or exercisable or exchangeable for Committed Acquisition Shares), the terms
and provisions of which do not provide for adjustments specifying the kind and
amount of capital stock, cash and/or securities or other property that such
holder would be entitled to receive upon the conversion, exercise or exchange of
such Convertible Securities following any Conversion Date or Redemption Date on
which all outstanding shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock were converted or redeemed, then upon
such conversion, exercise or exchange of such Convertible Securities, any share
of Series A Liberty Media Group Common Stock or Series B Liberty Media Group
Common Stock that is issued on conversion, exercise or exchange of any such
Convertible Securities shall, immediately upon issuance pursuant to such
conversion, exercise or exchange and without any notice or any other action on
the part of the Corporation or its Board of Directors or the holder of such
share of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock, be redeemed in exchange for, to the extent assets of the
Corporation are legally available therefor, the amount of $.01 per share in
cash.
(d) GENERAL.
(i) Not later than the 10th Trading Day following the consummation of a
Disposition referred to in subparagraph 5(b) of this Section E, the Corporation
shall announce publicly by press release (A) the Liberty Media Group Net
Proceeds of such Disposition, (B) the number of outstanding shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common Stock,
(C) the number of shares of Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock into or for which Convertible Securities are
then convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof (and stating which, if any, of such Convertible
Securities constitute Pre-Distribution Convertible Securities or Convertible
Securities which are convertible into or exercisable or exchangeable for
Committed Acquisition Shares) and the number of Committed Acquisition Shares
issuable, (D) the Liberty Media Group Outstanding Interest Fraction as of a
recent date preceding the date of such notice and (E) the Adjusted Liberty Media
Group Outstanding Interest Fraction as of a recent date preceding the date of
such notice. Not earlier than the 26th Trading Day and not later than the 30th
Trading Day following the consummation of such Disposition, the Corporation
shall announce publicly by press release which of the actions specified in
clauses (i), (ii) or (iii) of paragraph 5(b) of this Section E it has
irrevocably determined to take.
(ii) If the Corporation determines to pay a dividend pursuant to clause
(i) of subparagraph 5(b) of this Section E, the Corporation shall, not later
than the 30th Trading Day following the consummation of such Disposition, cause
to be given to each holder of outstanding shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock, and to each holder
of Convertible Securities convertible into or exercisable or exchangeable for
shares of either such series (unless provision for notice is otherwise made
pursuant to the terms of such Convertible Securities), a notice setting forth
(A) the record date for determining holders entitled to receive such dividend,
which shall be not earlier than the 40th Trading Day and not later than the 50th
Trading Day following the consummation of such Disposition, (B) the anticipated
payment date of such dividend (which shall not be more than 85 Trading Days
following the consummation of such Disposition), (C) the kind of shares of
capital stock, cash and/or other securities or property to be distributed in
respect of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock, (D) the Liberty Media Group Net Proceeds of
such Disposition, (E) the Liberty Media Group Outstanding Interest Fraction as
of a recent date preceding the date of such notice, (F) the number of
outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock and the number of shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock into or
for which outstanding Convertible Securities are then convertible, exercisable
or exchangeable and the conversion, exercise or exchange prices thereof and (G)
in the case of a notice to holders of Convertible Securities, a statement to the
effect that holders of such Convertible Securities shall be entitled to receive
such dividend only if they appropriately convert, exercise or exchange such
Convertible Securities prior to the record date referred to in clause (A) of
this sentence. Such notice shall be sent by first-class mail, postage prepaid,
at such holder's address as the same appears on the transfer books of the
Corporation.
(iii) If the Corporation determines to undertake a redemption of shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock following a Disposition of all (not merely substantially all) of
the properties and assets of the Liberty Media Group pursuant to clause (ii) (A)
of paragraph 5(b) of this Section E, the Corporation shall cause to be given to
each holder of outstanding shares of Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock and to each holder of Convertible
Securities convertible into or exercisable or exchangeable for shares of either
such series (unless provision for notice is otherwise made pursuant to the terms
of such Convertible Securities), a notice setting forth (A) a
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statement that all shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock outstanding on the Redemption Date
shall be redeemed, (B) the Redemption Date (which shall not be more than 85
Trading Days following the consummation of such Disposition), (C) the kind of
shares of capital stock, cash and/or other securities or property to be paid as
a redemption price in respect of shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock outstanding on the
Redemption Date, (D) the Liberty Media Group Net Proceeds of such Disposition,
(E) the Adjusted Liberty Media Group Outstanding Interest Fraction as of a
recent date preceding the date of such notice, (F) the place or places where
certificates for shares of Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock, properly endorsed or assigned for transfer
(unless the Corporation waives such requirement), are to be surrendered for
delivery of certificates for shares of such capital stock, cash and/or other
securities or property, (G) the number of outstanding shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock and the
number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock into or for which outstanding Convertible
Securities are then convertible, exercisable or exchangeable and the conversion,
exercise or exchange prices thereof (and stating which, if any, of such
Convertible Securities constitute Pre-Distribution Convertible Securities or
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares) and the number of Committed Acquisition Shares
issuable, and (H) in the case of a notice to holders of Convertible Securities,
a statement to the effect that holders of such Convertible Securities shall be
entitled to participate in such redemption only if such holders appropriately
convert, exercise or exchange such Convertible Securities on or prior to the
Redemption Date referred to in clause (B) of this sentence and a statement as to
what, if anything, such holders shall be entitled to receive pursuant to the
terms of such Convertible Securities or, if applicable, paragraph 5(c) of this
Section E if such holders convert, exercise or exchange such Convertible
Securities following such Redemption Date. Such notice shall be sent by first-
class mail, postage prepaid, not less than 35 Trading Days nor more than 45
Trading Days prior to the Redemption Date, at such holder's address as the same
appears on the transfer books of the Corporation.
(iv) If the Corporation determines to undertake a redemption of shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock following a Disposition of substantially all (but not all) of the
properties and assets of the Liberty Media Group pursuant to clause (ii)(B) of
paragraph 5(b) of this Section E, the Corporation shall, not later than the 30th
Trading Day following the consummation of such Disposition, cause to be given to
each holder of record of outstanding shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock, and to each holder
of Convertible Securities convertible into or exercisable or exchangeable for
shares of either such series (unless provision for notice is otherwise made
pursuant to the terms of such Convertible Securities), a notice setting forth
(A) a date not earlier than the 40th Trading Day and not later than the 50th
Trading Day following the consummation of such Disposition which shall be the
date on which shares of the Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock then outstanding shall be selected for
redemption, (B) the anticipated Redemption Date (which shall not be more than 85
Trading Days following the consummation of such Disposition), (C) the kind of
shares of capital stock, cash and/or other securities or property to be paid as
a redemption price in respect of shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock selected for redemption, (D)
the Liberty Media Group Net Proceeds of such Disposition, (E) the Liberty Media
Group Outstanding Interest Fraction as of a recent date preceding the date of
such notice, (F) the number of outstanding shares of Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock and the number
of shares of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock into or for which outstanding Convertible Securities
are then convertible, exercisable or exchangeable and the conversion or exercise
prices thereof, (G) in the case of a notice to holders of Convertible
Securities, a statement to the effect that holders of such Convertible
Securities shall be entitled to participate in such selection for redemption
only if such holders appropriately convert, exercise or exchange such
Convertible Securities on or prior to the date referred to in clause (A) of this
sentence and a statement as to what, if anything, such holders shall be entitled
to receive pursuant to the terms of such Convertible Securities if such holders
convert, exercise or exchange such Convertible Securities following such date
and (H) a statement that the Corporation will not be required to register a
transfer of any shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock for a period of 15 Trading Days next preceding
the date referred to in clause (A) of this sentence. Promptly following the date
referred to in clause (A) of the preceding sentence, but not earlier than the
40th Trading Day and not later than the 50th Trading Day following the
consummation of such Disposition, the Corporation shall cause to be given to
each holder of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock to be so redeemed, a notice setting forth (A)
the number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock held by such holder to be redeemed, (B) a
statement that such shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock shall be
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redeemed, (C) the Redemption Date (which shall not be more than 85 Trading Days
following the consummation of such Disposition), (D) the kind and per share
amount of shares of capital stock, cash and/or other securities or property to
be received by such holder with respect to each share of such Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock to be
redeemed, including details as to the calculation thereof, and (E) the place or
places where certificates for shares of such Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock, properly endorsed or
assigned for transfer (unless the Corporation waives such requirement), are to
be surrendered for delivery of certificates for shares of such capital stock,
cash and/or other securities or property. The notices referred to in this clause
(iv) shall be sent by first-class mail, postage prepaid, at such holder's
address as the same appears on the transfer books of the Corporation. The
outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock to be redeemed shall be redeemed by the
Corporation pro rata among the holders of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock or by such other method as
may be determined by the Board of Directors to be equitable.
(v) In the event of any conversion pursuant to paragraph 2(d) of this
Section E or pursuant to this paragraph 5 (other than pursuant to paragraph
5(c)), the Corporation shall cause to be given to each holder of outstanding
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock and to each holder of Convertible Securities convertible into
or exercisable or exchangeable for shares of either such series (unless
provision for such notice is otherwise made pursuant to the terms of such
Convertible Securities), a notice setting forth (A) a statement that all
outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock shall be converted, (B) the Conversion Date
(which shall not be more than 85 Trading Days following the consummation of such
Disposition in the event of a conversion pursuant to paragraph 5(b) and which
shall not be more than 120 days after the Appraisal Date in the event of a
conversion pursuant to paragraph 2(d)), (C) the per share number of shares of
Series A TCI Group Common Stock or Series B TCI Group Common Stock, as
applicable, to be received with respect to each share of Series A Liberty Media
Group Common Stock or Series B Liberty Media Group Common Stock, including
details as to the calculation thereof, (D) the place or places where
certificates for shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock, properly endorsed or assigned for transfer
(unless the Corporation shall waive such requirement), are to be surrendered,
(E) the number of outstanding shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock, the number of Committed
Acquisition Shares issuable and the number of shares of Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock into or for
which outstanding Convertible Securities are then convertible, exercisable or
exchangeable and the conversion, exercise or exchange prices thereof and (F) in
the case of a notice to holders of Convertible Securities, a statement to the
effect that holders of such Convertible Securities shall be entitled to
participate in such conversion only if such holders appropriately convert,
exercise or exchange such Convertible Securities on or prior to the Conversion
Date referred to in clause (B) of this sentence and a statement as to what, if
anything, such holders shall be entitled to receive pursuant to the terms of
such Convertible Securities or, if applicable, paragraph 5(c) of this Section E
if such holders convert, exercise or exchange such Convertible Securities
following such Conversion Date. Such notice shall be sent by first-class mail,
postage prepaid, not less than 35 Trading Days nor more than 45 Trading Days
prior to the Conversion Date, at such holder's address as the same appears on
the transfer books of the Corporation.
(vi) If the Corporation determines to redeem shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock pursuant
to subparagraph (a) of this paragraph 5, the Corporation shall promptly cause to
be given to each holder of Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock and to each holder of Convertible Securities
convertible into or exercisable or exchangeable for shares of either such series
(unless provision for such notice is otherwise made pursuant to the terms of
such Convertible Securities), a notice setting forth (A) a statement that all
outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock shall be redeemed in exchange for shares of
common stock of the Liberty Media Group Subsidiaries, (B) the Redemption Date,
(C) the Adjusted Liberty Media Group Outstanding Interest Fraction as of a
recent date preceding the date of such notice, (D) the place or places where
certificates for shares of Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock, properly endorsed or assigned for transfer
(unless the Corporation shall waive such requirement), are to be surrendered for
delivery of certificates for shares of common stock of the Liberty Media Group
Subsidiaries, (E) the number of outstanding shares of Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock and the number
of shares of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock into or for which outstanding Convertible Securities
are then convertible, exercisable or exchangeable and the conversion, exercise
or exchange prices thereof (and stating which, if any, of such Convertible
Securities constitute Pre-Distribution Convertible Securities or Convertible
Securities which are
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convertible into or exercisable or exchangeable for Committed Acquisition
Shares) and the number of Committed Acquisition Shares issuable, and (F) in the
case of a notice to holders of Convertible Securities, a statement to the effect
that holders of such Convertible Securities shall be entitled to participate in
such redemption only if such holders appropriately convert, exercise or exchange
such Convertible Securities on or prior to the Redemption Date referred to in
clause (B) of this sentence and a statement as to what, if anything, such
holders shall be entitled to receive pursuant to the terms of such Convertible
Securities or, if applicable, paragraph 5(c) of this Section E if such holders
convert, exercise or exchange such Convertible Securities following the
Redemption Date. Such notice shall be sent by first-class mail, postage prepaid,
not less than 35 Trading Days nor more than 45 Trading Days prior to the
Redemption Date, at such holder's address as the same appears on the transfer
books of the Corporation.
(vii) Neither the failure to mail any notice required by this paragraph
5(d) to any particular holder of Series A Liberty Media Group Common Stock,
Series B Liberty Media Group Common Stock or of Convertible Securities nor any
defect therein shall affect the sufficiency thereof with respect to any other
holder of outstanding shares of Series A Liberty Media Group Common Stock or
Series B Liberty Media Group Common Stock or of Convertible Securities, or the
validity of any conversion or redemption.
(viii) The Corporation shall not be required to issue or deliver fractional
shares of any class of capital stock or any fractional securities to any holder
of Series A Liberty Media Group Common Stock or Series B Liberty Media Group
Common Stock upon any conversion, redemption, dividend or other distribution
pursuant to paragraph 2(d) of this Section E or pursuant to this paragraph 5. In
connection with the determination of the number of shares of any class of
capital stock that shall be issuable or the amount of securities that shall be
deliverable to any holder of record upon any such conversion, redemption,
dividend or other distribution (including any fractions of shares or
securities), the Corporation may aggregate the number of shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
held at the relevant time by such holder of record. If the number of shares of
any class of capital stock or the amount of securities remaining to be issued or
delivered to any holder of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock is a fraction, the Corporation shall, if such
fraction is not issued or delivered to such holder, pay a cash adjustment in
respect of such fraction in an amount equal to the fair market value of such
fraction on the fifth Trading Day prior to the date such payment is to be made
(without interest). For purposes of the preceding sentence, "fair market value"
of any fraction shall be (A) in the case of any fraction of a share of capital
stock of the Corporation, the product of such fraction and the Market Value of
one share of such capital stock and (B) in the case of any other fractional
security, such value as is determined by the Board of Directors.
(ix) No adjustments in respect of dividends shall be made upon the
conversion or redemption of any shares of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock; provided, however, that if
the Conversion Date or the Redemption Date with respect to the Series A Liberty
Media Group Common Stock or Series B Liberty Media Group Common Stock shall be
subsequent to the record date for the payment of a dividend or other
distribution thereon or with respect thereto, the holders of shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock at
the close of business on such record date shall be entitled to receive the
dividend or other distribution payable on or with respect to such shares on the
date set for payment of such dividend or other distribution, notwithstanding the
conversion or redemption of such shares or the Corporation's default in payment
of the dividend or distribution due on such date.
(x) Before any holder of shares of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock shall be entitled to receive
certificates representing shares of any kind of capital stock or cash and/or
securities or other property to be received by such holder with respect to
shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock pursuant to paragraph 2(d) of this Section E or pursuant to
this paragraph 5, such holder shall surrender at such place as the Corporation
shall specify certificates for such shares of Series A Liberty Media Group
Common Stock or Series B Liberty Media Group Common Stock, properly endorsed or
assigned for transfer (unless the Corporation shall waive such requirement). The
Corporation shall as soon as practicable after such surrender of certificates
representing shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock deliver to the person for whose account shares
of Series A Liberty Media Group Common Stock or Series B Liberty Media Group
Common Stock were so surrendered, or to the nominee or nominees of such person,
certificates representing the number of whole shares of the kind of capital
stock or cash and/or securities or other property to which such person shall be
entitled as aforesaid, together with any payment for fractional securities
contemplated by paragraph 5(d)(viii). If less than all of the shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
represented by any one certificate are to be redeemed, the Corporation shall
issue and deliver a new certificate for the
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shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock not redeemed. The Corporation shall not be required to
register a transfer of (1) any shares of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock for a period of 15 Trading
Days next preceding any selection of shares of Series A Liberty Media Group
Common Stock or Series B Liberty Media Group Common Stock to be redeemed or (2)
any shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock selected or called for redemption. Shares selected for
redemption may not thereafter be converted pursuant to paragraph 2(b) of this
Section E.
(xi) From and after any applicable Conversion Date or Redemption Date, all
rights of a holder of shares of Series A Liberty Media Group Common Stock or
Series B Liberty Media Group Common Stock that were converted or redeemed shall
cease except for the right, upon surrender of the certificates representing
shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock, to receive certificates representing shares of the kind and
amount of capital stock or cash and/or securities or other property for which
such shares were converted or redeemed, together with any payment for fractional
securities contemplated by paragraph 5(d)(viii) of this Section E and such
holder shall have no other or further rights in respect of the shares of Series
A Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
so converted or redeemed, including, but not limited to, any rights with respect
to any cash, securities or other properties which are reserved or otherwise
designated by the Corporation as being held for the satisfaction of the
Corporation's obligations to pay or deliver any cash, securities or other
property upon the conversion, exercise or exchange of any Convertible Securities
outstanding as of the date of such conversion or redemption or any Committed
Acquisition Shares which may then be issuable. No holder of a certificate that,
immediately prior to the applicable Conversion Date or Redemption Date for the
Series A Liberty Media Group Common Stock or Series B Liberty Media Group Common
Stock, represented shares of Series A Liberty Media Group Common Stock or Series
B Liberty Media Group Common Stock shall be entitled to receive any dividend or
other distribution with respect to shares of any kind of capital stock into or
in exchange for which the Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock was converted or redeemed until surrender of
such holder's certificate for a certificate or certificates representing shares
of such kind of capital stock. Upon such surrender, there shall be paid to the
holder the amount of any dividends or other distributions (without interest)
which theretofore became payable with respect to a record date after the
Conversion Date or Redemption Date, as the case may be, but that were not paid
by reason of the foregoing, with respect to the number of whole shares of the
kind of capital stock represented by the certificate or certificates issued upon
such surrender. From and after a Conversion Date or Redemption Date, as the case
may be, for any shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock, the Corporation shall, however, be entitled to
treat the certificates for shares of Series A Liberty Media Group Common Stock
or Series B Liberty Media Group Common Stock that have not yet been surrendered
for conversion or redemption as evidencing the ownership of the number of whole
shares of the kind or kinds of capital stock for which the shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
represented by such certificates shall have been converted or redeemed,
notwithstanding the failure to surrender such certificates.
(xii) The Corporation shall pay any and all documentary, stamp or similar
issue or transfer taxes that may be payable in respect of the issue or delivery
of any shares of capital stock and/or other securities on conversion or
redemption of shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock pursuant to this Section E. The Corporation
shall not, however, be required to pay any tax that may be payable in respect of
any transfer involved in the issue and delivery of any shares of capital stock
in a name other than that in which the shares of Series A Liberty Media Group
Common Stock or Series B Liberty Media Group Common Stock so converted or
redeemed were registered and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to the Corporation the amount of
any such tax, or has established to the satisfaction of the Corporation that
such tax has been paid.
6. Redemption and Other Provisions Relating to the Series A Telephony Group
Common Stock and Series B Telephony Group Common Stock.
(a) REDEMPTION IN EXCHANGE FOR STOCK OF TELEPHONY GROUP SUBSIDIARIES. At
any time at which all of the assets and liabilities attributed to the Telephony
Group have become and continue to be held directly or indirectly by any one or
more Qualifying Subsidiaries (the "Telephony Group Subsidiaries"), the Board of
Directors may, subject to the availability of assets of the Corporation legally
available therefor, redeem, on a pro rata basis, all of the outstanding shares
of Series A Telephony Group Common Stock and Series B Telephony Group Common
Stock in exchange for an aggregate number of outstanding fully paid and
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nonassessable shares of common stock of each Telephony Group Subsidiary equal to
the product of the Telephony Group Outstanding Interest Fraction and the number
of outstanding shares of common stock of such Telephony Group Subsidiary held by
the Corporation. Any such redemption shall occur on a Redemption Date set forth
in a notice to holders of Series A Telephony Group Common Stock and Series B
Telephony Group Common Stock and Convertible Securities convertible into or
exercisable or exchangeable for shares of either such series (unless provision
for notice is otherwise made pursuant to the terms of such Convertible
Securities) pursuant to paragraph 6(d)(vi). In effecting such a redemption, the
Board of Directors may determine either to (i) redeem shares of Series A
Telephony Group Common Stock and Series B Telephony Group Common Stock in
exchange for shares of separate classes or series of common stock of each
Telephony Group Subsidiary with relative voting rights and related differences
in designation, conversion, redemption and share distribution provisions not
greater than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series A
Telephony Group Common Stock and Series B Telephony Group Common Stock, with
holders of shares of Series B Telephony Group Common Stock receiving the class
or series having the higher relative voting rights, or (ii) redeem shares of
Series A Telephony Group Common Stock and Series B Telephony Group Common Stock
in exchange for shares of a single class of common stock of each Telephony Group
Subsidiary without distinction between the shares distributed to the holders of
the Series A Telephony Group Common Stock and Series B Telephony Group Common
Stock.
(b) MANDATORY DIVIDEND, REDEMPTION OR CONVERSION IN CASE OF DISPOSITION
OF TELEPHONY GROUP ASSETS. In the event of the Disposition, in one transaction
or a series of related transactions, by the Corporation and its subsidiaries of
all or substantially all of the properties and assets of the Telephony Group to
one or more persons, entities or groups (other than (w) in connection with the
Disposition by the Corporation of all of the Corporation's properties and assets
in one transaction or a series of related transactions in connection with the
liquidation, dissolution or winding up of the Corporation within the meaning of
paragraph 7 of this Section E, (x) a dividend, other distribution or redemption
in accordance with any provision of paragraph 3, paragraph 4, paragraph 6(a) or
paragraph 7 of this Section E, (y) to any person, entity or group which the
Corporation, directly or indirectly, after giving effect to the Disposition,
controls or (z) in connection with a Related Business Transaction), the
Corporation shall, on or prior to the 85th Trading Day following the
consummation of such Disposition, either:
(i) subject to paragraph 3(c) of this Section E, declare and pay a
dividend in cash and/or in securities or other property (other than a
dividend or distribution of Common Stock) to the holders of the outstanding
shares of Series A Telephony Group Common Stock and Series B Telephony
Group Common Stock equally on a share for share basis (subject to the last
sentence of this Section 6(b)), in an aggregate amount equal to the product
of the Telephony Group Outstanding Interest Fraction as of the record date
for determining the holders entitled to receive such dividend and the
Telephony Group Net Proceeds of such Disposition; or
(ii) provided that there are assets of the Corporation legally
available therefor and the Telephony Group Available Dividend Amount would
have been sufficient to pay a dividend in lieu thereof pursuant to clause
(i) of this paragraph 6(b), then:
(A) if such Disposition involves all (not merely substantially
all) of the properties and assets of the Telephony Group, redeem all
outstanding shares of Series A Telephony Group Common Stock and Series
B Telephony Group Common Stock in exchange for cash and/or securities
or other property (other than Common Stock) in an aggregate amount
equal to the product of the Telephony Group Outstanding Interest
Fraction as of the date of such redemption and the Telephony Group Net
Proceeds, such aggregate amount to be allocated (subject to the last
sentence of this paragraph 6(b)) to shares of Series A Telephony Group
Common Stock and Series B Telephony Group Common Stock in the ratio of
the number of shares of each such series outstanding (so that the
amount of consideration paid for the redemption of each share of
Series A Telephony Group Common Stock and each share of Series B
Telephony Group Common Stock is the same); or
(B) if such Disposition involves substantially all (but not
all) of the properties and assets of the Telephony Group, apply an
aggregate amount of cash and/or securities or other property (other
than Common Stock) equal to the product of the Telephony Group
Outstanding Interest Fraction as of the date shares are selected for
redemption and the Telephony Group Net Proceeds to the redemption of
outstanding shares of Series A Telephony Group Common Stock and Series
B Telephony Group Common Stock, such aggregate amount to be allocated
(subject to the last sentence of this paragraph 6(b)) to shares of
Series A Telephony Group Common Stock and Series B Telephony Group
Common Stock in the ratio of the number of shares of each such series
outstanding, and the number of shares of each such series to be
redeemed to equal the lesser of (x)
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the whole number nearest the number determined by dividing the aggregate
amount so allocated to the redemption of such series by the average
Market Value of one share of Series A Telephony Group Common Stock during
the ten-Trading Day period beginning on the 16th Trading Day following
the consummation of such Disposition and (y) the number of shares of such
series outstanding (so that the amount of consideration paid for the
redemption of each share of Series A Telephony Group Common Stock and
each share of Series B Telephony Group Common Stock is the same);
such redemption to be effected in accordance with the applicable provisions of
paragraph 6(d) of this Section E; or
(iii) convert (A) each outstanding share of Series A Telephony Group
Common Stock into a number (or fraction) of fully paid and nonassessable
shares of Series A TCI Group Common Stock and (B) each outstanding share of
Series B Telephony Group Common Stock into a number (or fraction) of fully
paid and nonassessable shares of Series B TCI Group Common Stock, in each case
equal to 110% of the average daily ratio (calculated to the nearest five
decimal places) of the Market Value of one share of Series A Telephony Group
Common Stock to the Market Value of one share of Series A TCI Group Common
Stock during the ten-Trading Day period referred to in clause (ii)(B) of this
paragraph 6(b).
For purposes of this paragraph 6(b):
(x) as of any date, "substantially all of the properties and assets of the
Telephony Group" shall mean a portion of such properties and assets that
represents at least 80% of the then-current market value (as determined by the
Board of Directors) of the properties and assets of the Telephony Group as of
such date;
(y) in the case of a Disposition of properties and assets in a series of
related transactions, such Disposition shall not be deemed to have been
consummated until the consummation of the last of such transactions; and
(z) the Corporation may pay the dividend or redemption price referred to
in clause (i) or (ii) of this subparagraph 6(b) either in the same form as the
proceeds of the Disposition were received or in any other combination of cash
or securities or other property (other than Common Stock) that the Board of
Directors determines will have an aggregate market value on a fully
distributed basis, of not less than the amount of the Telephony Group Net
Proceeds. If the dividend or redemption price is paid in the form of
securities of an issuer other than the Corporation, the Board of Directors may
determine either to (1) pay the dividend or redemption price in the form of
separate classes or series of securities, with one class or series of such
securities to holders of Series A Telephony Group Common Stock and another
class or series of securities to holders of Series B Telephony Group Common
Stock, provided that such securities (and, if such securities are convertible
into or exercisable or exchangeable for shares of another class or series of
securities, the securities so issuable upon such conversion, exercise or
exchange) do not differ in any respect other than their relative voting rights
and related differences in designation, conversion, redemption and share
distribution provisions, with holders of shares of Series B Telephony Group
Common Stock receiving the class or series having the higher relative voting
rights (without regard to whether such rights differ to a greater or lesser
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series A
Telephony Group Common Stock and the Series B Telephony Group Common Stock),
provided that if such securities constitute capital stock of a Subsidiary of
the Corporation, such rights shall not differ to a greater extent than the
corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Series A Telephony
Group Common Stock and Series B Telephony Group Common Stock, and otherwise
such securities shall be distributed on an equal per share basis, or (2) pay
the dividend or redemption price in the form of a single class of securities
without distinction between the shares received by the holders of Series A
Telephony Group Common Stock and Series B Telephony Group Common Stock.
(c) CERTAIN PROVISIONS RESPECTING CONVERTIBLE SECURITIES. Unless the
provisions of any class or series of Convertible Securities which are or become
convertible into or exercisable or exchangeable for shares of Series A Telephony
Group Common Stock or Series B Telephony Group Common Stock provide specifically
to the contrary, after any Conversion Date or Redemption Date on which all
outstanding shares of Series A Telephony Group Common Stock and Series B
Telephony Group Common Stock were converted or redeemed, any share of Series A
Telephony Group Common Stock or Series B Telephony Group Common Stock that is
issued on conversion, exercise or exchange of any such Convertible Securities
will, immediately upon issuance pursuant to such conversion, exercise or
exchange and without any notice or any other action on the part of the
Corporation or its
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Board of Directors or the holder of such share of Series A Telephony Group
Common Stock or Series B Telephony Group Common Stock, be redeemed in exchange
for, to the extent assets of the Corporation are legally available therefor, the
amount of $.01 per share in cash.
(d) GENERAL.
(i) Not later than the 10th Trading Day following the consummation of a
Disposition referred to in subparagraph 6(b) of this Section E, the Corporation
shall announce publicly by press release (A) the Telephony Group Net Proceeds of
such Disposition, (B) the number of outstanding shares of Series A Telephony
Group Common Stock and Series B Telephony Group Common Stock, (C) the number of
shares of Series A Telephony Group Common Stock and Series B Telephony Group
Common Stock into or for which Convertible Securities are then convertible,
exercisable or exchangeable and the conversion, exercise or exchange prices
thereof, and (D) the Telephony Group Outstanding Interest Fraction as of a
recent date preceding the date of such notice. Not earlier than the 26th Trading
Day and not later than the 30th Trading Day following the consummation of such
Disposition, the Corporation shall announce publicly by press release which of
the actions specified in clauses (i), (ii) or (iii) of paragraph 6(b) of this
Section E it has irrevocably determined to take.
(ii) If the Corporation determines to pay a dividend pursuant to clause
(i) of subparagraph 6(b) of this Section E, the Corporation shall, not later
than the 30th Trading Day following the consummation of such Disposition, cause
to be given to each holder of outstanding shares of Series A Telephony Group
Common Stock and Series B Telephony Group Common Stock, and to each holder of
Convertible Securities convertible into or exercisable or exchangeable for
shares of either such series (unless provision for notice is otherwise made
pursuant to the terms of such Convertible Securities), a notice setting forth
(A) the record date for determining holders entitled to receive such dividend,
which shall be not earlier than the 40th Trading Day and not later than the 50th
Trading Day following the consummation of such Disposition, (B) the anticipated
payment date of such dividend (which shall not be more than 85 Trading Days
following the consummation of such Disposition), (C) the kind of shares of
capital stock, cash and/or other securities or property to be distributed in
respect of shares of Series A Telephony Group Common Stock and Series B
Telephony Group Common Stock, (D) the Telephony Group Net Proceeds of such
Disposition, (E) the Telephony Group Outstanding Interest Fraction as of a
recent date preceding the date of such notice, (F) the number of outstanding
shares of Series A Telephony Group Common Stock and Series B Telephony Group
Common Stock and the number of shares of Series A Telephony Group Common Stock
and Series B Telephony Group Common Stock into or for which outstanding
Convertible Securities are then convertible, exercisable or exchangeable and the
conversion, exercise or exchange prices thereof and (G) in the case of a notice
to holders of Convertible Securities, a statement to the effect that holders of
such Convertible Securities shall be entitled to receive such dividend only if
they appropriately convert, exercise or exchange such Convertible Securities
prior to the record date referred to in clause (A) of this sentence. Such notice
shall be sent by first-class mail, postage prepaid, at such holder's address as
the same appears on the transfer books of the Corporation.
(iii) If the Corporation determines to undertake a redemption of shares of
Series A Telephony Group Common Stock and Series B Telephony Group Common Stock
following a Disposition of all (not merely substantially all) of the properties
and assets of the Telephony Group pursuant to clause (ii)(A) of paragraph 6(b)
of this Section E, the Corporation shall cause to be given to each holder of
outstanding shares of Series A Telephony Group Common Stock and Series B
Telephony Group Common Stock and to each holder of Convertible Securities
convertible into or exercisable or exchangeable for shares of either such series
(unless provision for notice is otherwise made pursuant to the terms of such
Convertible Securities), a notice setting forth (A) a statement that all shares
of Series A Telephony Group Common Stock and Series B Telephony Group Common
Stock outstanding on the Redemption Date shall be redeemed, (B) the Redemption
Date (which shall not be more than 85 Trading Days following the consummation of
such Disposition), (C) the kind of shares of capital stock, cash and/or other
securities or property to be paid as a redemption price in respect of shares of
Series A Telephony Group Common Stock and Series B Telephony Group Common Stock
outstanding on the Redemption Date, (D) the Telephony Group Net Proceeds of such
Disposition, (E) the Telephony Group Outstanding Interest Fraction as of a
recent date preceding the date of such notice, (F) the place or places where
certificates for shares of Series A Telephony Group Common Stock and Series B
Telephony Group Common Stock, properly endorsed or assigned for transfer (unless
the Corporation waives such requirement), are to be surrendered for delivery of
certificates for shares of such capital stock, cash and/or other securities or
property, (G) the number of outstanding shares of Series A Telephony Group
Common Stock and Series B Telephony Group
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Common Stock and the number of shares of Series A Telephony Group Common Stock
and Series B Telephony Group Common Stock into or for which outstanding
Convertible Securities are then convertible, exercisable or exchangeable and the
conversion, exercise or exchange prices thereof, and (H) in the case of a notice
to holders of Convertible Securities, a statement to the effect that holders of
such Convertible Securities shall be entitled to participate in such redemption
only if such holders appropriately convert, exercise or exchange such
Convertible Securities on or prior to the Redemption Date referred to in clause
(B) of this sentence and a statement as to what, if anything, such holders shall
be entitled to receive pursuant to the terms of such Convertible Securities or,
if applicable, paragraph 6(c) of this Section E if such holders convert,
exercise or exchange such Convertible Securities following such Redemption Date.
Such notice shall be sent by first-class mail, postage prepaid, not less than 35
Trading Days nor more than 45 Trading Days prior to the Redemption Date, at such
holder's address as the same appears on the transfer books of the Corporation.
(iv) If the Corporation determines to undertake a redemption of shares of
Series A Telephony Group Common Stock and Series B Telephony Group Common Stock
following a Disposition of substantially all (but not all) of the properties and
assets of the Telephony Group pursuant to clause (ii)(B) of paragraph 6(b) of
this Section E, the Corporation shall, not later than the 30th Trading Day
following the consummation of such Disposition, cause to be given to each holder
of record of outstanding shares of Series A Telephony Group Common Stock and
Series B Telephony Group Common Stock, and to each holder of Convertible
Securities convertible into or exercisable or exchangeable for shares of either
such series (unless provision for notice is otherwise made pursuant to the terms
of such Convertible Securities), a notice setting forth (A) a date not earlier
than the 40th Trading Day and not later than the 50th Trading Day following the
consummation of such Disposition which shall be the date on which shares of the
Series A Telephony Group Common Stock and Series B Telephony Group Common Stock
then outstanding shall be selected for redemption, (B) the anticipated
Redemption Date (which shall not be more than 85 Trading Days following the
consummation of such Disposition), (C) the kind of shares of capital stock, cash
and/or other securities or property to be paid as a redemption price in respect
of shares of Series A Telephony Group Common Stock and Series B Telephony Group
Common Stock selected for redemption, (D) the Telephony Group Net Proceeds of
such Disposition, (E) the Telephony Group Outstanding Interest Fraction as of a
recent date preceding the date of such notice, (F) the number of outstanding
shares of Series A Telephony Group Common Stock and Series B Telephony Group
Common Stock and the number of shares of Series A Telephony Group Common Stock
and Series B Telephony Group Common Stock into or for which outstanding
Convertible Securities are then convertible, exercisable or exchangeable and the
conversion or exercise prices thereof, (G) in the case of a notice to holders of
Convertible Securities, a statement to the effect that holders of such
Convertible Securities shall be entitled to participate in such selection for
redemption only if such holders appropriately convert, exercise or exchange such
Convertible Securities on or prior to the date referred to in clause (A) of this
sentence and a statement as to what, if anything, such holders shall be entitled
to receive pursuant to the terms of such Convertible Securities if such holders
convert, exercise or exchange such Convertible Securities following such date
and (H) a statement that the Corporation will not be required to register a
transfer of any shares of Series A Telephony Group Common Stock or Series B
Telephony Group Common Stock for a period of 15 Trading Days next preceding the
date referred to in clause (A) of this sentence. Promptly following the date
referred to in clause (A) of the preceding sentence, but not earlier than the
40th Trading Day and not later than the 50th Trading Day following the
consummation of such Disposition, the Corporation shall cause to be given to
each holder of shares of Series A Telephony Group Common Stock and Series B
Telephony Group Common Stock to be so redeemed, a notice setting forth (A) the
number of shares of Series A Telephony Group Common Stock and Series B Telephony
Group Common Stock held by such holder to be redeemed, (B) a statement that such
shares of Series A Telephony Group Common Stock and Series B Telephony Group
Common Stock shall be redeemed, (C) the Redemption Date (which shall not be more
than 85 Trading Days following the consummation of such Disposition), (D) the
kind and per share amount of shares of capital stock, cash and/or other
securities or property to be received by such holder with respect to each share
of such Series A Telephony Group Common Stock and Series B Telephony Group
Common Stock to be redeemed, including details as to the calculation thereof,
and (E) the place or places where certificates for shares of such Series A
Telephony Group Common Stock or Series B Telephony Group Common Stock, properly
endorsed or assigned for transfer (unless the Corporation waives such
requirement), are to be surrendered for delivery of certificates for shares of
such capital stock, cash and/or other securities or property. The notices
referred to in this clause (iv) shall be sent by first-class mail, postage
prepaid, at such holder's address as the same appears on the transfer books of
the Corporation. The outstanding shares of Series A Telephony Group Common Stock
and Series B Telephony Group Common Stock to be redeemed shall be redeemed by
the Corporation pro rata among the holders of Series A Telephony Group Common
Stock and Series B Telephony Group Common Stock or by such other method as may
be determined by the Board of Directors to be equitable.
(v) In the event of any conversion pursuant to paragraph 2(e) of this
Section E or pursuant to this paragraph 6 (other than pursuant to paragraph
6(c)), the Corporation shall cause to be given to each holder of outstanding
shares of Series A Telephony Group
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Common Stock and Series B Telephony Group Common Stock and to each holder of
Convertible Securities convertible into or exercisable or exchangeable for
shares of either such series (unless provision for such notice is otherwise made
pursuant to the terms of such Convertible Securities), a notice setting forth
(A) a statement that all outstanding shares of Series A Telephony Group Common
Stock and Series B Telephony Group Common Stock shall be converted, (B) the
Conversion Date (which shall not be more than 85 Trading Days following the
consummation of such Disposition in the event of a conversion pursuant to
paragraph 6(b) and which shall not be more than 120 days after the Appraisal
Date in the event of a conversion pursuant to paragraph 2(e)), (C) the per share
number of shares of Series A TCI Group Common Stock or Series B TCI Group Common
Stock, as applicable, to be received with respect to each share of Series A
Telephony Group Common Stock or Series B Telephony Group Common Stock, including
details as to the calculation thereof, (D) the place or places where
certificates for shares of Series A Telephony Group Common Stock or Series B
Telephony Group Common Stock, properly endorsed or assigned for transfer (unless
the Corporation shall waive such requirement), are to be surrendered, (E) the
number of outstanding shares of Series A Telephony Group Common Stock and Series
B Telephony Group Common Stock and the number of shares of Series A Telephony
Group Common Stock and Series B Telephony Group Common Stock into or for which
outstanding Convertible Securities are then convertible, exercisable or
exchangeable and the conversion, exercise or exchange prices thereof and (F) in
the case of a notice to holders of Convertible Securities, a statement to the
effect that holders of such Convertible Securities shall be entitled to
participate in such conversion only if such holders appropriately convert,
exercise or exchange such Convertible Securities on or prior to the Conversion
Date referred to in clause (B) of this sentence and a statement as to what, if
anything, such holders shall be entitled to receive pursuant to the terms of
such Convertible Securities or, if applicable, paragraph 6(c) of this Section E
if such holders convert, exercise or exchange such Convertible Securities
following such Conversion Date. Such notice shall be sent by first-class mail,
postage prepaid, not less than 35 Trading Days nor more than 45 Trading Days
prior to the Conversion Date, at such holder's address as the same appears on
the transfer books of the Corporation.
(vi) If the Corporation determines to redeem shares of Series A Telephony
Group Common Stock and Series B Telephony Group Common Stock pursuant to
subparagraph (a) of this paragraph 6, the Corporation shall promptly cause to be
given to each holder of Series A Telephony Group Common Stock and Series B
Telephony Group Common Stock and to each holder of Convertible Securities
convertible into or exercisable or exchangeable for shares of either such series
(unless provision for such notice is otherwise made pursuant to the terms of
such Convertible Securities), a notice setting forth (A) a statement that all
outstanding shares of Series A Telephony Group Common Stock and Series B
Telephony Group Common Stock shall be redeemed in exchange for shares of common
stock of the Telephony Group Subsidiaries, (B) the Redemption Date, (C) the
Telephony Group Outstanding Interest Fraction as of a recent date preceding the
date of such notice, (D) the place or places where certificates for shares of
Series A Telephony Group Common Stock and Series B Telephony Group Common Stock,
properly endorsed or assigned for transfer (unless the Corporation shall waive
such requirement), are to be surrendered for delivery of certificates for shares
of common stock of the Telephony Group Subsidiaries, (E) the number of
outstanding shares of Series A Telephony Group Common Stock and Series B
Telephony Group Common Stock and the number of shares of Series A Telephony
Group Common Stock and Series B Telephony Group Common Stock into or for which
outstanding Convertible Securities are then convertible, exercisable or
exchangeable and the conversion, exercise or exchange prices thereof, and (F) in
the case of a notice to holders of Convertible Securities, a statement to the
effect that holders of such Convertible Securities shall be entitled to
participate in such redemption only if such holders appropriately convert,
exercise or exchange such Convertible Securities on or prior to the Redemption
Date referred to in clause (B) of this sentence and a statement as to what, if
anything, such holders shall be entitled to receive pursuant to the terms of
such Convertible Securities or, if applicable, paragraph 6(c) of this Section E
if such holders convert, exercise or exchange such Convertible Securities
following the Redemption Date. Such notice shall be sent by first-class mail,
postage prepaid, not less than 35 Trading Days nor more than 45 Trading Days
prior to the Redemption Date, at such holder's address as the same appears on
the transfer books of the Corporation.
(vii) Neither the failure to mail any notice required by this paragraph
6(d) to any particular holder of Series A Telephony Group Common Stock, Series B
Telephony Group Common Stock or of Convertible Securities nor any defect therein
shall affect the sufficiency thereof with respect to any other holder of
outstanding shares of Series A Telephony Group Common Stock or Series B
Telephony Group Common Stock or of Convertible Securities, or the validity of
any conversion or redemption.
(viii) The Corporation shall not be required to issue or deliver fractional
shares of any class of capital stock or any fractional securities to any holder
of Series A Telephony Group Common Stock or Series B Telephony Group Common
Stock upon any conversion, redemption, dividend or other distribution pursuant
to paragraph 2(e) of this Section E or pursuant to this paragraph 6. In
connection with the determination of the number of shares of any class of
capital stock that shall be issuable or the amount of
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securities that shall be deliverable to any holder of record upon any such
conversion, redemption, dividend or other distribution (including any fractions
of shares or securities), the Corporation may aggregate the number of shares of
Series A Telephony Group Common Stock or Series B Telephony Group Common Stock
held at the relevant time by such holder of record. If the number of shares of
any class of capital stock or the amount of securities remaining to be issued or
delivered to any holder of Series A Telephony Group Common Stock or Series B
Telephony Group Common Stock is a fraction, the Corporation shall, if such
fraction is not issued or delivered to such holder, pay a cash adjustment in
respect of such fraction in an amount equal to the fair market value of such
fraction on the fifth Trading Day prior to the date such payment is to be made
(without interest). For purposes of the preceding sentence, "fair market value"
of any fraction shall be (A) in the case of any fraction of a share of capital
stock of the Corporation, the product of such fraction and the Market Value of
one share of such capital stock and (B) in the case of any other fractional
security, such value as is determined by the Board of Directors.
(ix) No adjustments in respect of dividends shall be made upon the
conversion or redemption of any shares of Series A Telephony Group Common Stock
or Series B Telephony Group Common Stock; provided, however, that if the
Conversion Date or the Redemption Date with respect to the Series A Telephony
Group Common Stock or Series B Telephony Group Common Stock shall be subsequent
to the record date for the payment of a dividend or other distribution thereon
or with respect thereto, the holders of shares of Series A Telephony Group
Common Stock or Series B Telephony Group Common Stock at the close of business
on such record date shall be entitled to receive the dividend or other
distribution payable on or with respect to such shares on the date set for
payment of such dividend or other distribution, notwithstanding the conversion
or redemption of such shares or the Corporation's default in payment of the
dividend or distribution due on such date.
(x) Before any holder of shares of Series A Telephony Group Common Stock
or Series B Telephony Group Common Stock shall be entitled to receive
certificates representing shares of any kind of capital stock or cash and/or
securities or other property to be received by such holder with respect to
shares of Series A Telephony Group Common Stock or Series B Telephony Group
Common Stock pursuant to paragraph 2(e) of this Section E or pursuant to this
paragraph 6, such holder shall surrender at such place as the Corporation shall
specify certificates for such shares of Series A Telephony Group Common Stock or
Series B Telephony Group Common Stock, properly endorsed or assigned for
transfer (unless the Corporation shall waive such requirement). The Corporation
shall as soon as practicable after such surrender of certificates representing
shares of Series A Telephony Group Common Stock or Series B Telephony Group
Common Stock deliver to the person for whose account shares of Series A
Telephony Group Common Stock or Series B Telephony Group Common Stock were so
surrendered, or to the nominee or nominees of such person, certificates
representing the number of whole shares of the kind of capital stock or cash
and/or securities or other property to which such person shall be entitled as
aforesaid, together with any payment for fractional securities contemplated by
paragraph 6(d)(viii). If less than all of the shares of Series A Telephony Group
Common Stock or Series B Telephony Group Common Stock represented by any one
certificate are to be redeemed, the Corporation shall issue and deliver a new
certificate for the shares of Series A Telephony Group Common Stock or Series B
Telephony Group Common Stock not redeemed. The Corporation shall not be required
to register a transfer of (1) any shares of Series A Telephony Group Common
Stock or Series B Telephony Group Common Stock for a period of 15 Trading Days
next preceding any selection of shares of Series A Telephony Group Common Stock
or Series B Telephony Group Common Stock to be redeemed or (2) any shares of
Series A Telephony Group Common Stock or Series B Telephony Group Common Stock
selected or called for redemption. Shares selected for redemption may not
thereafter be converted pursuant to paragraph 2(c) of this Section E.
(xi) From and after any applicable Conversion Date or Redemption Date, all
rights of a holder of shares of Series A Telephony Group Common Stock or Series
B Telephony Group Common Stock that were converted or redeemed shall cease
except for the right, upon surrender of the certificates representing shares of
Series A Telephony Group Common Stock or Series B Telephony Group Common Stock,
to receive certificates representing shares of the kind and amount of capital
stock or cash and/or securities or other property for which such shares were
converted or redeemed, together with any payment for fractional securities
contemplated by paragraph 6(d)(viii) of this Section E and such holder shall
have no other or further rights in respect of the shares of Series A Telephony
Group Common Stock or Series B Telephony Group Common Stock so converted or
redeemed, including, but not limited to, any rights with respect to any cash,
securities or other properties which are reserved or otherwise designated by the
Corporation as being held for the satisfaction of the Corporation's obligations
to pay or deliver any cash, securities or other property upon the conversion,
exercise or exchange of any Convertible Securities outstanding as of the date of
such conversion or redemption. No
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holder of a certificate that, immediately prior to the applicable Conversion
Date or Redemption Date for the Series A Telephony Group Common Stock or Series
B Telephony Group Common Stock, represented shares of Series A Telephony Group
Common Stock or Series B Telephony Group Common Stock shall be entitled to
receive any dividend or other distribution with respect to shares of any kind of
capital stock into or in exchange for which the Series A Telephony Group Common
Stock or Series B Telephony Group Common Stock was converted or redeemed until
surrender of such holder's certificate for a certificate or certificates
representing shares of such kind of capital stock. Upon such surrender, there
shall be paid to the holder the amount of any dividends or other distributions
(without interest) which theretofore became payable with respect to a record
date after the Conversion Date or Redemption Date, as the case may be, but that
were not paid by reason of the foregoing, with respect to the number of whole
shares of the kind of capital stock represented by the certificate or
certificates issued upon such surrender. From and after a Conversion Date or
Redemption Date, as the case may be, for any shares of Series A Telephony Group
Common Stock or Series B Telephony Group Common Stock, the Corporation shall,
however, be entitled to treat the certificates for shares of Series A Telephony
Group Common Stock or Series B Telephony Group Common Stock that have not yet
been surrendered for conversion or redemption as evidencing the ownership of the
number of whole shares of the kind or kinds of capital stock for which the
shares of Series A Telephony Group Common Stock or Series B Telephony Group
Common Stock represented by such certificates shall have been converted or
redeemed, notwithstanding the failure to surrender such certificates.
(xii) The Corporation shall pay any and all documentary, stamp or similar
issue or transfer taxes that may be payable in respect of the issue or delivery
of any shares of capital stock and/or other securities on conversion or
redemption of shares of Series A Telephony Group Common Stock or Series B
Telephony Group Common Stock pursuant to this Section E. The Corporation shall
not, however, be required to pay any tax that may be payable in respect of any
transfer involved in the issue and delivery of any shares of capital stock in a
name other than that in which the shares of Series A Telephony Group Common
Stock or Series B Telephony Group Common Stock so converted or redeemed were
registered and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any such
tax, or has established to the satisfaction of the Corporation that such tax has
been paid.
7. Liquidation.
In the event of a liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the Corporation and subject to the
prior payment in full of the preferential amounts to which any class or series
of Preferred Stock is entitled, (a) the holders of the shares of Series A TCI
Group Common Stock and the holders of the shares of Series B TCI Group Common
Stock shall share equally, on a share for share basis, in a percentage of the
funds of the Corporation remaining for distribution to its common stockholders
equal to 100% multiplied by the average daily ratio (expressed as a decimal) of
W/Z for the 20-Trading Day period ending on the Trading Day prior to the date of
the public announcement of such liquidation, dissolution or winding up, (b) the
holders of the shares of Series A Liberty Media Group Common Stock and the
holders of the shares of Series B Liberty Media Group Common Stock shall share
equally, on a share for share basis, in a percentage of the funds of the
Corporation remaining for distribution to its common stockholders equal to 100%
multiplied by the average daily ratio (expressed as a decimal) of X/Z for such
20-Trading Day period, and (c) the holders of the shares of Series A Telephony
Group Common Stock and the holders of the Series B Telephony Group Common Stock
shall share equally, on a share for share basis, in a percentage of the funds of
the Corporation remaining for distribution to its common stockholders equal to
100% multiplied by the average daily ratio (expressed as a decimal) of Y/Z for
such 20-Trading Day period, where W is the aggregate Market Capitalization of
the Series A TCI Group Common Stock and the Series B TCI Group Common Stock, X
is the aggregate Market Capitalization of the Series A Liberty Media Group
Common Stock and the Series B Liberty Media Group Common Stock, Y is the
aggregate Market Capitalization of the Series A Telephony Group Common Stock and
the Series B Telephony Group Common Stock, and Z is the aggregate Market
Capitalization of the Series A TCI Group Common Stock, the Series B TCI Group
Common Stock, the Series A Liberty Media Group Common Stock, the Series B
Liberty Media Group Common Stock, the Series A Telephony Group Common Stock and
the Series B Telephony Group Common Stock. Neither the consolidation or merger
of the Corporation with or into any other corporation or corporations nor the
sale, transfer or lease of all or substantially all of the assets of the
Corporation shall itself be deemed to be a liquidation, dissolution or winding
up of the Corporation within the meaning of this paragraph 7.
8. Determinations by the Board of Directors.
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Any determinations made by the Board of Directors under any provision in
this Section E shall be final and binding on all stockholders of the
Corporation, except as may otherwise be required by law. The Corporation shall
prepare a statement of any such determination by the Board of Directors
respecting the fair market value of any properties, assets or securities and
shall file such statement with the Secretary of the Corporation.
9. Certain Definitions.
Unless the context otherwise requires, the terms defined in this paragraph
9 shall have, for all purposes of this Section E, the meanings herein specified:
"Adjusted Liberty Media Group Outstanding Interest Fraction," as of
any date, shall mean a fraction the numerator of which is the aggregate
number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock outstanding on such date and the
denominator of which is the sum of (a) such aggregate number of shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock outstanding on such date, (b) the Number of Shares Issuable
with Respect to the Liberty Media Group Inter-Group Interest as of such
date, (c) the aggregate number of shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock issuable,
determined as of such date, upon conversion, exercise or exchange of Pre-
Distribution Convertible Securities and (d) the number of Committed
Acquisition Shares issuable, determined as of such date.
"Appraisal Date," with respect to any determination of the Liberty
Media Group Private Market Value or the Telephony Group Private Market
Value, shall mean the last day of the calendar month preceding the month in
which the Selection Date occurs.
"Appraiser" means each of the First Appraiser, the Second Appraiser
and the Mutually Designated Appraiser.
"Committed Acquisition Shares" shall mean (a) the shares of Series A
Liberty Media Group Common Stock that the Corporation had, prior to the
record date for the Liberty Media Group Distribution, agreed to issue, but
as of such record date had not issued, and (b) the shares of Series A
Liberty Media Group Common Stock that are issuable upon conversion,
exercise or exchange of Convertible Securities that the Corporation had,
prior to the record date for the Liberty Media Group Distribution, agreed
to issue, but as of such record date has not issued, in each case including
obligations of the Corporation to issue shares of the Corporation's Class A
Common Stock, par value $1.00 per share, which as a result of the Liberty
Media Group Distribution, constitute obligations to issue, among other
securities, Series A Liberty Media Group Common Stock or Convertible
Securities which are convertible into or exercisable or exchangeable for
Series A Liberty Media Group Common Stock; provided, however, that
Committed Acquisition Shares shall not include any shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common
Stock issuable upon conversion, exercise or exchange of Pre-Distribution
Convertible Securities. The type and amount of Committed Acquisition Shares
issuable shall be appropriately adjusted to reflect subdivisions and
combinations of the Series A Liberty Media Group Common Stock and dividends
or distributions of shares of Series A Liberty Media Group Common Stock or
Series B Liberty Media Group Common Stock to holders of Series A Liberty
Media Group Common Stock and other reclassifications of the Series A
Liberty Media Group Common Stock, in each case occurring (or the record
date for which it occurs) after the Liberty Media Group Distribution.
"Conversion Date" shall mean any date fixed by the Board of Directors
for a conversion of shares of (i) Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock, or (ii) Series A Telephony
Group Common Stock and Series B Telephony Group Common Stock, as the case
may be, as set forth in a notice to holders of the applicable series of
Common Stock pursuant to paragraph 5(d) or 6(d), as applicable, of this
Section E.
"Convertible Securities" shall mean any securities of the Corporation
(other than any series of Common Stock) that are convertible into,
exchangeable for or evidence the right to purchase any shares of any series
of Common Stock, whether upon conversion, exercise, exchange, pursuant to
antidilution provisions of such securities or otherwise.
"Corporation Earnings (Loss) Attributable to the Liberty Media Group,"
for any period, shall mean the net earnings or loss of
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the Liberty Media Group for such period determined on a basis consistent
with the determination of the net earnings or loss of the Liberty Media
Group for such period as presented in the combined financial statements of
the Liberty Media Group for such period, including income and expenses of
the Corporation attributed to the operations of the Liberty Media Group on
a substantially consistent basis, including without limitation, corporate
administrative costs, net interest and income taxes.
"Corporation Earnings (Loss) Attributable to the TCI Group," for any
period, shall mean the net earnings or loss of the TCI Group for such
period determined on a basis consistent with the determination of the net
earnings or loss of the TCI Group for such period as presented in the
combined financial statements of the TCI Group for such period, including
income and expenses of the Corporation attributed to the operations of the
TCI Group on a substantially consistent basis, including without
limitation, corporate administrative costs, net interest and income taxes.
"Corporation Earnings (Loss) Attributable to the Telephony Group," for
any period, shall mean the net earnings or loss of the Telephony Group for
such period determined on a basis consistent with the determination of the
net earnings or loss of the Telephony Group for such period as presented in
the combined financial statements of the Telephony Group for such period,
including income and expenses of the Corporation attributed to the
operations of the Telephony Group on a substantially consistent basis,
including without limitation, corporate administrative costs, net interest
and income taxes.
"Disposition" shall mean the sale, transfer, assignment or other
disposition (whether by merger, consolidation, sale or contribution of
assets or stock or otherwise) of properties or assets.
"First Appraiser" means, with respect to any determination of the
Liberty Media Group Private Market Value or the Telephony Group Private
Market Value, an investment banking firm of recognized national standing
selected by the Corporation to make such determination.
"Higher Appraised Amount," with respect to any determination of the
Liberty Media Group Private Market Value or the Telephony Group Private
Market Value, the higher of the respective final views of the First
Appraiser and the Second Appraiser as to such private market value.
"Independent Committee" means a committee of the Board of Directors of
the Corporation formed in order to select the Second Appraiser, all of
whose members are "independent directors" as determined under Nasdaq
National Market rules.
"Liberty Media Group" shall mean, as of any date that any shares of
Series A Liberty Media Group Common Stock or Series B Liberty Media Group
Common Stock have been issued and continue to be outstanding:
(a) the interest of the Corporation or of any of its subsidiaries in
Liberty Media Corporation or any of its subsidiaries (including any
successor thereto by merger, consolidation or sale of all or substantially
all of its assets, whether or not in connection with a Related Business
Transaction) and their respective properties and assets,
(b) all assets and liabilities of the Corporation or any of its
subsidiaries to the extent attributed to any of the properties or assets
referred to in clause (a) of this sentence, whether or not such assets or
liabilities are assets and liabilities of Liberty Media Corporation or any
of its subsidiaries (or a successor as described in clause (a) of this
sentence),
(c) all assets and properties contributed or otherwise transferred to
the Liberty Media Group from the TCI Group, and
(d) the interest of the Corporation or any of its subsidiaries in the
businesses, assets and liabilities acquired by the Corporation or any of
its subsidiaries for the Liberty Media Group, as determined by the Board of
Directors;
provided that (i) from and after any dividend or other distribution with
respect to any shares of Series A Liberty Media Group Common Stock or
Series B Liberty Media Group Common Stock (other than a dividend or other
distribution payable in shares of Series A Liberty Media Group Common Stock
or Series B Liberty Media Group Common Stock, with respect to which
adjustment shall be made as provided in clause (a) of the definition of
"Number of Shares Issuable with Respect to the Liberty Media Group
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Inter-Group Interest," or in other securities of the Corporation attributed
to the Liberty Media Group for which provision shall be made as set forth
in the penultimate sentence of this definition), the Liberty Media Group
shall no longer include an amount of assets or properties equal to the
aggregate amount of such kind of assets or properties so paid in respect of
shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock multiplied by a fraction the numerator of which is
equal to the Liberty Media Group Inter-Group Interest Fraction in effect
immediately prior to the record date for such dividend or other
distribution and the denominator of which is equal to the Liberty Media
Group Outstanding Interest Fraction in effect immediately prior to the
record date for such dividend or other distribution and (ii) from and after
any transfer of assets or properties from the Liberty Media Group to the
TCI Group, the Liberty Media Group shall no longer include the assets or
properties so transferred. If the Corporation shall pay a dividend or make
any other distribution with respect to shares of Series A Liberty Media
Group Common Stock or Series B Liberty Media Group Common Stock payable in
securities of the Corporation attributed to the Liberty Media Group other
than Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock, the TCI Group shall be deemed to hold an amount of such
other securities equal to the amount so distributed multiplied by the
fraction specified in clause (i) of this definition (determined as of a
time immediately prior to the record date for such dividend or other
distribution), and to the extent interest or dividends are paid or other
distributions are made on such other securities so distributed to the
holders of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock, the Liberty Media Group shall no longer include a
corresponding ratable amount of the kind of assets paid as such interest or
dividends or other distributions in respect of such securities so deemed to
be held by the TCI Group. The Corporation may also, to the extent any such
other securities constitute Convertible Securities which are at the time
convertible, exercisable or exchangeable, cause such Convertible Securities
deemed to be held by the TCI Group to be deemed to be converted, exercised
or exchanged (and to the extent the terms of such Convertible Securities
require payment or delivery of consideration in order to effect such
conversion, exercise or exchange, the Liberty Media Group shall in such
case include an amount of the kind of properties or assets required to be
paid or delivered as such consideration for the amount of the Convertible
Securities deemed converted, exercised or exchanged as if such Convertible
Securities were outstanding), in which case such Convertible Securities
shall no longer be deemed to be held by the TCI Group or attributed to the
Liberty Media Group.
"Liberty Media Group Available Dividend Amount," as of any date, shall
mean the product of the Liberty Media Group Outstanding Interest Fraction
and either: (a) the excess of (i) an amount equal to the total assets of
the Liberty Media Group less the total liabilities (not including preferred
stock) of the Liberty Media Group as of such date over (ii) the aggregate
par value of, or any greater amount determined to be capital in respect of,
all outstanding shares of Series A Liberty Media Group Common Stock, Series
B Liberty Media Group Common Stock and each class or series of Preferred
Stock attributed to the Liberty Media Group or (b) in case there is no such
excess, an amount equal to the Corporation Earnings (Loss) Attributable to
the Liberty Media Group (if positive) for the fiscal year in which such
date occurs and/or the preceding fiscal year.
"Liberty Media Group Distribution" shall mean the share distribution
of shares of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock made to the holders of record of Series A TCI
Group Common Stock and Series B TCI Group Common Stock as of the close of
business on August 4, 1995.
"Liberty Media Group Inter-Group Interest Fraction," as of any date,
shall mean a fraction the numerator of which is the Number of Shares
Issuable with Respect to the Liberty Media Group Inter-Group Interest as of
such date and the denominator of which is the sum of (a) such Number of
Shares Issuable with Respect to the Liberty Media Group Inter-Group
Interest as of such date and (b) the aggregate number of shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock outstanding as of such date.
"Liberty Media Group Net Proceeds" shall mean, as of any date, with
respect to any Disposition of any of the properties and assets of the
Liberty Media Group, an amount, if any, equal to the gross proceeds of such
Disposition after any payment of, or reasonable provision for, (a) any
taxes payable by the Corporation in respect of such Disposition or in
respect of any resulting dividend or redemption pursuant to clause (i) or
(ii), respectively, of paragraph 5(b) of this Section E (or which would
have been payable but for the utilization of tax benefits attributable to
the TCI Group or the Telephony Group), (b) any transaction costs,
including, without limitation, any legal, investment banking and accounting
fees and expenses and (c) any liabilities and other obligations (contingent
or otherwise) of, or attributed to, the Liberty Media Group, including,
without limitation, any indemnity or guarantee obligations incurred in
connection with the Disposition or any liabilities for future purchase
price adjustments and any
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preferential amounts plus any accumulated and unpaid dividends and other
obligations (without duplication of amounts allocated for the satisfaction
of the Corporation's obligations with respect to Pre-Distribution
Convertible Securities and Committed Acquisition Shares issuable which are
included in the determination of the Adjusted Liberty Media Group
Outstanding Interest Fraction) in respect of Preferred Stock attributed to
the Liberty Media Group. For purposes of this definition, any properties
and assets of the Liberty Media Group remaining after such Disposition
shall constitute "reasonable provision" for such amount of taxes, costs and
liabilities (contingent or otherwise) as can be supported by such
properties and assets. To the extent the proceeds of any Disposition
include any securities or other property other than cash, the Board of
Directors shall determine the value of such securities or property,
including for the purpose of determining the equivalent value thereof if
the Board of Directors determines to pay a dividend or redemption price in
cash or securities or other property as provided in clause (z) of paragraph
5(b) of this Section E.
"Liberty Media Group Outstanding Interest Fraction," as of any date,
shall mean a fraction the numerator of which is the aggregate number of
shares of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock outstanding on such date and the denominator of
which is the sum of (a) such aggregate number of shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock
outstanding on such date and (b) the Number of Shares Issuable with Respect
to the Liberty Media Group Inter-Group Interest as of such date.
"Liberty Media Group Private Market Value" shall mean an amount equal
to the private market value of the Liberty Media Group as of the Appraisal
Date. Each of the First Appraiser, the Second Appraiser and the Mutually
Designated Appraiser, if any, shall be instructed to determine the private
market value of the Liberty Media Group as of the Appraisal Date based upon
the amount a willing purchaser would pay to a willing seller, in an arm's
length transaction, if it were acquiring the Liberty Media Group, as if the
Liberty Media Group were a publicly traded non-controlled corporation and
the purchaser was acquiring all of the capital stock of such corporation,
and without consideration of any potential regulatory constraints limiting
the potential purchasers of the Liberty Media Group other than that which
would have existed if the Liberty Media Group were a publicly traded non-
controlled entity.
"Lower Appraised Amount," with respect to any determination of the
Liberty Media Group Private Market Value or the Telephony Group Private
Market Value, the lower of the respective final views of the First
Appraiser and the Second Appraiser as to such private market value.
"Market Capitalization" of any class or series of capital stock of the
Corporation on any Trading Day shall mean the product of (i) the Market
Value of one share of such class or series on such Trading Day and (ii) the
number of shares of such class or series outstanding on such Trading Day.
"Market Value" of any class or series of capital stock of the
Corporation on any day shall mean the average of the high and low reported
sales prices regular way of a share of such class or series on such day (if
such day is a Trading Day, and if such day is not a Trading Day, on the
Trading Day immediately preceding such day) or in case no such reported
sale takes place on such Trading Day the average of the reported closing
bid and asked prices regular way of a share of such class or series on such
Trading Day, in either case on the Nasdaq National Market, or if the shares
of such class or series are not quoted on such Nasdaq National Market on
such Trading Day, the average of the closing bid and asked prices of a
share of such class or series in the over-the-counter market on such
Trading Day as furnished by any New York Stock Exchange member firm
selected from time to time by the Corporation, or if such closing bid and
asked prices are not made available by any such New York Stock Exchange
member firm on such Trading Day, the market value of a share of such class
or series as determined by the Board of Directors; provided that for
purposes of determining the ratios set forth in paragraphs 2(d), 2(e),
5(b), 6(b) and 7 of this Section E, (a) the "Market Value" of any share of
any series of Common Stock on any day prior to the "ex" date or any similar
date for any dividend or distribution paid or to be paid with respect to
such series of Common Stock shall be reduced by the fair market value of
the per share amount of such dividend or distribution as determined by the
Board of Directors and (b) the "Market Value" of any share of any series of
Common Stock on any day prior to (i) the effective date of any subdivision
(by stock split or otherwise) or combination (by reverse stock split or
otherwise) of outstanding shares of such series of Common Stock or (ii) the
"ex" date or any similar date for any dividend or distribution with respect
to any such series of Common Stock in shares of such series of Common Stock
shall be appropriately adjusted to reflect such subdivision, combination,
dividend or distribution.
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"Mutually Appraised Amount," with respect to any determination of the
Liberty Media Group Private Market Value or the Telephony Group Private
Market Value, the determination by the Mutually Designated Appraiser of
such private market value.
"Mutually Designated Appraiser" shall mean, if required with respect
to any determination of the Liberty Media Group Private Market Value or the
Telephony Group Private Market Value, the investment banking firm of
recognized national standing jointly designated by the First Appraiser and
the Second Appraiser to make such determination.
"Number of Shares Issuable with Respect to the Liberty Media Group
Inter-Group Interest" after the Liberty Media Group Distribution shall be
zero and shall from time to time thereafter, as applicable, be
(a) adjusted as appropriate to reflect subdivisions (by stock split
or otherwise) and combinations (by reverse stock split or otherwise) of the
Series A Liberty Media Group Common Stock and dividends or distributions of
shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock to holders of Series A Liberty Media Group Common
Stock and other reclassifications of Series A Liberty Media Group Common
Stock,
(b) decreased (but not to less than zero) by (i) the aggregate number
of shares of Series A Liberty Media Group Common Stock issued or sold by
the Corporation after the Liberty Media Group Distribution other than
Committed Acquisition Shares, the proceeds of which are attributed to the
TCI Group, (ii) the aggregate number of shares of Series A Liberty Media
Group Common Stock issued or delivered upon conversion, exercise or
exchange of Convertible Securities (other than Pre-Distribution Convertible
Securities and Convertible Securities which are convertible into or
exercisable or exchangeable for Committed Acquisition Shares), the proceeds
of which are attributed to the TCI Group, (iii) the aggregate number of
shares of Series A Liberty Media Group Common Stock issued or delivered by
the Corporation as a dividend or distribution to holders of Series A TCI
Group Common Stock and Series B TCI Group Common Stock, (iv) the aggregate
number of shares of Series A Liberty Media Group Common Stock issued or
delivered upon the conversion, exercise or exchange of any Convertible
Securities (other than Pre-Distribution Convertible Securities and
Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares) issued or delivered by the
Corporation after the Liberty Media Group Distribution as a dividend or
distribution or by reclassification or exchange to holders of Series A TCI
Group Common Stock and Series B TCI Group Common Stock and (v) the
aggregate number of shares of Series A Liberty Media Group Common Stock
(rounded, if necessary, to the nearest whole number), equal to the
aggregate fair value (as determined by the Board of Directors) of assets or
properties attributed to the Liberty Media Group that are transferred from
the Liberty Media Group to the TCI Group in consideration of a reduction in
the Number of Shares Issuable with Respect to the Liberty Media Group
Inter-Group Interest, divided by the Market Value of one share of Series A
Liberty Media Group Common Stock as of the date of such transfer, and
(c) increased by (i) the aggregate number of any shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock which are retired or otherwise cease to be outstanding following
their purchase with funds attributed to the TCI Group, (ii) a number
(rounded, if necessary, to the nearest whole number), equal to the fair
value (as determined by the Board of Directors) of assets or properties
theretofore attributed to the TCI Group that are contributed to the Liberty
Media Group in consideration of an increase in the Number of Shares
Issuable with Respect to the Liberty Media Group Inter-Group Interest,
divided by the Market Value of one share of Series A Liberty Media Group
Common Stock as of the date of such contribution and (iii) the aggregate
number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock into or for which Convertible Securities
are deemed to be converted, exercised or exchanged pursuant to the last
sentence of the definition of "TCI Group" in this paragraph 9. The
Corporation shall not issue or sell shares of Series B Liberty Media Group
Common Stock in respect of a reduction in the Number of Shares Issuable
with Respect to the Liberty Media Group Inter-Group Interest.
Whenever a change in the Number of Shares Issuable with Respect to the
Liberty Media Group Inter-Group Interest occurs, the Corporation shall
prepare and file a statement of such change with the Secretary of the
Corporation.
"Number of Shares Issuable with Respect to the Telephony Group Inter-
Group Interest" shall initially be that number of shares of Series A
Telephony Group Common Stock and Series B Telephony Group Common Stock
which represent 100% of the
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common stockholders' equity value of the Corporation attributable to the
Telephony Group, as determined by the Board of Directors of the Corporation
prior to the first issuance of shares of Series A Telephony Group Common
Stock or Series B Telephony Group Common Stock, and shall from time to time
thereafter, as applicable, be
(a) adjusted as appropriate to reflect subdivisions (by stock split
or otherwise) and combinations (by reverse stock split or otherwise) of the
Series A Telephony Group Common Stock and Series B Telephony Group Common
Stock and dividends or distributions of shares of Series A Telephony Group
Common Stock or Series B Telephony Group Common Stock to holders of Series
A Telephony Group Common Stock and Series B Telephony Group Common Stock
and other reclassifications of the Series A Telephony Group Common Stock
and Series B Telephony Group Common Stock,
(b) decreased (but not to less than zero) by (i) the aggregate number
of shares of Series A Telephony Group Common Stock or Series B Telephony
Group Common Stock issued or sold by the Corporation the proceeds of which
are attributed to the TCI Group, (ii) the aggregate number of shares of
Series A Telephony Group Common Stock or Series B Telephony Group Common
Stock issued or delivered upon conversion, exercise or exchange of
Convertible Securities, the proceeds of which are attributed to the TCI
Group, (iii) the aggregate number of shares of Series A Telephony Group
Common Stock or Series B Telephony Group Common Stock issued or delivered
by the Corporation as a dividend or distribution to holders of Series A TCI
Group Common Stock and Series B TCI Group Common Stock, (iv) the aggregate
number of shares of Series A Telephony Group Common Stock or Series B
Telephony Group Common Stock issued or delivered upon the conversion,
exercise or exchange of any Convertible Securities issued or delivered by
the Corporation as a dividend or distribution or by reclassification or
exchange to holders of Series A TCI Group Common Stock and Series B TCI
Group Common Stock and (v) the aggregate number of shares of Series A
Telephony Group Common Stock and Series B Telephony Group Common Stock
(rounded, if necessary, to the nearest whole number), equal to the
aggregate fair value (as determined by the Board of Directors) of assets or
properties attributed to the Telephony Group that are transferred from the
Telephony Group to the TCI Group in consideration of a reduction in the
Number of Shares Issuable with Respect to the Telephony Group Inter-Group
Interest, divided by the Market Value of one share of Series A Telephony
Group Common Stock as of the date of such transfer, and
(c) increased by (i) the aggregate number of any shares of Series A
Telephony Group Common Stock and Series B Telephony Group Common Stock
which are retired or otherwise cease to be outstanding following their
purchase with funds attributed to the TCI Group, (ii) a number (rounded, if
necessary, to the nearest whole number), equal to the fair value (as
determined by the Board of Directors) of assets or properties, theretofore
attributed to the TCI Group that are contributed to the Telephony Group in
consideration of an increase in the Number of Shares Issuable with Respect
to the Telephony Group Inter-Group Interest, divided by the Market Value of
one share of Series A Telephony Group Common Stock as of the date of such
contribution and (iii) the aggregate number of shares of Series A Telephony
Group Common Stock and Series B Telephony Group Common Stock into or for
which Convertible Securities are deemed to be converted, exercised or
exchanged pursuant to the last sentence of the definition of "TCI Group" in
this paragraph 9.
Whenever a change in the Number of Shares Issuable with Respect to the
Telephony Group Inter-Group Interest occurs, the Corporation shall prepare
and file a statement of such change with the Secretary of the Corporation.
"Pre-Distribution Convertible Securities" shall mean Convertible
Securities that were outstanding on the record date for the Liberty Media
Group Distribution and were, prior to such date, convertible into or
exercisable or exchangeable for shares of the Class A Common Stock, par
value $1.00 per share, of the Corporation.
"Qualifying Subsidiary" shall mean a Subsidiary of the Corporation in
which (x) the Corporation's ownership and voting interest is sufficient to
satisfy the requirements of the Internal Revenue Service for a distribution
of the Corporation's interest in such Subsidiary to the holders of Series A
Telephony Group Common Stock and Series B Telephony Group Common Stock that
is tax free to such holders or (y) the Corporation owns, directly or
indirectly, all of the issued and outstanding capital stock.
"Redemption Date" shall mean any date fixed for a redemption or
purchase of shares of (i) Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock or (ii) Series A Telephony Group
Common Stock and Series B Telephony Group Common Stock, as the case may be,
as set forth in a notice to holders of such series pursuant to this
Certificate.
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"Related Business Transaction" shall mean any Disposition of all or
substantially all of the properties and assets of the Liberty Media Group
or the Telephony Group, as the case may be, in which the Corporation
receives as proceeds of such Disposition primarily equity securities
(including, without limitation, capital stock, convertible securities,
partnership or limited partnership interests and other types of equity
securities, without regard to the voting power or contractual or other
management or governance rights related to such equity securities) of the
purchaser or acquiror of such assets and properties of the Liberty Media
Group or the Telephony Group, as the case may be, any entity which succeeds
(by merger, formation of a joint venture enterprise or otherwise) to such
assets and properties of the Liberty Media Group or the Telephony Group, as
the case may be, or a third party issuer, which purchaser, acquiror or
other issuer is engaged or proposes to engage primarily in one or more
businesses similar or complementary to the businesses conducted by the
Liberty Media Group or the Telephony Group, as the case may be, prior to
such Disposition, as determined in good faith by the Board of Directors.
"Second Appraiser" means, with respect to any determination of the
Liberty Media Group Private Market Value or the Telephony Group Private
Market Value, an investment banking firm of recognized national standing
selected by the Independent Committee to make such determination.
"Selection Date," with respect to any determination of the Liberty
Media Group Private Market Value or the Telephony Group Private Market
Value, shall mean the date upon which the Second Appraiser for such
determination is selected by the Independent Committee.
"Subsidiary" shall mean, with respect to any person or entity, any
corporation or partnership 50% or more of whose outstanding voting
securities or partnership interests, as the case may be, are directly or
indirectly owned by such person or entity.
"TCI Group" shall mean, as of any date:
(a) the interest of the Corporation or any of its subsidiaries in all
of the businesses in which the Corporation or any of its subsidiaries (or
any of their predecessors or successors) is or has been engaged, directly
or indirectly, and the respective assets and liabilities of the Corporation
or any of its subsidiaries, other than any businesses, assets or
liabilities of the Liberty Media Group or the Telephony Group;
(b) a proportionate interest in the businesses, assets and
liabilities of the Liberty Media Group equal to the Liberty Media Group
Inter-Group Interest Fraction as of such date;
(c) a proportionate interest in the businesses, assets and
liabilities of the Telephony Group equal to the Telephony Group Inter-Group
Interest Fraction as of such date;
(d) from and after any dividend or other distribution with respect to
shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock (other than a dividend or other distribution
payable in shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock, with respect to which adjustment shall be
made as provided in clause (a) of the definition of "Number of Shares
Issuable with Respect to the Liberty Media Group Inter-Group Interest," or
in other securities of the Corporation attributed to the Liberty Media
Group, for which provision shall be made as set forth in the penultimate
sentence of this definition), an amount of assets or properties theretofore
included in the Liberty Media Group equal to the aggregate amount of such
kind of assets or properties so paid in respect of such dividend or other
distribution with respect to shares of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock multiplied by a fraction
the numerator of which is equal to the Liberty Media Group Inter-Group
Interest Fraction in effect immediately prior to the record date for such
dividend or other distribution and the denominator of which is equal to the
Liberty Media Group Outstanding Interest Fraction in effect immediately
prior to the record date for such dividend or other distribution; and
(e) from and after any dividend or other distribution with respect to
shares of Series A Telephony Group Common Stock or Series B Telephony Group
Common Stock (other than a dividend or other distribution payable in shares
of Series A Telephony
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Group Common Stock or Series B Telephony Group Common Stock, with respect
to which adjustment shall be made as provided in clause (a) of the
definition of "Number of Shares Issuable with Respect to the Telephony
Group Inter-Group Interest," or in other securities of the Corporation
attributed to the Telephony Group, for which provision shall be made as set
forth in the penultimate sentence of this definition), an amount of assets
or properties theretofore included in the Telephony Group equal to the
aggregate amount of such kind of assets or properties so paid in respect of
such dividend or other distribution with respect to shares of Series A
Telephony Group Common Stock or Series B Telephony Group Common Stock
multiplied by a fraction the numerator of which is equal to the Telephony
Group Inter-Group Interest Fraction in effect immediately prior to the
record date for such dividend or other distribution and the denominator of
which is equal to the Telephony Group Outstanding Interest Fraction in
effect immediately prior to the record date for such dividend or other
distribution; and
(f) any assets or properties transferred from the Liberty Media Group
or the Telephony Group to the TCI Group;
provided that, from and after any contribution or transfer of any assets or
properties from the TCI Group to the Liberty Media Group or the Telephony
Group, the TCI Group shall no longer include such assets or properties so
contributed or transferred (other than pursuant to its interest in the
businesses, assets and liabilities of the Liberty Media Group or the
Telephony Group pursuant to clauses (b) or (c), respectively, above). If
(1) the Corporation shall pay a dividend or make any other distribution
with respect to shares of Series A Liberty Media Group Common Stock or
Series B Liberty Media Group Common Stock payable in other securities of
the Corporation attributed to the Liberty Media Group, the TCI Group shall
be deemed to hold an amount of such other securities equal to the amount so
distributed multiplied by the fraction specified in clause (d) of this
definition (determined as of a time immediately prior to the record date
for such dividend or other distribution), and to the extent interest or
dividends are paid or other distributions are made on such other securities
so distributed to holders of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock, the TCI Group shall include a
corresponding ratable amount of the kind of assets paid as such interest or
dividends or other distributions in respect of such securities so deemed to
be held by the TCI Group, or (2) the Corporation shall pay a dividend or
make any other distribution with respect to shares of Series A Telephony
Group Common Stock or Series B Telephony Group Common Stock payable in
other securities of the Corporation attributed to the Telephony Group, the
TCI Group shall be deemed to hold an amount of such other securities equal
to the amount so distributed multiplied by the fraction specified in clause
(e) of this definition (determined as of a time immediately prior to the
record date for such dividend or other distribution), and to the extent
interest or dividends are paid or other distributions are made on such
other securities so distributed to holders of Series A Telephony Group
Common Stock and Series B Telephony Group Common Stock, the TCI Group shall
include a corresponding ratable amount of the kind of assets paid as such
interest or dividends or other distributions in respect of such securities
so deemed to be held by the TCI Group. The Corporation may also, to the
extent any such other securities constitute Convertible Securities which
are at the time convertible, exercisable or exchangeable, cause such
Convertible Securities deemed to be held by the TCI Group to be deemed to
be converted, exercised or exchanged (and to the extent the terms of such
Convertible Securities require payment or delivery of consideration in
order to effect such conversion, exercise or exchange, the TCI Group shall
in such case no longer include an amount of the kind of properties or
assets required to be paid or delivered as such consideration for the
amount of the Convertible Securities deemed converted, exercised or
exchanged as if such Convertible Securities were outstanding), in which
case such Convertible Securities shall no longer be deemed to be held by
the TCI Group or attributed to the Liberty Media Group or the Telephony
Group.
"TCI Group Available Dividend Amount," as of any date, shall mean
either: (a) the excess of (i) an amount equal to the total assets of the
TCI Group less the total liabilities (not including preferred stock) of the
TCI Group as of such date over (ii) the aggregate par value of, or any
greater amount determined to be capital in respect of, all outstanding
shares of Series A TCI Group Common Stock, Series B TCI Group Common Stock
and each class or series of Preferred Stock attributed to the TCI Group or
(b) in case there is no such excess, an amount equal to the Corporation
Earnings (Loss) Attributable to the TCI Group (if positive) for the fiscal
year in which such date occurs and/or the preceding fiscal year.
"Telephony Group" shall mean, as of any date that any shares of Series
A Telephony Group Common Stock or Series B Telephony Group Common Stock
have been issued and continue to be outstanding:
(a) the interest of the Corporation or of any of its subsidiaries in
TCI Telephony Services, Inc. ("TCI Telephony") or any of its subsidiaries
(including any successor thereto by merger, consolidation or sale of all or
substantially all of its assets, whether or not
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in connection with a Related Business Transaction) and their respective
properties and assets,
(b) all assets and liabilities of the Corporation or any of its
subsidiaries to the extent attributed to any of the properties or assets
referred to in clause (a) of this sentence, whether or not such assets or
liabilities are assets and liabilities of TCI Telephony or any of its
subsidiaries (or a successor as described in clause (a) of this sentence),
(c) all assets and properties contributed or otherwise transferred to
the Telephony Group from the TCI Group, and
(d) the interest of the Corporation or any of its subsidiaries in the
businesses, assets and liabilities acquired by the Corporation or any of
its subsidiaries for the Telephony Group, as determined by the Board of
Directors;
provided that (i) from and after any dividend or other distribution with
respect to any shares of Series A Telephony Group Common Stock or Series B
Telephony Group Common Stock (other than a dividend or other distribution
payable in shares of Series A Telephony Group Common Stock or Series B
Telephony Group Common Stock, with respect to which adjustment shall be
made as provided in clause (a) of the definition of "Number of Shares
Issuable with Respect to the Telephony Group Inter-Group Interest," or in
other securities of the Corporation attributed to the Telephony Group for
which provision shall be made as set forth in the penultimate sentence of
this definition), the Telephony Group shall no longer include an amount of
assets or properties equal to the aggregate amount of such kind of assets
or properties so paid in respect of shares of Series A Telephony Group
Common Stock or Series B Telephony Group Common Stock multiplied by a
fraction the numerator of which is equal to the Telephony Group Inter-Group
Interest Fraction in effect immediately prior to the record date for such
dividend or other distribution and the denominator of which is equal to the
Telephony Group Outstanding Interest Fraction in effect immediately prior
to the record date for such dividend or other distribution and (ii) from
and after any transfer of assets or properties from the Telephony Group to
the TCI Group, the Telephony Group shall no longer include the assets or
properties so transferred. If the Corporation shall pay a dividend or make
any other distribution with respect to shares of Series A Telephony Group
Common Stock or Series B Telephony Group Common Stock payable in securities
of the Corporation attributed to the Telephony Group other than Series A
Telephony Group Common Stock and Series B Telephony Group Common Stock, the
TCI Group shall be deemed to hold an amount of such other securities equal
to the amount so distributed multiplied by the fraction specified in clause
(i) of this definition (determined as of a time immediately prior to the
record date for such dividend or other distribution), and to the extent
interest or dividends are paid or other distributions are made on such
other securities so distributed to the holders of Series A Telephony Group
Common Stock and Series B Telephony Group Common Stock, the Telephony Group
shall no longer include a corresponding ratable amount of the kind of
assets paid as such interest or dividends or other distributions in respect
of such securities so deemed to be held by the TCI Group. The Corporation
may also, to the extent any such other securities constitute Convertible
Securities which are at the time convertible, exercisable or exchangeable,
cause such Convertible Securities deemed to be held by the TCI Group to be
deemed to be converted, exercised or exchanged (and to the extent the terms
of such Convertible Securities require payment or delivery of consideration
in order to effect such conversion, exercise or exchange, the Telephony
Group shall in such case include an amount of the kind of properties or
assets required to be paid or delivered as such consideration for the
amount of the Convertible Securities deemed converted, exercised or
exchanged as if such Convertible Securities were outstanding), in which
case such Convertible Securities shall no longer be deemed to be held by
the TCI Group or attributed to the Telephony Group.
"Telephony Group Available Dividend Amount," as of any date, shall
mean the product of the Telephony Group Outstanding Interest Fraction and
either: (a) the excess of (i) an amount equal to the total assets of the
Telephony Group less the total liabilities (not including preferred stock)
of the Telephony Group as of such date over (ii) the aggregate par value
of, or any greater amount determined to be capital in respect of, all
outstanding shares of Series A Telephony Group Common Stock, Series B
Telephony Group Common Stock and each class or series of Preferred Stock
attributed to the Telephony Group or (b) in case there is no such excess,
an amount equal to the Corporation Earnings (Loss) Attributable to the
Telephony Group (if positive) for the fiscal year in which such date occurs
and/or the preceding fiscal year.
"Telephony Group Inter-Group Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the Number of Shares Issuable
with Respect to the Telephony Group Inter-Group Interest as of such date
and the denominator of which is the sum of (a) such Number of Shares
Issuable with Respect to the Telephony Group Inter-Group Interest as of
such date and (b) the
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aggregate number of shares of Series A Telephony Group Common Stock and
Series B Telephony Group Common Stock outstanding as of such date.
"Telephony Group Net Proceeds" shall mean, as of any date, with
respect to any Disposition of any of the properties and assets of the
Telephony Group, an amount, if any, equal to the gross proceeds of such
Disposition after any payment of, or reasonable provision for, (a) any
taxes payable by the Corporation in respect of such Disposition or in
respect of any resulting dividend or redemption pursuant to clause (i) or
(ii), respectively, of paragraph 6(b) of this Section E (or which would
have been payable but for the utilization of tax benefits attributable to
the TCI Group or the Liberty Media Group), (b) any transaction costs,
including, without limitation, any legal, investment banking and accounting
fees and expenses and (c) any liabilities and other obligations (contingent
or otherwise) of, or attributed to, the Telephony Group, including, without
limitation, any indemnity or guarantee obligations incurred in connection
with the Disposition or any liabilities for future purchase price
adjustments and any preferential amounts plus any accumulated and unpaid
dividends and other obligations in respect of Preferred Stock attributed to
the Telephony Group. For purposes of this definition, any properties and
assets of the Telephony Group remaining after such Disposition shall
constitute "reasonable provision" for such amount of taxes, costs and
liabilities (contingent or otherwise) as can be supported by such
properties and assets. To the extent the proceeds of any Disposition
include any securities or other property other than cash, the Board of
Directors shall determine the value of such securities or property,
including for the purpose of determining the equivalent value thereof if
the Board of Directors determines to pay a dividend or redemption price in
cash or securities or other property as provided in clause (z) of paragraph
6(b) of this Section E.
"Telephony Group Outstanding Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the aggregate number of shares of
Series A Telephony Group Common Stock and Series B Telephony Group Common
Stock outstanding on such date and the denominator of which is the sum of
(a) such aggregate number of shares of Series A Telephony Group Common
Stock and Series B Telephony Group Common Stock outstanding on such date
and (b) the Number of Shares Issuable with Respect to the Telephony Group
Inter-Group Interest as of such date.
"Telephony Group Private Market Value" shall mean an amount equal to
the private market value of the Telephony Group as of the Appraisal Date.
Each of the First Appraiser, the Second Appraiser and the Mutually
Designated Appraiser, if any, shall be instructed to determine the private
market value of the Telephony Group as of the Appraisal Date based upon the
amount a willing purchaser would pay to a willing seller, in an arm's
length transaction, if it were acquiring the Telephony Group, as if the
Telephony Group were a publicly traded non-controlled corporation and the
purchaser was acquiring all of the capital stock of such corporation, and
without consideration of any potential regulatory constraints limiting the
potential purchasers of the Telephony Group other than that which would
have existed if the Telephony Group were a publicly traded non-controlled
entity.
"Trading Day" shall mean each weekday other than any day on which any
relevant class or series of capital stock of the Corporation is not traded
on the Nasdaq National Market System or in the over-the-counter market.""
(IV)SECTION C OF ARTICLE V OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE
CORPORATION IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
"SECTION C
REMOVAL OF DIRECTORS
Subject to the rights of the holders of any class or series of Preferred
Stock, directors may be removed from office only for cause (as hereinafter
defined) upon the affirmative vote of the holders of 66 2/3% of the total voting
power of the then outstanding shares of Series A TCI Group Common Stock, Series
B TCI Group Common Stock, Series A Liberty Media Group Common Stock, Series B
Liberty Media Group Common Stock, Series A Telephony Group Common Stock, Series
B Telephony Group Common Stock and any class or series of Preferred Stock
entitled to vote at an election of directors, voting together as a single class.
Except as may be provided by law, "cause" for removal, for purposes of this
Section C, shall exist only if: (i) the director whose removal is proposed has
been convicted of a felony, or has been granted immunity to testify in an action
where another has been convicted of a felony, by a court of competent
jurisdiction and such conviction is no longer subject to direct appeal; (ii)
such director has become mentally
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incompetent, whether or not so adjudicated, which mental incompetence directly
affects his ability as a director of the Corporation, as determined by at least
66 2/3% of the members of the Board of Directors then in office (other than such
director); or (iii) such director's actions or failure to act have been
determined by at least 66 2/3% of the members of the Board of Directors then in
office (other than such director) to be in derogation of the director's duties."
(V)SECTION A OF ARTICLE VIII OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE
CORPORATION IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
"ARTICLE VIII
MEETINGS OF STOCKHOLDERS
SECTION A
ANNUAL AND SPECIAL MEETINGS
Subject to the rights of the holders of any class or series of Preferred
Stock, stockholder action may be taken only at an annual or special meeting.
Except as otherwise provided in the terms of any class or series of Preferred
Stock or unless otherwise prescribed by law or by another provision of this
Certificate, special meetings of the stockholders of the Corporation, for any
purpose or purposes, shall be called by the Secretary of the Corporation (i)
upon the written request of the holders of not less than 66 2/3% of the total
voting power of the outstanding Voting Securities (as hereinafter defined) or
(ii) at the request of at least 75% of the members of the Board of Directors
then in office. The term "Voting Securities" shall include the Series A TCI
Group Common Stock, the Series B TCI Group Common Stock, the Series A Liberty
Media Group Common Stock, the Series B Liberty Media Group Common Stock, the
Series A Telephony Group Common Stock, the Series B Telephony Group Common Stock
and any class or series of Preferred Stock entitled to vote with the holders of
Common Stock generally upon all matters which may be submitted to a vote of
stockholders at any annual meeting or special meeting thereof.
SECOND: That said amendments were duly adopted by the Board of Directors of
the Corporation, and pursuant to resolution of the Board of Directors of the
Corporation, the annual meeting of the stockholders of the Corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, at which meeting the necessary number
of shares as required by statute and the Restated Certificate of Incorporation
of the Corporation were voted in favor of said amendments.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware."
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IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Amendment this 7th day of April, 1997.
TELE-COMMUNICATIONS, INC.
By: /s/ JOHN C. MALONE
------------------------------------
Name: John C. Malone
Title: Chief Executive Officer
ATTEST:
By: /s/ STEPHEN M. BRETT
- ------------------------------------
Name: Stephen M. Brett
Title: Secretary
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STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
__________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE TWENTY-
EIGHTH DAY OF AUGUST, A.D. 1997, AT 1 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATION HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ EDWARD J. FREEL
-------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8627797
----------
DATE: 08-28-97
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CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
TELE-COMMUNICATIONS, INC.
TELE-COMMUNICATIONS, INC., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
FIRST: That the Restated Certificate of Incorporation of the Corporation is
hereby amended as follows:
(I) SECTION E OF ARTICLE IV OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE
CORPORATION IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
"SECTION E
SERIES A TCI GROUP COMMON STOCK, SERIES B TCI GROUP COMMON
STOCK, SERIES A LIBERTY MEDIA GROUP COMMON STOCK,
SERIES B LIBERTY MEDIA GROUP COMMON STOCK,
SERIES A TCI VENTURES GROUP COMMON STOCK AND
SERIES B TCI VENTURES GROUP COMMON STOCK
One billion seven hundred fifty million (1,750,000,000) shares of Common
Stock shall be of a series designated Tele-Communications, Inc. Series A TCI
Group Common Stock (the "Series A TCI Group Common Stock"), one hundred fifty
million (150,000,000) shares of Common Stock shall be of a series designated
Tele-Communications, Inc. Series B TCI Group Common Stock (the "Series B TCI
Group Common Stock"), seven hundred fifty million (750,000,000) shares of Common
Stock shall be of a series designated Tele-Communications, Inc. Series A Liberty
Media Group Common Stock (the "Series A Liberty Media Group Common Stock"),
seventy-five million (75,000,000) shares of Common Stock shall be of a series
designated Tele-Communications, Inc. Series B Liberty Media Group Common Stock
(the "Series B Liberty Media Group Common Stock"), seven hundred fifty million
(750,000,000) shares of Common Stock shall be of a series designated Tele-
Communications, Inc. Series A TCI Ventures Group Common Stock (the "Series A TCI
Ventures Group Common Stock") and seventy five million (75,000,000) shares of
Common Stock shall be of a series designated Tele-Communications, Inc. Series B
TCI Ventures Group Common Stock (the "Series B TCI Ventures Group Common
Stock").
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Each share of Series A TCI Group Common Stock and each share of Series B
TCI Group Common Stock shall, except as otherwise provided in this Section E, be
identical in all respects and shall have equal rights, powers and privileges.
Each share of Series A Liberty Media Group Common Stock and each share of
Series B Liberty Media Group Common Stock shall, except as otherwise provided in
this Section E, be identical in all respects and shall have equal rights, powers
and privileges.
Each share of Series A TCI Ventures Group Common Stock and each share of
Series B TCI Ventures Group Common Stock shall, except as otherwise provided in
this Section E, be identical in all respects and shall have equal rights, powers
and privileges.
1. Voting Rights.
-------------
Holders of Series A TCI Group Common Stock shall be entitled to one vote
for each share of such stock held, holders of Series B TCI Group Common Stock
shall be entitled to ten votes for each share of such stock held, holders of
Series A Liberty Media Group Common Stock shall be entitled to one vote for each
share of such stock held, holders of Series B Liberty Media Group Common Stock
shall be entitled to ten votes for each share of such stock held, holders of
Series A TCI Ventures Group Common Stock shall be entitled to one vote for each
share of such stock held, and holders of Series B TCI Ventures Group Common
Stock shall be entitled to ten votes for each share of such stock held, on all
matters presented to such stockholders. Except as may otherwise be required by
the laws of the State of Delaware or, with respect to any class of Preferred
Stock or any series of such a class, in this Certificate (including any
resolution or resolutions providing for the establishment of such class or
series pursuant to authority vested in the Board of Directors by this
Certificate), the holders of shares of Series A TCI Group Common Stock, the
holders of shares of Series B TCI Group Common Stock, the holders of shares of
Series A Liberty Media Group Common Stock, the holders of shares of Series B
Liberty Media Group Common Stock, the holders of shares of Series A TCI Ventures
Group Common Stock, the holders of shares of Series B TCI Ventures Group Common
Stock and the holders of shares of each class or series of Preferred Stock, if
any, entitled to vote thereon, shall vote as one class with respect to the
election of directors and with respect to all other matters to be voted on by
stockholders of the Corporation (including, without limitation, any proposed
amendment to this Certificate that would increase the number of authorized
shares of Common Stock or any series thereof or of any other class or series of
stock or decrease the number of authorized shares of any class or series of
stock (but not below the number of shares thereof then outstanding)), and no
separate vote or consent of the holders of shares of Series A TCI Group Common
Stock, the holders of shares of Series B TCI Group Common Stock, the holders of
shares of Series A Liberty Media Group Common Stock, the holders of shares of
Series B Liberty Media Group Common Stock, the holders of shares of Series A TCI
Ventures Group Common Stock, the holders of shares of Series B TCI Ventures
Group Common Stock, or the holders of shares of any such class or series of
Preferred Stock shall be required for the approval of any such matter.
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2. Conversion Rights.
-----------------
(a) CONVERSION OF SERIES B TCI GROUP COMMON STOCK INTO SERIES A TCI GROUP
COMMON STOCK. Each share of Series B TCI Group Common Stock shall be
convertible, at the option of the holder thereof, into one share of Series A TCI
Group Common Stock. Any such conversion may be effected by any holder of Series
B TCI Group Common Stock by surrendering such holder's certificate or
certificates for the Series B TCI Group Common Stock to be converted, duly
endorsed, at the office of the Corporation or any transfer agent for the Series
B TCI Group Common Stock, together with a written notice to the Corporation at
such office that such holder elects to convert all or a specified number of
shares of Series B TCI Group Common Stock represented by such certificate and
stating the name or names in which such holder desires the certificate or
certificates for Series A TCI Group Common Stock to be issued. If so required
by the Corporation, any certificate for shares surrendered for conversion shall
be accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder of such shares or the duly authorized
representative of such holder. Promptly thereafter, the Corporation shall issue
and deliver to such holder or such holder's nominee or nominees, a certificate
or certificates for the number of shares of Series A TCI Group Common Stock to
which such holder shall be entitled as herein provided. Such conversion shall
be deemed to have been made at the close of business on the date of receipt by
the Corporation or any such transfer agent of the certificate or certificates,
notice and, if required, instruments of transfer referred to above, and the
person or persons entitled to receive the Series A TCI Group Common Stock
issuable on such conversion shall be treated for all purposes as the record
holder or holders of such Series A TCI Group Common Stock on that date. A
number of shares of Series A TCI Group Common Stock equal to the number of
shares of Series B TCI Group Common Stock outstanding from time to time shall be
set aside and reserved for issuance upon conversion of shares of Series B TCI
Group Common Stock. Shares of Series A TCI Group Common Stock shall not be
convertible into shares of Series B TCI Group Common Stock.
(b) CONVERSION OF SERIES B LIBERTY MEDIA GROUP COMMON STOCK INTO SERIES A
LIBERTY MEDIA GROUP COMMON STOCK. Each share of Series B Liberty Media Group
Common Stock shall be convertible, at the option of the holder thereof, into one
share of Series A Liberty Media Group Common Stock. Any such conversion may be
effected by any holder of Series B Liberty Media Group Common Stock by
surrendering such holder's certificate or certificates for the Series B Liberty
Media Group Common Stock to be converted, duly endorsed, at the office of the
Corporation or any transfer agent for the Series B Liberty Media Group Common
Stock, together with a written notice to the Corporation at such office that
such holder elects to convert all or a specified number of shares of Series B
Liberty Media Group Common Stock represented by such certificate and stating the
name or names in which such holder desires the certificate or certificates for
Series A Liberty Media Group Common Stock to be issued. If so required by the
Corporation, any certificate for shares surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder of such shares or the duly authorized representative
of such holder. Promptly thereafter, the
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Corporation shall issue and deliver to such holder or such holder's nominee or
nominees, a certificate or certificates for the number of shares of Series A
Liberty Media Group Common Stock to which such holder shall be entitled as
herein provided. Such conversion shall be deemed to have been made at the close
of business on the date of receipt by the Corporation or any such transfer agent
of the certificate or certificates, notice and, if required, instruments of
transfer referred to above, and the person or persons entitled to receive the
Series A Liberty Media Group Common Stock issuable on such conversion shall be
treated for all purposes as the record holder or holders of such Series A
Liberty Media Group Common Stock on that date. A number of shares of Series A
Liberty Media Group Common Stock equal to the number of shares of Series B
Liberty Media Group Common Stock outstanding from time to time shall be set
aside and reserved for issuance upon conversion of shares of Series B Liberty
Media Group Common Stock. Shares of Series A Liberty Media Group Common Stock
shall not be convertible into shares of Series B Liberty Media Group Common
Stock.
(c) CONVERSION OF SERIES B TCI VENTURES GROUP COMMON STOCK INTO SERIES A
TCI VENTURES GROUP COMMON STOCK. Each share of Series B TCI Ventures Group
Common Stock shall be convertible, at the option of the holder thereof, into one
share of Series A TCI Ventures Group Common Stock. Any such conversion may be
effected by any holder of Series B TCI Ventures Group Common Stock by
surrendering such holder's certificate or certificates for the Series B TCI
Ventures Group Common Stock to be converted, duly endorsed, at the office of the
Corporation or any transfer agent for the Series B TCI Ventures Group Common
Stock, together with a written notice to the Corporation at such office that
such holder elects to convert all or a specified number of shares of Series B
TCI Ventures Group Common Stock represented by such certificate and stating the
name or names in which such holder desires the certificate or certificates for
Series A TCI Ventures Group Common Stock to be issued. If so required by the
Corporation, any certificate for shares surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder of such shares or the duly authorized representative
of such holder. Promptly thereafter, the Corporation shall issue and deliver to
such holder or such holder's nominee or nominees, a certificate or certificates
for the number of shares of Series A TCI Ventures Group Common Stock to which
such holder shall be entitled as herein provided. Such conversion shall be
deemed to have been made at the close of business on the date of receipt by the
Corporation or any such transfer agent of the certificate or certificates,
notice and, if required, instruments of transfer referred to above, and the
person or persons entitled to receive the Series A TCI Ventures Group Common
Stock issuable on such conversion shall be treated for all purposes as the
record holder or holders of such Series A TCI Ventures Group Common Stock on
that date. A number of shares of Series A TCI Ventures Group Common Stock equal
to the number of shares of Series B TCI Ventures Group Common Stock outstanding
from time to time shall be set aside and reserved for issuance upon conversion
of shares of Series B TCI Ventures Group Common Stock. Shares of Series A TCI
Ventures Group Common Stock shall not be convertible into shares of Series B TCI
Ventures Group Common Stock.
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<PAGE>
(d) CONVERSION OF SERIES A LIBERTY MEDIA GROUP COMMON STOCK INTO SERIES A
TCI GROUP COMMON STOCK AND SERIES B LIBERTY MEDIA GROUP COMMON STOCK INTO SERIES
B TCI GROUP COMMON STOCK AT THE OPTION OF THE CORPORATION. (i) At the option of
the Corporation by action of its Board of Directors, (A) all shares of Series A
Liberty Media Group Common Stock shall be converted into a number (or fraction)
of fully paid and nonassessable shares of Series A TCI Group Common Stock equal
to the Liberty Media Group Optional Conversion Ratio, and (B) all shares of
Series B Liberty Media Group Common Stock shall be convertible into a number (or
fraction) of fully paid and nonassessable shares of Series B TCI Group Common
Stock equal to the Liberty Media Group Optional Conversion Ratio.
(ii) For purposes of this paragraph 2(d), the "Liberty Media Group
Optional Conversion Ratio" shall mean the quotient (calculated to the nearest
five decimal places) obtained by dividing (A) the Liberty Media Group Common
Stock Per Share Value by (B) the average Market Value of one share of Series A
TCI Group Common Stock over the 20-Trading Day period ending on the Trading Day
preceding the Appraisal Date.
(iii) In the event that the Corporation determines to establish the
Liberty Media Group Private Market Value, the Corporation shall designate the
First Appraiser, and the Independent Committee shall designate the Second
Appraiser. Not later than 20 days after the Selection Date, the First
Appraiser and the Second Appraiser shall each determine its initial view as to
the private market value of the Liberty Media Group as of the Appraisal Date and
shall consult with one another with respect thereto. Not later than the 30th
day after the Selection Date, the First Appraiser and the Second Appraiser shall
each have determined its final view as to such private market value. If the
Higher Appraised Amount is not more than 120% of the Lower Appraised Amount, the
Liberty Media Group Private Market Value (subject to any adjustment provided in
subparagraph (iv) of this paragraph 2(d)) shall be the average of those two
amounts. If the Higher Appraised Amount is more than 120% of the Lower
Appraised Amount, the First Appraiser and the Second Appraiser shall agree upon
and jointly designate the Mutually Designated Appraiser to determine such
private market value. The Mutually Designated Appraiser shall not be provided
with any of the work of the First Appraiser and Second Appraiser. The Mutually
Designated Appraiser shall, no later than the 20th day after the date the
Mutually Designated Appraiser is designated, determine the Mutually Appraised
Amount, and the Liberty Media Group Private Market Value (subject to any
adjustment provided in subparagraph (iv) of this paragraph 2(d)) shall be (A) if
the Mutually Appraised Amount is between the Lower Appraised Amount and the
Higher Appraised Amount, (I) the average of (1) the Mutually Appraised Amount
and (2) the Lower Appraised Amount or the Higher Appraised Amount, whichever is
closer to the Mutually Appraised Amount, or (II) the Mutually Appraised Amount,
if neither the Lower Appraised Amount nor the Higher Appraised Amount is closer
to the Mutually Appraised Amount, or (B) if the Mutually Appraised Amount is
greater than the Higher Appraised Amount or less than the Lower Appraised
Amount, the average of the Higher Appraised Amount and the Lower Appraised
Amount. For these purposes, if any such Appraiser expresses its final view of
the private market value of the Liberty Media Group as a range of
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values, such Appraiser's final view of such private market value shall be deemed
to be the midpoint of such range of values.
(iv) Following the determination of the Liberty Media Group Private
Market Value, the Appraiser or Appraisers whose final views of the private
market value of the Liberty Media Group were used in the calculation of the
Liberty Media Group Private Market Value shall determine the Adjusted
Outstanding Shares of Liberty Media Group Common Stock together with any further
appropriate adjustments to the Liberty Media Group Private Market Value
resulting from such determination. The "Adjusted Outstanding Shares of Liberty
Media Group Common Stock" shall mean a number, as determined by such
Appraiser(s) as of the Appraisal Date, equal to the sum of the number of shares
of Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock outstanding, the Number of Shares Issuable with Respect to the
Liberty Media Group Inter-Group Interest, the number of Committed Acquisition
Shares issuable, the number of shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock issuable upon the
conversion, exercise or exchange of all Pre-Distribution Convertible Securities
and the number of shares of Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock issuable upon the conversion, exercise or
exchange of those Convertible Securities (other than Pre-Distribution
Convertible Securities and other than Convertible Securities which are
convertible into or exercisable or exchangeable for Committed Acquisition
Shares) the holders of which would derive an economic benefit from conversion,
exercise or exchange of such Convertible Securities which exceeds the economic
benefit of not converting, exercising or exchanging such Convertible Securities.
The "Liberty Media Group Common Stock Per Share Value" shall mean the quotient
obtained by dividing the Liberty Media Group Private Market Value by the
Adjusted Outstanding Shares of Liberty Media Group Common Stock, provided that
if such Appraiser(s) do not agree on the determinations provided for in this
subparagraph (iv), the Liberty Media Group Common Stock Per Share Value shall be
the average of the quotients so obtained on the basis of the respective
determinations of such firms.
(v) If the Corporation determines to convert shares of Series A
Liberty Media Group Common Stock into Series A TCI Group Common Stock and shares
of Series B Liberty Media Group Common Stock into Series B TCI Group Common
Stock at the Liberty Media Group Optional Conversion Ratio, such conversion
shall occur on a Conversion Date on or prior to the 120th day following the
Appraisal Date. If the Corporation determines not to undertake such conversion,
the Corporation may at any time thereafter undertake to reestablish the Liberty
Media Group Common Stock Per Share Value as of a subsequent date.
(vi) The Corporation shall not convert shares of Series A Liberty
Media Group Common Stock into shares of Series A TCI Group Common Stock without
converting shares of Series B Liberty Media Group Common Stock into shares of
Series B TCI Group Common Stock, and the Corporation shall not convert shares of
Series B Liberty Media Group Common Stock into shares of Series B TCI Group
Common Stock without converting shares of Series A
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<PAGE>
Liberty Media Group Common Stock into shares of Series A TCI Group Common Stock.
The Series A Liberty Media Group Common Stock and the Series B Liberty Media
Group Common Stock shall also be convertible at the option of the Corporation in
accordance with paragraph 5(b)(iii) of this Section E.
(e) CONVERSION OF SERIES A TCI VENTURES GROUP COMMON STOCK INTO SERIES A
TCI GROUP COMMON STOCK AND SERIES B TCI VENTURES GROUP COMMON STOCK INTO SERIES
B TCI GROUP COMMON STOCK AT THE OPTION OF THE CORPORATION. (i) At the option of
the Corporation by action of its Board of Directors, (A) all shares of Series A
TCI Ventures Group Common Stock shall be converted into a number (or fraction)
of fully paid and nonassessable shares of Series A TCI Group Common Stock equal
to the TCI Ventures Group Optional Conversion Ratio, and (B) all shares of
Series B TCI Ventures Group Common Stock shall be convertible into a number (or
fraction) of fully paid and nonassessable shares of Series B TCI Group Common
Stock equal to the TCI Ventures Group Optional Conversion Ratio.
(ii) For purposes of this paragraph 2(e), the "TCI Ventures Group
Optional Conversion Ratio" shall mean the quotient (calculated to the nearest
five decimal places) obtained by dividing (A) the TCI Ventures Group Common
Stock Per Share Value by (B) the average Market Value of one share of Series A
TCI Group Common Stock over the 20-Trading Day period ending on the Trading Day
preceding the Appraisal Date.
(iii) In the event that the Corporation determines to establish the TCI
Ventures Group Private Market Value, the Corporation shall designate the First
Appraiser, and the Independent Committee shall designate the Second Appraiser.
Not later than 20 days after the Selection Date, the First Appraiser and the
Second Appraiser shall each determine its initial view as to the private market
value of the TCI Ventures Group as of the Appraisal Date and shall consult with
one another with respect thereto. Not later than the 30th day after the
Selection Date, the First Appraiser and the Second Appraiser shall each have
determined its final view as to such private market value. If the Higher
Appraised Amount is not more than 120% of the Lower Appraised Amount, the TCI
Ventures Group Private Market Value (subject to any adjustment provided in
subparagraph (iv) of this paragraph 2(e)) shall be the average of those two
amounts. If the Higher Appraised Amount is more than 120% of the Lower
Appraised Amount, the First Appraiser and the Second Appraiser shall agree upon
and jointly designate the Mutually Designated Appraiser to determine such
private market value. The Mutually Designated Appraiser shall not be provided
with any of the work of the First Appraiser and Second Appraiser. The Mutually
Designated Appraiser shall, no later than the 20th day after the date the
Mutually Designated Appraiser is designated, determine the Mutually Appraised
Amount and the TCI Ventures Group Private Market Value (subject to any
adjustment provided in subparagraph (iv) of this paragraph 2(e)) shall be (A) if
the Mutually Appraised Amount is between the Lower Appraised Amount and the
Higher Appraised Amount, (I) the average of (1) the Mutually Appraised Amount
and (2) the Lower Appraised Amount or the Higher Appraised Amount, whichever is
closer to the Mutually Appraised Amount, or (II) the Mutually Appraised Amount,
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<PAGE>
if neither the Lower Appraised Amount nor the Higher Appraised Amount is closer
to the Mutually Appraised Amount, or (B) if the Mutually Appraised Amount is
greater than the Higher Appraised Amount or less than the Lower Appraised
Amount, the average of the Higher Appraised Amount and the Lower Appraised
Amount. For these purposes, if any such Appraiser expresses its final view of
the private market value of the TCI Ventures Group as a range of values, such
Appraiser's final view of such private market value shall be deemed to be the
midpoint of such range of values.
(iv) Following the determination of the TCI Ventures Group Private Market
Value, the Appraiser or Appraisers whose final views of the private market value
of the TCI Ventures Group were used in the calculation of the TCI Ventures Group
Private Market Value shall determine the Adjusted Outstanding Shares of TCI
Ventures Group Common Stock together with any further adjustments to the TCI
Ventures Group Private Market Value resulting from such determination. The
"Adjusted Outstanding Shares of TCI Ventures Group Common Stock" shall mean a
number, as determined by such Appraiser(s) as of the Appraisal Date, equal to
the sum of the number of shares of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock outstanding, the Number of Shares
Issuable with Respect to the TCI Ventures Group Inter-Group Interest, the number
of shares of Series A TCI Ventures Group Common Stock and Series B TCI Ventures
Group Common Stock issuable upon the conversion, exercise or exchange of all
Pre-Exchange Offer Securities and the number of shares of Series A TCI Ventures
Group Common Stock and Series B TCI Ventures Group Common Stock issuable upon
the conversion, exercise or exchange of those Convertible Securities (other than
Pre-Exchange Offer Securities) the holders of which would derive an economic
benefit from conversion, exercise or exchange of such Convertible Securities
which exceeds the economic benefit of not converting, exercising or exchanging
such Convertible Securities. The "TCI Ventures Group Common Stock Per Share
Value" shall mean the quotient obtained by dividing the TCI Ventures Group
Private Market Value by the Adjusted Outstanding Shares of TCI Ventures Group
Common Stock, provided that if such Appraiser(s) do not agree on the
determinations provided for in this subparagraph (iv), the TCI Ventures Group
Common Stock Per Share Value shall be the average of the quotients so obtained
on the basis of the respective determinations of such firms.
(v) If the Corporation determines to convert shares of Series A TCI
Ventures Group Common Stock into Series A TCI Group Common Stock and shares of
Series B TCI Ventures Group Common Stock into Series B TCI Group Common Stock at
the TCI Ventures Group Optional Conversion Ratio, such conversion shall occur on
a Conversion Date on or prior to the 120th day following the Appraisal Date. If
the Corporation determines not to undertake such conversion, the Corporation may
at any time thereafter undertake to reestablish the TCI Ventures Group Common
Stock Per Share Value as of a subsequent date.
(vi) The Corporation shall not convert shares of Series A TCI Ventures
Group Common Stock into shares of Series A TCI Group Common Stock without
converting shares of
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Series B TCI Ventures Group Common Stock into shares of Series B TCI Group
Common Stock, and the Corporation shall not convert shares of Series B TCI
Ventures Group Common Stock into shares of Series B TCI Group Common Stock
without converting shares of Series A TCI Ventures Group Common Stock into
shares of Series A TCI Group Common Stock. The Series A TCI Ventures Group
Common Stock and the Series B TCI Ventures Group Common Stock shall also be
convertible at the option of the Corporation in accordance with paragraph
6(b)(iii) of this Section E.
3. Dividends.
---------
(a) DIVIDENDS ON SERIES A TCI GROUP COMMON STOCK AND SERIES B TCI GROUP
COMMON STOCK. Dividends on the Series A TCI Group Common Stock and the Series B
TCI Group Common Stock may be declared and paid only out of the lesser of (i)
assets of the Corporation legally available therefor and (ii) the TCI Group
Available Dividend Amount. Subject to paragraph 4 of this Section E, whenever a
dividend is paid to the holders of Series A TCI Group Common Stock, the
Corporation shall also pay to the holders of Series B TCI Group Common Stock a
dividend per share equal to the dividend per share paid to the holders of Series
A TCI Group Common Stock, and whenever a dividend is paid to the holders of
Series B TCI Group Common Stock, the Corporation shall also pay to the holders
of Series A TCI Group Common Stock a dividend per share equal to the dividend
per share paid to the holders of Series B TCI Group Common Stock.
(b) DIVIDENDS ON SERIES A LIBERTY MEDIA GROUP COMMON STOCK AND SERIES B
LIBERTY MEDIA GROUP COMMON STOCK. Dividends on the Series A Liberty Media Group
Common Stock and the Series B Liberty Media Group Common Stock may be declared
and paid only out of the lesser of (i) assets of the Corporation legally
available therefor and (ii) the Liberty Media Group Available Dividend Amount.
Subject to paragraph 4 and the last sentence of paragraph 5(b) of this Section
E, whenever a dividend is paid to the holders of Series A Liberty Media Group
Common Stock, the Corporation shall also pay to the holders of Series B Liberty
Media Group Common Stock a dividend per share equal to the dividend per share
paid to the holders of Series A Liberty Media Group Common Stock, and whenever a
dividend is paid to the holders of Series B Liberty Media Group Common Stock,
the Corporation shall also pay to the holders of Series A Liberty Media Group
Common Stock a dividend per share equal to the dividend per share paid to the
holders of Series B Liberty Media Group Common Stock.
(c) DIVIDENDS ON SERIES A TCI VENTURES GROUP COMMON STOCK AND SERIES B TCI
VENTURES GROUP COMMON STOCK. Dividends on the Series A TCI Ventures Group
Common Stock and the Series B TCI Ventures Group Common Stock may be declared
and paid only out of the lesser of (i) assets of the Corporation legally
available therefor and (ii) the TCI Ventures Group Available Dividend Amount.
Subject to paragraph 4 and the last sentence of paragraph 6(b) of this Section
E, whenever a dividend is paid to the holders of Series A TCI Ventures Group
Common Stock, the Corporation shall also pay to the holders of Series B TCI
Ventures Group Common Stock a dividend per share equal to the dividend per share
paid to the holders of Series A TCI Ventures Group Common Stock, and whenever a
dividend is paid to the holders of Series B TCI
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Ventures Group Common Stock, the Corporation shall also pay to the holders of
Series A TCI Ventures Group Common Stock a dividend per share equal to the
dividend per share paid to the holders of Series B TCI Ventures Group Common
Stock.
(d) DISCRIMINATION BETWEEN OR AMONG SERIES OF COMMON STOCK. The Board of
Directors, subject to the provisions of paragraph 3(a), 3(b) and 3(c) of this
Section E, shall have the authority and discretion to declare and pay dividends
on (i) the Series A TCI Group Common Stock and Series B TCI Group Common Stock,
(ii) the Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock, or (iii) the Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock, in equal or unequal amounts,
notwithstanding the relationship between the TCI Group Available Dividend
Amount, the Liberty Media Group Available Dividend Amount and the TCI Ventures
Group Available Dividend Amount, the respective amounts of prior dividends
declared on, or the liquidation rights of, the Series A TCI Group Common Stock
and Series B TCI Group Common Stock, the Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock, or the Series A TCI
Ventures Group Common Stock and the Series B TCI Ventures Group Common Stock, or
any other factor.
4. Share Distributions.
-------------------
The Corporation may declare and pay a distribution consisting of shares of
Series A TCI Group Common Stock, Series B TCI Group Common Stock, Series A
Liberty Media Group Common Stock, Series B Liberty Media Group Common Stock,
Series A TCI Ventures Group Common Stock, Series B TCI Ventures Group Common
Stock or any other securities of the Corporation or any other Person
(hereinafter sometimes called a "share distribution") to holders of the Common
Stock only in accordance with the provisions of this paragraph 4.
(a) DISTRIBUTIONS ON SERIES A TCI GROUP COMMON STOCK AND SERIES B TCI GROUP
COMMON STOCK. If at any time a share distribution is to be made with respect to
the Series A TCI Group Common Stock or Series B TCI Group Common Stock, such
share distribution may be declared and paid only as follows:
(i) a share distribution consisting of shares of Series A TCI Group
Common Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock, on an
equal per share basis; or consisting of shares of Series B TCI Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series B TCI Group Common Stock) to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock, on an
equal per share basis; or consisting of shares of Series A
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TCI Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A TCI Group Common Stock)
to holders of Series A TCI Group Common Stock and, on an equal per share
basis, shares of Series B TCI Group Common Stock (or like Convertible
Securities convertible into or exercisable or exchangeable for shares of
Series B TCI Group Common Stock) to holders of Series B TCI Group Common
Stock;
(ii) subsequent to the Liberty Media Group Distribution, a share
distribution consisting of shares of Series A Liberty Media Group Common
Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A Liberty Media Group Common Stock) to
holders of Series A TCI Group Common Stock and Series B TCI Group Common
Stock, on an equal per share basis; provided that the sum of (A) the
aggregate number of shares of Series A Liberty Media Group Common Stock to
be so issued (or the number of such shares which would be issuable upon
conversion, exercise or exchange of any Convertible Securities to be so
issued) and (B) the number of shares of such series that are subject to
issuance upon conversion, exercise or exchange of any Convertible
Securities then outstanding that are attributed to the TCI Group (other
than Pre-Distribution Convertible Securities and other than Convertible
Securities convertible into or exercisable or exchangeable for Committed
Acquisition Shares) is less than or equal to the Number of Shares Issuable
with Respect to the Liberty Media Group Inter-Group Interest;
(iii) a share distribution consisting of shares of Series A TCI
Ventures Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A TCI Ventures Group
Common Stock) to holders of Series A TCI Group Common Stock and Series B
TCI Group Common Stock, on an equal per share basis; or consisting of
shares of Series B TCI Ventures Group Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for shares of
Series B TCI Ventures Group Common Stock) to holders of Series A TCI Group
Common Stock and Series B TCI Group Common Stock, on an equal per share
basis; or consisting of shares of Series A TCI Ventures Group Common Stock
(or Convertible Securities convertible into or exercisable or exchangeable
for shares of Series A TCI Ventures Group Common Stock) to holders of
Series A TCI Group Common Stock and, on an equal per share basis, shares of
Series B TCI Ventures Group Common Stock (or like Convertible Securities
convertible into or exercisable or exchangeable for shares of Series B TCI
Ventures Group Common Stock) to holders of Series B TCI Group Common Stock;
provided that the sum of (A) the aggregate number of shares of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock to
be so distributed (or the number of such shares of Series A TCI Ventures
Group Common Stock and Series B TCI Ventures Group Common Stock which would
be issuable upon conversion, exercise or exchange of any Convertible
Securities to be so distributed) and (B) the number of shares of Series A
TCI Ventures Group Common Stock and Series B
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TCI Ventures Group Common Stock that are subject to issuance upon
conversion, exercise or exchange of any Convertible Securities then
outstanding that are attributed to the TCI Group (other than Pre-Exchange
Offer Securities), is less than or equal to the Number of Shares Issuable
with Respect to the TCI Ventures Group Inter-Group Interest.
(iv) a share distribution consisting of any class or series of
securities of the Corporation or any other Person other than Series A TCI
Group Common Stock, Series B TCI Group Common Stock, Series A Liberty Media
Group Common Stock, Series B Liberty Media Group Common Stock, Series A TCI
Ventures Group Common Stock or Series B TCI Ventures Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series A TCI Group Common Stock, Series B TCI Group Common Stock,
Series A Liberty Media Group Common Stock, Series B Liberty Media Group
Common Stock, Series A TCI Ventures Group Common Stock or Series B TCI
Ventures Group Common Stock), either on the basis of a distribution of
identical securities, on an equal per share basis, to holders of Series A
TCI Group Common Stock and Series B TCI Group Common Stock or on the basis
of a distribution of one class or series of securities to holders of Series
A TCI Group Common Stock and another class or series of securities to
holders of Series B TCI Group Common Stock, provided that the securities so
distributed (and, if the distribution consists of Convertible Securities,
the securities into which such Convertible Securities are convertible or
for which they are exercisable or exchangeable) do not differ in any
respect other than their relative voting rights and related differences in
designation, conversion, redemption and share distribution provisions, with
holders of shares of Series B TCI Group Common Stock receiving the class or
series having the higher relative voting rights (without regard to whether
such rights differ to a greater or lesser extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Group Common Stock and the
Series B TCI Group Common Stock), provided that if the securities so
distributed constitute capital stock of a Subsidiary of the Corporation,
such rights shall not differ to a greater extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Group Common Stock and the
Series B TCI Group Common Stock, and provided in each case that such
distribution is otherwise made on an equal per share basis.
The Corporation shall not reclassify, subdivide or combine the Series A TCI
Group Common Stock without reclassifying, subdividing or combining the Series B
TCI Group Common Stock, on an equal per share basis, and the Corporation shall
not reclassify, subdivide or combine the Series B TCI Group Common Stock without
reclassifying, subdividing or combining the Series A TCI Group Common Stock, on
an equal per share basis.
(b) DISTRIBUTIONS ON SERIES A LIBERTY MEDIA GROUP COMMON STOCK AND SERIES
B LIBERTY MEDIA GROUP COMMON STOCK. If at any time a share distribution is to be
made with
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respect to the Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock, such share distribution may be declared and paid only
as follows (or as permitted by paragraph 5 of this Section E with respect to the
redemptions and other distributions referred to therein):
(i) a share distribution consisting of shares of Series A Liberty
Media Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A Liberty Media Group
Common Stock) to holders of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock, on an equal per share basis; or
consisting of shares of Series B Liberty Media Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series B Liberty Media Group Common Stock) to holders of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock, on an equal per share basis; or consisting of shares of Series A
Liberty Media Group Common Stock (or Convertible Securities convertible
into or exercisable or exchangeable for shares of Series A Liberty Media
Group Common Stock) to holders of Series A Liberty Media Group Common Stock
and, on an equal per share basis, shares of Series B Liberty Media Group
Common Stock (or like Convertible Securities convertible into or
exercisable or exchangeable for shares of Series B Liberty Media Group
Common Stock) to holders of Series B Liberty Media Group Common Stock; and
(ii) a share distribution consisting of any class or series of
securities of the Corporation or any other Person other than as described
in clause (i) of this paragraph 4(b) and other than Series A TCI Group
Common Stock, Series B TCI Group Common Stock, Series A TCI Ventures Group
Common Stock or Series B TCI Ventures Group Common Stock (or Convertible
Securities convertible into or exercisable or exchangeable for shares of
Series A TCI Group Common Stock, Series B TCI Group Common Stock, Series A
TCI Ventures Group Common Stock or Series B TCI Ventures Group Common
Stock) either on the basis of a distribution of identical securities, on an
equal per share basis, to holders of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock or on the basis of a
distribution of one class or series of securities to holders of Series A
Liberty Media Group Common Stock and another class or series of securities
to holders of Series B Liberty Media Group Common Stock, provided that the
securities so distributed (and, if the distribution consists of Convertible
Securities, the securities into which such Convertible Securities are
convertible or for which they are exercisable or exchangeable) do not
differ in any respect other than their relative voting rights and related
differences in designation, conversion, redemption and share distribution
provisions, with holders of shares of Series B Liberty Media Group Common
Stock receiving the class or series having the higher relative voting
rights (without regard to whether such rights differ to a greater or lesser
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series
A Liberty Media Group Common Stock and
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the Series B Liberty Media Group Common Stock), provided that if the
securities so distributed constitute capital stock of a Subsidiary of the
Corporation, such rights shall not differ to a greater extent than the
corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Series A Liberty
Media Group Common Stock and the Series B Liberty Media Group Common Stock,
and provided in each case that such distribution is otherwise made on an
equal per share basis.
The Corporation shall not reclassify, subdivide or combine the Series A
Liberty Media Group Common Stock without reclassifying, subdividing or combining
the Series B Liberty Media Group Common Stock, on an equal per share basis, and
the Corporation shall not reclassify, subdivide or combine the Series B Liberty
Media Group Common Stock without reclassifying, subdividing or combining the
Series A Liberty Media Group Common Stock, on an equal per share basis.
(c) DISTRIBUTIONS ON SERIES A TCI VENTURES GROUP COMMON STOCK AND SERIES B
TCI VENTURES GROUP COMMON STOCK. If at any time a share distribution is to be
made with respect to the Series A TCI Ventures Group Common Stock or Series B
TCI Ventures Group Common Stock, such share distribution may be declared and
paid only as follows (or as permitted by paragraph 6 of this Section E with
respect to the redemptions and other distributions referred to therein):
(i) a share distribution consisting of shares of Series A TCI Ventures
Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A TCI Ventures Group
Common Stock) to holders of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock, on an equal per share basis; or
consisting of shares of Series B TCI Ventures Group Common Stock (or
Convertible Securities convertible into or exercisable or exchangeable for
shares of Series B TCI Ventures Group Common Stock) to holders of Series A
TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock, on an equal per share basis; or consisting of shares of Series A TCI
Ventures Group Common Stock (or Convertible Securities convertible into or
exercisable or exchangeable for shares of Series A TCI Ventures Group
Common Stock) to holders of Series A TCI Ventures Group Common Stock and,
on an equal per share basis, shares of Series B TCI Ventures Group Common
Stock (or like Convertible Securities convertible into or exercisable or
exchangeable for shares of Series B TCI Ventures Group Common Stock) to
holders of Series B TCI Ventures Group Common Stock; and
(ii) a share distribution consisting of any class or series of
securities of the Corporation or any other Person other than as described
in clause (i) of this paragraph 4(c) and other than Series A TCI Group
Common Stock, Series B TCI Group Common Stock, Series A Liberty Media Group
Common Stock or Series B Liberty Media Group
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Common Stock (or Convertible Securities convertible into or exercisable or
exchangeable for shares of Series A TCI Group Common Stock, Series B TCI
Group Common Stock, Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock) either on the basis of a distribution of
identical securities, on an equal per share basis, to holders of Series A
TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock, or on the basis of a distribution of one class or series of
securities to holders of Series A TCI Ventures Group Common Stock and
another class or series of securities to holders of Series B TCI Ventures
Group Common Stock, provided that the securities so distributed (and, if
the distribution consists of Convertible Securities, the securities into
which such Convertible Securities are convertible or for which they are
exercisable or exchangeable) do not differ in any respect other than their
relative voting rights and related differences in designation, conversion,
redemption and share distribution provisions, with holders of shares of
Series B TCI Ventures Group Common Stock receiving the class or series
having the higher relative voting rights (without regard to whether such
rights differ to a greater or lesser extent than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Ventures Group Common
Stock and the Series B TCI Ventures Group Common Stock), provided that if
the securities so distributed constitute capital stock of a Subsidiary of
the Corporation, such rights shall not differ to a greater extent than the
corresponding differences in voting rights, designation, conversion,
redemption and share distribution provisions between the Series A TCI
Ventures Group Common Stock and the Series B TCI Ventures Group Common
Stock, and provided in each case that such distribution is otherwise made
on an equal per share basis.
The Corporation shall not reclassify, subdivide or combine the Series A TCI
Ventures Group Common Stock without reclassifying, subdividing or combining the
Series B TCI Ventures Group Common Stock, on an equal per share basis, and the
Corporation shall not reclassify, subdivide or combine the Series B TCI Ventures
Group Common Stock without reclassifying, subdividing or combining the Series A
TCI Ventures Group Common Stock, on an equal per share basis.
5. Redemption and Other Provisions Relating to the Series A Liberty Media
----------------------------------------------------------------------
Group Common Stock and Series B Liberty Media Group Common Stock
- ----------------------------------------------------------------
(a) REDEMPTION IN EXCHANGE FOR STOCK OF LIBERTY MEDIA GROUP SUBSIDIARIES.
At any time at which all of the assets and liabilities attributed to the Liberty
Media Group have become and continue to be held directly or indirectly by any
one or more Qualifying Subsidiaries (the "Liberty Media Group Subsidiaries"),
the Board of Directors may, subject to the availability of assets of the
Corporation legally available therefor, redeem, on a pro rata basis, all of the
outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock in exchange for an aggregate number of
outstanding fully paid and
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<PAGE>
nonassessable shares of common stock of each Liberty Media Group Subsidiary
equal to the product of the Adjusted Liberty Media Group Outstanding Interest
Fraction and the number of outstanding shares of common stock of such Liberty
Media Group Subsidiary held by the Corporation. Any such redemption shall occur
on a Redemption Date set forth in a notice to holders of Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock and Convertible
Securities convertible into or exercisable or exchangeable for shares of either
such series (unless provision for notice is otherwise made pursuant to the terms
of such Convertible Securities) pursuant to paragraph 5(d)(vi). In effecting
such a redemption, the Board of Directors may determine either to (i) redeem
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock in exchange for shares of separate classes or series of
common stock of each Liberty Media Group Subsidiary with relative voting rights
and related differences in designation, conversion, redemption and share
distribution provisions not greater than the corresponding differences in voting
rights, designation, conversion, redemption and share distribution provisions
between the Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock, with holders of shares of Series B Liberty Media Group
Common Stock receiving the class or series having the higher relative voting
rights, or (ii) redeem shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock in exchange for shares of a single
class of common stock of each Liberty Media Group Subsidiary without distinction
between the shares distributed to the holders of the Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock. If the
Corporation determines to undertake a redemption as described in clause (i) of
the preceding sentence, the outstanding shares of common stock of each Liberty
Media Group Subsidiary not distributed to holders of Series A Liberty Media
Group Common Stock or Series B Liberty Media Group Common Stock shall consist
solely of the class or series having the lower relative voting rights.
(b) MANDATORY DIVIDEND, REDEMPTION OR CONVERSION IN CASE OF DISPOSITION OF
LIBERTY MEDIA GROUP ASSETS. In the event of the Disposition, in one transaction
or a series of related transactions, by the Corporation and its subsidiaries of
all or substantially all of the properties and assets of the Liberty Media Group
to one or more persons, entities or groups (other than (w) in connection with
the Disposition by the Corporation of all of the Corporation's properties and
assets in one transaction or a series of related transactions in connection with
the liquidation, dissolution or winding up of the Corporation within the meaning
of paragraph 7 of this Section E, (x) a dividend, other distribution or
redemption in accordance with any provision of paragraph 3, paragraph 4,
paragraph 5(a) or paragraph 7 of this Section E, (y) to any person, entity or
group which the Corporation, directly or indirectly, after giving effect to the
Disposition, controls or (z) in connection with a Related Business Transaction),
the Corporation shall, on or prior to the 85th Trading Day following the
consummation of such Disposition, either:
(i) subject to paragraph 3(b) of this Section E, declare and pay a
dividend in cash and/or in securities or other property (other than a
dividend or distribution of
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<PAGE>
Common Stock) to the holders of the outstanding shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock
equally on a share for share basis (subject to the last sentence of this
Section 5(b)), in an aggregate amount equal to the product of the Liberty
Media Group Outstanding Interest Fraction as of the record date for
determining the holders entitled to receive such dividend and the Liberty
Media Group Net Proceeds of such Disposition; or
(ii) provided that there are assets of the Corporation legally
available therefor and the Liberty Media Group Available Dividend Amount
would have been sufficient to pay a dividend in lieu thereof pursuant to
clause (i) of this paragraph 5(b), then:
(A) if such Disposition involves all (not merely substantially
all) of the properties and assets of the Liberty Media Group, redeem
all outstanding shares of Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock in exchange for cash
and/or securities or other property (other than Common Stock) in an
aggregate amount equal to the product of the Adjusted Liberty Media
Group Outstanding Interest Fraction as of the date of such redemption
and the Liberty Media Group Net Proceeds, such aggregate amount to be
allocated (subject to the last sentence of this paragraph 5(b)) to
shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock in the ratio of the number of shares
of each such series outstanding (so that the amount of consideration
paid for the redemption of each share of Series A Liberty Media Group
Common Stock and each share of Series B Liberty Media Group Common
Stock is the same); or
(B) if such Disposition involves substantially all (but not all)
of the properties and assets of the Liberty Media Group, apply an
aggregate amount of cash and/or securities or other property (other
than Common Stock) equal to the product of the Liberty Media Group
Outstanding Interest Fraction as of the date shares are selected for
redemption and the Liberty Media Group Net Proceeds to the redemption
of outstanding shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock, such aggregate amount to be
allocated (subject to the last sentence of this paragraph 5(b)) to
shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock in the ratio of the number of shares
of each such series outstanding, and the number of shares of each such
series to be redeemed to equal the lesser of (x) the whole number
nearest the number determined by dividing the aggregate amount so
allocated to the redemption of such series by the average Market Value
of one share of Series A Liberty Media Group Common Stock during the
ten-Trading Day period beginning on the 16th Trading Day following the
consummation of such Disposition and (y) the number of shares of such
series outstanding (so that the amount of consideration paid for the
redemption of each
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<PAGE>
share of Series A Liberty Media Group Common Stock and each share of
Series B Liberty Media Group Common Stock is the same);
such redemption to be effected in accordance with the applicable provisions
of paragraph 5(d) of this Section E; or
(iii) convert (A) each outstanding share of Series A Liberty Media
Group Common Stock into a number (or fraction) of fully paid and
nonassessable shares of Series A TCI Group Common Stock and (B) each
outstanding share of Series B Liberty Media Group Common Stock into a
number (or fraction) of fully paid and nonassessable shares of Series B TCI
Group Common Stock, in each case equal to 110% of the average daily ratio
(calculated to the nearest five decimal places) of the Market Value of one
share of Series A Liberty Media Group Common Stock to the Market Value of
one share of Series A TCI Group Common Stock during the ten-Trading Day
period referred to in clause (ii)(B) of this paragraph 5(b).
For purposes of this paragraph 5(b):
(x) as of any date, "substantially all of the properties and assets
of the Liberty Media Group" shall mean a portion of such properties and
assets that represents at least 80% of the then-current market value (as
determined by the Board of Directors) of the properties and assets of the
Liberty Media Group as of such date;
(y) in the case of a Disposition of properties and assets in a
series of related transactions, such Disposition shall not be deemed to
have been consummated until the consummation of the last of such
transactions; and
(z) the Corporation may pay the dividend or redemption price
referred to in clause (i) or (ii) of this subparagraph 5(b) either in the
same form as the proceeds of the Disposition were received or in any other
combination of cash or securities or other property (other than Common
Stock) that the Board of Directors determines will have an aggregate market
value on a fully distributed basis, of not less than the amount of the
Liberty Media Group Net Proceeds. If the dividend or redemption price is
paid in the form of securities of an issuer other than the Corporation, the
Board of Directors may determine either to (1) pay the dividend or
redemption price in the form of separate classes or series of securities,
with one class or series of such securities to holders of Series A Liberty
Media Group Common Stock and another class or series of securities to
holders of Series B Liberty Media Group Common Stock, provided that such
securities (and, if such securities are convertible into or exercisable or
exchangeable for shares of another class or series of securities, the
securities so issuable upon such conversion, exercise or exchange) do not
differ in any respect other than their relative voting rights and related
differences in designation, conversion, redemption and share distribution
18
<PAGE>
provisions, with holders of shares of Series B Liberty Media Group Common
Stock receiving the class or series having the higher relative voting
rights (without regard to whether such rights differ to a greater or lesser
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series
A Liberty Media Group Common Stock and the Series B Liberty Media Group
Common Stock), provided that if such securities constitute capital stock of
a Subsidiary of the Corporation, such rights shall not differ to a greater
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series
A Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock, and otherwise such securities shall be distributed on an equal per
share basis, or (2) pay the dividend or redemption price in the form of a
single class of securities without distinction between the shares received
by the holders of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock.
(c) CERTAIN PROVISIONS RESPECTING CONVERTIBLE SECURITIES. Unless the
provisions of any class or series of Pre-Distribution Convertible Securities or
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares provide specifically to the contrary, after any
Conversion Date or Redemption Date on which all outstanding shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common Stock
were converted or redeemed, any share of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock that is issued on conversion,
exercise or exchange of any Pre-Distribution Convertible Securities or any
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares shall, immediately upon issuance pursuant to
such conversion, exercise or exchange and without any notice or any other action
on the part of the Corporation or its Board of Directors or the holder of such
share of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock, be converted into (in case all such outstanding shares were
converted) or redeemed in exchange for (in case all such outstanding shares were
redeemed) the kind and amount of shares of capital stock, cash and/or other
securities or property that a holder of such Pre-Distribution Convertible
Securities or any Convertible Securities which are convertible into or
exercisable or exchangeable for Committed Acquisition Shares would have been
entitled to receive pursuant to the terms of such securities had such terms
provided that the conversion, exercise or exchange privilege in effect
immediately prior to any such conversion or redemption of all outstanding shares
of Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock would be adjusted so that the holder of any such Pre-Distribution
Convertible Securities or any Convertible Securities which are convertible into
or exercisable or exchangeable for Committed Acquisition Shares thereafter
surrendered for conversion, exercise or exchange would be entitled to receive
the kind and amount of shares of capital stock, cash and/or other securities or
property such holder would have received as a result of such action had such
securities been converted, exercised or exchanged immediately prior thereto.
With respect to any Convertible Securities which are created, established or
otherwise first authorized for
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<PAGE>
issuance subsequent to the record date for the Liberty Distribution (other than
Pre-Distribution Convertible Securities and Convertible Securities which are
convertible into or exercisable or exchangeable for Committed Acquisition
Shares), the terms and provisions of which do not provide for adjustments
specifying the kind and amount of capital stock, cash and/or securities or other
property that such holder would be entitled to receive upon the conversion,
exercise or exchange of such Convertible Securities following any Conversion
Date or Redemption Date on which all outstanding shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock were
converted or redeemed, then upon such conversion, exercise or exchange of such
Convertible Securities, any share of Series A Liberty Media Group Common Stock
or Series B Liberty Media Group Common Stock that is issued on conversion,
exercise or exchange of any such Convertible Securities shall, immediately upon
issuance pursuant to such conversion, exercise or exchange and without any
notice or any other action on the part of the Corporation or its Board of
Directors or the holder of such share of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock, be redeemed in exchange for,
to the extent assets of the Corporation are legally available therefor, the
amount of $.01 per share in cash.
(d) GENERAL.
(i) Not later than the 10th Trading Day following the consummation of a
Disposition referred to in subparagraph 5(b) of this Section E, the Corporation
shall announce publicly by press release (A) the Liberty Media Group Net
Proceeds of such Disposition, (B) the number of outstanding shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common Stock,
(C) the number of shares of Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock into or for which Convertible Securities are
then convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof (and stating which, if any, of such Convertible
Securities constitute Pre-Distribution Convertible Securities or Convertible
Securities which are convertible into or exercisable or exchangeable for
Committed Acquisition Shares) and the number of Committed Acquisition Shares
issuable, (D) the Liberty Media Group Outstanding Interest Fraction as of a
recent date preceding the date of such notice and (E) the Adjusted Liberty Media
Group Outstanding Interest Fraction as of a recent date preceding the date of
such notice. Not earlier than the 26th Trading Day and not later than the 30th
Trading Day following the consummation of such Disposition, the Corporation
shall announce publicly by press release which of the actions specified in
clauses (i), (ii) or (iii) of paragraph 5(b) of this Section E it has
irrevocably determined to take.
(ii) If the Corporation determines to pay a dividend pursuant to clause
(i) of subparagraph 5(b) of this Section E, the Corporation shall, not later
than the 30th Trading Day following the consummation of such Disposition, cause
to be given to each holder of outstanding shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock, and to each holder
of Convertible Securities convertible into or exercisable or
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<PAGE>
exchangeable for shares of either such series (unless provision for notice is
otherwise made pursuant to the terms of such Convertible Securities), a notice
setting forth (A) the record date for determining holders entitled to receive
such dividend, which shall be not earlier than the 40th Trading Day and not
later than the 50th Trading Day following the consummation of such Disposition,
(B) the anticipated payment date of such dividend (which shall not be more than
85 Trading Days following the consummation of such Disposition), (C) the kind of
shares of capital stock, cash and/or other securities or property to be
distributed in respect of shares of Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock, (D) the Liberty Media Group Net
Proceeds of such Disposition, (E) the Liberty Media Group Outstanding Interest
Fraction as of a recent date preceding the date of such notice, (F) the number
of outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock and the number of shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock into or
for which outstanding Convertible Securities are then convertible, exercisable
or exchangeable and the conversion, exercise or exchange prices thereof and (G)
in the case of a notice to holders of Convertible Securities, a statement to the
effect that holders of such Convertible Securities shall be entitled to receive
such dividend only if they appropriately convert, exercise or exchange such
Convertible Securities prior to the record date referred to in clause (A) of
this sentence. Such notice shall be sent by first-class mail, postage prepaid,
at such holder's address as the same appears on the transfer books of the
Corporation.
(iii) If the Corporation determines to undertake a redemption of shares
of Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock following a Disposition of all (not merely substantially all) of
the properties and assets of the Liberty Media Group pursuant to clause (ii) (A)
of paragraph 5(b) of this Section E, the Corporation shall cause to be given to
each holder of outstanding shares of Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock and to each holder of Convertible
Securities convertible into or exercisable or exchangeable for shares of either
such series (unless provision for notice is otherwise made pursuant to the terms
of such Convertible Securities), a notice setting forth (A) a statement that all
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock outstanding on the Redemption Date shall be redeemed, (B) the
Redemption Date (which shall not be more than 85 Trading Days following the
consummation of such Disposition), (C) the kind of shares of capital stock, cash
and/or other securities or property to be paid as a redemption price in respect
of shares of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock outstanding on the Redemption Date, (D) the Liberty
Media Group Net Proceeds of such Disposition, (E) the Adjusted Liberty Media
Group Outstanding Interest Fraction as of a recent date preceding the date of
such notice, (F) the place or places where certificates for shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common Stock,
properly endorsed or assigned for transfer (unless the Corporation waives such
requirement), are to be surrendered for delivery of certificates for shares of
such capital stock, cash and/or other securities or property, (G) the number of
outstanding shares of Series A Liberty
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Media Group Common Stock and Series B Liberty Media Group Common Stock and the
number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock into or for which outstanding Convertible
Securities are then convertible, exercisable or exchangeable and the conversion,
exercise or exchange prices thereof (and stating which, if any, of such
Convertible Securities constitute Pre-Distribution Convertible Securities or
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares) and the number of Committed Acquisition Shares
issuable, and (H) in the case of a notice to holders of Convertible Securities
(other than Pre-Distribution Convertible Securities or Convertible Securities
which are convertible into or exercisable or exchangeable for Committed
Acquisition Shares), a statement to the effect that holders of such Convertible
Securities shall be entitled to participate in such redemption only if such
holders appropriately convert, exercise or exchange such Convertible Securities
on or prior to the Redemption Date referred to in clause (B) of this sentence
and a statement as to what, if anything, such holders shall be entitled to
receive pursuant to the terms of such Convertible Securities or, if applicable,
paragraph 5(c) of this Section E if such holders convert, exercise or exchange
such Convertible Securities following such Redemption Date. Such notice shall be
sent by first-class mail, postage prepaid, not less than 35 Trading Days nor
more than 45 Trading Days prior to the Redemption Date, at such holder's address
as the same appears on the transfer books of the Corporation.
(iv) If the Corporation determines to undertake a redemption of shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock following a Disposition of substantially all (but not all) of the
properties and assets of the Liberty Media Group pursuant to clause (ii)(B) of
paragraph 5(b) of this Section E, the Corporation shall, not later than the 30th
Trading Day following the consummation of such Disposition, cause to be given to
each holder of record of outstanding shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock, and to each holder
of Convertible Securities convertible into or exercisable or exchangeable for
shares of either such series (unless provision for notice is otherwise made
pursuant to the terms of such Convertible Securities), a notice setting forth
(A) a date not earlier than the 40th Trading Day and not later than the 50th
Trading Day following the consummation of such Disposition which shall be the
date on which shares of the Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock then outstanding shall be selected for
redemption, (B) the anticipated Redemption Date (which shall not be more than 85
Trading Days following the consummation of such Disposition), (C) the kind of
shares of capital stock, cash and/or other securities or property to be paid as
a redemption price in respect of shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock selected for redemption, (D)
the Liberty Media Group Net Proceeds of such Disposition, (E) the Liberty Media
Group Outstanding Interest Fraction as of a recent date preceding the date of
such notice, (F) the number of outstanding shares of Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock and the number
of shares of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock into or for which outstanding
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Convertible Securities are then convertible, exercisable or exchangeable and the
conversion or exercise prices thereof, (G) in the case of a notice to holders of
Convertible Securities, a statement to the effect that holders of such
Convertible Securities shall be entitled to participate in such selection for
redemption only if such holders appropriately convert, exercise or exchange such
Convertible Securities on or prior to the date referred to in clause (A) of this
sentence and a statement as to what, if anything, such holders shall be entitled
to receive pursuant to the terms of such Convertible Securities if such holders
convert, exercise or exchange such Convertible Securities following such date
and (H) a statement that the Corporation will not be required to register a
transfer of any shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock for a period of 15 Trading Days next preceding
the date referred to in clause (A) of this sentence. Promptly following the date
referred to in clause (A) of the preceding sentence, but not earlier than the
40th Trading Day and not later than the 50th Trading Day following the
consummation of such Disposition, the Corporation shall cause to be given to
each holder of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock to be so redeemed, a notice setting forth (A)
the number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock held by such holder to be redeemed, (B) a
statement that such shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock shall be redeemed, (C) the Redemption
Date (which shall not be more than 85 Trading Days following the consummation of
such Disposition), (D) the kind and per share amount of shares of capital stock,
cash and/or other securities or property to be received by such holder with
respect to each share of such Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock to be redeemed, including details as
to the calculation thereof, and (E) the place or places where certificates for
shares of such Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock, properly endorsed or assigned for transfer (unless the
Corporation waives such requirement), are to be surrendered for delivery of
certificates for shares of such capital stock, cash and/or other securities or
property. The notices referred to in this clause (iv) shall be sent by first-
class mail, postage prepaid, at such holder's address as the same appears on the
transfer books of the Corporation. The outstanding shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock to be
redeemed shall be redeemed by the Corporation pro rata among the holders of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock or by such other method as may be determined by the Board of
Directors to be equitable.
(v) In the event of any conversion pursuant to paragraph 2(d) of this
Section E or pursuant to this paragraph 5 (other than pursuant to paragraph
5(c)), the Corporation shall cause to be given to each holder of outstanding
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock and to each holder of Convertible Securities convertible into
or exercisable or exchangeable for shares of either such series (unless
provision for such notice is otherwise made pursuant to the terms of such
Convertible Securities), a notice setting forth (A) a statement that all
outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock shall be converted, (B) the
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Conversion Date (which shall not be more than 85 Trading Days following the
consummation of such Disposition in the event of a conversion pursuant to
paragraph 5(b) and which shall not be more than 120 days after the Appraisal
Date in the event of a conversion pursuant to paragraph 2(d)), (C) the per share
number of shares of Series A TCI Group Common Stock or Series B TCI Group Common
Stock, as applicable, to be received with respect to each share of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock,
including details as to the calculation thereof, (D) the place or places where
certificates for shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock, properly endorsed or assigned for transfer
(unless the Corporation shall waive such requirement), are to be surrendered,
(E) the number of outstanding shares of Series A Liberty Media Group Common
Stock and Series B Liberty Media Group Common Stock, the number of Committed
Acquisition Shares issuable and the number of shares of Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock into or for
which outstanding Convertible Securities are then convertible, exercisable or
exchangeable and the conversion, exercise or exchange prices thereof and (F) in
the case of a notice to holders of Convertible Securities, a statement to the
effect that holders of such Convertible Securities shall be entitled to
participate in such conversion only if such holders appropriately convert,
exercise or exchange such Convertible Securities on or prior to the Conversion
Date referred to in clause (B) of this sentence and a statement as to what, if
anything, such holders shall be entitled to receive pursuant to the terms of
such Convertible Securities or, if applicable, paragraph 5(c) of this Section E
if such holders convert, exercise or exchange such Convertible Securities
following such Conversion Date. Such notice shall be sent by first-class mail,
postage prepaid, not less than 35 Trading Days nor more than 45 Trading Days
prior to the Conversion Date, at such holder's address as the same appears on
the transfer books of the Corporation.
(vi) If the Corporation determines to redeem shares of Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock pursuant
to subparagraph (a) of this paragraph 5, the Corporation shall promptly cause to
be given to each holder of Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock and to each holder of Convertible Securities
convertible into or exercisable or exchangeable for shares of either such series
(unless provision for such notice is otherwise made pursuant to the terms of
such Convertible Securities), a notice setting forth (A) a statement that all
outstanding shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock shall be redeemed in exchange for shares of
common stock of the Liberty Media Group Subsidiaries, (B) the Redemption Date,
(C) the Adjusted Liberty Media Group Outstanding Interest Fraction as of a
recent date preceding the date of such notice, (D) the place or places where
certificates for shares of Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock, properly endorsed or assigned for transfer
(unless the Corporation shall waive such requirement), are to be surrendered for
delivery of certificates for shares of common stock of the Liberty Media Group
Subsidiaries, (E) the number of outstanding shares of Series A Liberty Media
Group Common Stock and Series B Liberty Media Group Common Stock and the number
of shares of Series A Liberty Media Group Common Stock and
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Series B Liberty Media Group Common Stock into or for which outstanding
Convertible Securities are then convertible, exercisable or exchangeable and the
conversion, exercise or exchange prices thereof (and stating which, if any, of
such Convertible Securities constitute Pre-Distribution Convertible Securities
or Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares) and the number of Committed
Acquisition Shares issuable, and (F) in the case of a notice to holders of
Convertible Securities (other than Pre-Distribution Convertible Securities or
Convertible Securities which are convertible into or exercisable or exchangeable
for Committed Acquisition Shares), a statement to the effect that holders of
such Convertible Securities shall be entitled to participate in such redemption
only if such holders appropriately convert, exercise or exchange such
Convertible Securities on or prior to the Redemption Date referred to in clause
(B) of this sentence and a statement as to what, if anything, such holders shall
be entitled to receive pursuant to the terms of such Convertible Securities or,
if applicable, paragraph 5(c) of this Section E if such holders convert,
exercise or exchange such Convertible Securities following the Redemption Date.
Such notice shall be sent by first-class mail, postage prepaid, not less than 35
Trading Days nor more than 45 Trading Days prior to the Redemption Date, at such
holder's address as the same appears on the transfer books of the Corporation.
(vii) Neither the failure to mail any notice required by this paragraph
5(d) to any particular holder of Series A Liberty Media Group Common Stock,
Series B Liberty Media Group Common Stock or of Convertible Securities nor any
defect therein shall affect the sufficiency thereof with respect to any other
holder of outstanding shares of Series A Liberty Media Group Common Stock or
Series B Liberty Media Group Common Stock or of Convertible Securities, or the
validity of any conversion or redemption.
(viii) The Corporation shall not be required to issue or deliver
fractional shares of any class of capital stock or any fractional securities to
any holder of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock upon any conversion, redemption, dividend or other
distribution pursuant to paragraph 2(d) of this Section E or pursuant to this
paragraph 5. In connection with the determination of the number of shares of
any class of capital stock that shall be issuable or the amount of securities
that shall be deliverable to any holder of record upon any such conversion,
redemption, dividend or other distribution (including any fractions of shares or
securities), the Corporation may aggregate the number of shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
held at the relevant time by such holder of record. If the number of shares of
any class of capital stock or the amount of securities remaining to be issued or
delivered to any holder of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock is a fraction, the Corporation shall, if such
fraction is not issued or delivered to such holder, pay a cash adjustment in
respect of such fraction in an amount equal to the fair market value of such
fraction on the fifth Trading Day prior to the date such payment is to be made
(without interest). For purposes of the preceding sentence, "fair market value"
of any fraction shall be (A) in the case of any fraction of a share of capital
stock of the Corporation, the
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product of such fraction and the Market Value of one share of such capital
stock and (B) in the case of any other fractional security, such value as is
determined by the Board of Directors.
(ix) No adjustments in respect of dividends shall be made upon the
conversion or redemption of any shares of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock; provided, however, that if
the Conversion Date or the Redemption Date with respect to the Series A Liberty
Media Group Common Stock or Series B Liberty Media Group Common Stock shall be
subsequent to the record date for the payment of a dividend or other
distribution thereon or with respect thereto, the holders of shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock at
the close of business on such record date shall be entitled to receive the
dividend or other distribution payable on or with respect to such shares on the
date set for payment of such dividend or other distribution, notwithstanding the
conversion or redemption of such shares or the Corporation's default in payment
of the dividend or distribution due on such date.
(x) Before any holder of shares of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock shall be entitled to receive
certificates representing shares of any kind of capital stock or cash and/or
securities or other property to be received by such holder with respect to
shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock pursuant to paragraph 2(d) of this Section E or pursuant to
this paragraph 5, such holder shall surrender at such place as the Corporation
shall specify certificates for such shares of Series A Liberty Media Group
Common Stock or Series B Liberty Media Group Common Stock, properly endorsed or
assigned for transfer (unless the Corporation shall waive such requirement).
The Corporation shall as soon as practicable after such surrender of
certificates representing shares of Series A Liberty Media Group Common Stock or
Series B Liberty Media Group Common Stock deliver to the person for whose
account shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock were so surrendered, or to the nominee or nominees of
such person, certificates representing the number of whole shares of the kind of
capital stock or cash and/or securities or other property to which such person
shall be entitled as aforesaid, together with any payment for fractional
securities contemplated by paragraph 5(d)(viii). If less than all of the shares
of Series A Liberty Media Group Common Stock or Series B Liberty Media Group
Common Stock represented by any one certificate are to be redeemed, the
Corporation shall issue and deliver a new certificate for the shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
not redeemed. The Corporation shall not be required to register a transfer of
(1) any shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock for a period of 15 Trading Days next preceding any
selection of shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock to be redeemed or (2) any shares of Series A
Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
selected or called for redemption. Shares selected for redemption may not
thereafter be converted pursuant to paragraph 2(b) of this Section E.
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(xi) From and after any applicable Conversion Date or Redemption Date, all
rights of a holder of shares of Series A Liberty Media Group Common Stock or
Series B Liberty Media Group Common Stock that were converted or redeemed shall
cease except for the right, upon surrender of the certificates representing
shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock, to receive certificates representing shares of the kind and
amount of capital stock or cash and/or securities or other property for which
such shares were converted or redeemed, together with any payment for fractional
securities contemplated by paragraph 5(d)(viii) of this Section E and such
holder shall have no other or further rights in respect of the shares of Series
A Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
so converted or redeemed, including, but not limited to, any rights with respect
to any cash, securities or other properties which are reserved or otherwise
designated by the Corporation as being held for the satisfaction of the
Corporation's obligations to pay or deliver any cash, securities or other
property upon the conversion, exercise or exchange of any Convertible Securities
outstanding as of the date of such conversion or redemption or any Committed
Acquisition Shares which may then be issuable. No holder of a certificate that,
immediately prior to the applicable Conversion Date or Redemption Date for the
Series A Liberty Media Group Common Stock or Series B Liberty Media Group Common
Stock, represented shares of Series A Liberty Media Group Common Stock or Series
B Liberty Media Group Common Stock shall be entitled to receive any dividend or
other distribution with respect to shares of any kind of capital stock into or
in exchange for which the Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock was converted or redeemed until surrender of
such holder's certificate for a certificate or certificates representing shares
of such kind of capital stock. Upon such surrender, there shall be paid to the
holder the amount of any dividends or other distributions (without interest)
which theretofore became payable with respect to a record date after the
Conversion Date or Redemption Date, as the case may be, but that were not paid
by reason of the foregoing, with respect to the number of whole shares of the
kind of capital stock represented by the certificate or certificates issued upon
such surrender. From and after a Conversion Date or Redemption Date, as the
case may be, for any shares of Series A Liberty Media Group Common Stock or
Series B Liberty Media Group Common Stock, the Corporation shall, however, be
entitled to treat the certificates for shares of Series A Liberty Media Group
Common Stock or Series B Liberty Media Group Common Stock that have not yet been
surrendered for conversion or redemption as evidencing the ownership of the
number of whole shares of the kind or kinds of capital stock for which the
shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock represented by such certificates shall have been converted or
redeemed, notwithstanding the failure to surrender such certificates.
(xii) The Corporation shall pay any and all documentary, stamp or similar
issue or transfer taxes that may be payable in respect of the issue or delivery
of any shares of capital stock and/or other securities on conversion or
redemption of shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock pursuant to this Section E.
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The Corporation shall not, however, be required to pay any tax that may be
payable in respect of any transfer involved in the issue and delivery of any
shares of capital stock in a name other than that in which the shares of Series
A Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
so converted or redeemed were registered and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the
Corporation the amount of any such tax, or has established to the satisfaction
of the Corporation that such tax has been paid.
6. Redemption and Other Provisions Relating to the Series A TCI Ventures Group
---------------------------------------------------------------------------
Common Stock and Series B TCI Ventures Group Common Stock.
- ---------------------------------------------------------
(a) REDEMPTION IN EXCHANGE FOR STOCK OF TCI VENTURES GROUP SUBSIDIARIES.
At any time at which all of the assets and liabilities attributed to the TCI
Ventures Group have become and continue to be held directly or indirectly by any
one or more Qualifying Subsidiaries (the "TCI Ventures Group Subsidiaries"), the
Board of Directors may, subject to the availability of assets of the Corporation
legally available therefor, redeem, on a pro rata basis, all of the outstanding
shares of Series A TCI Ventures Group Common Stock and Series B TCI Ventures
Group Common Stock in exchange for an aggregate number of outstanding fully paid
and nonassessable shares of common stock of each TCI Ventures Group Subsidiary
equal to the product of the Adjusted TCI Ventures Group Outstanding Interest
Fraction and the number of outstanding shares of common stock of such TCI
Ventures Group Subsidiary held by the Corporation. Any such redemption shall
occur on a Redemption Date set forth in a notice to holders of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock and
Convertible Securities convertible into or exercisable or exchangeable for
shares of either such series (unless provision for notice is otherwise made
pursuant to the terms of such Convertible Securities) pursuant to paragraph
6(d)(vi). In effecting such a redemption, the Board of Directors may determine
either to (i) redeem shares of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock in exchange for shares of separate
classes or series of common stock of each TCI Ventures Group Subsidiary with
relative voting rights and related differences in designation, conversion,
redemption and share distribution provisions not greater than the corresponding
differences in voting rights, designation, conversion, redemption and share
distribution provisions between the Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock, with holders of shares of Series B TCI
Ventures Group Common Stock receiving the class or series having the higher
relative voting rights, or (ii) redeem shares of Series A TCI Ventures Group
Common Stock and Series B TCI Ventures Group Common Stock in exchange for shares
of a single class of common stock of each TCI Ventures Group Subsidiary without
distinction between the shares distributed to the holders of the Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock.
(b) MANDATORY DIVIDEND, REDEMPTION OR CONVERSION IN CASE OF DISPOSITION OF
TCI VENTURES GROUP ASSETS. In the event of the Disposition, in one transaction
or a series of
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related transactions, by the Corporation and its subsidiaries of all or
substantially all of the properties and assets of the TCI Ventures Group to one
or more persons, entities or groups (other than (w) in connection with the
Disposition by the Corporation of all of the Corporation's properties and assets
in one transaction or a series of related transactions in connection with the
liquidation, dissolution or winding up of the Corporation within the meaning of
paragraph 7 of this Section E, (x) a dividend, other distribution or redemption
in accordance with any provision of paragraph 3, paragraph 4, paragraph 6(a) or
paragraph 7 of this Section E, (y) to any person, entity or group which the
Corporation, directly or indirectly, after giving effect to the Disposition,
controls or (z) in connection with a Related Business Transaction), the
Corporation shall, on or prior to the 85th Trading Day following the
consummation of such Disposition, either:
(i) subject to paragraph 3(c) of this Section E, declare and pay a
dividend in cash and/or in securities or other property (other than a
dividend or distribution of Common Stock) to the holders of the outstanding
shares of Series A TCI Ventures Group Common Stock and Series B TCI
Ventures Group Common Stock equally on a share for share basis (subject to
the last sentence of this Section 6(b)), in an aggregate amount equal to
the product of the TCI Ventures Group Outstanding Interest Fraction as of
the record date for determining the holders entitled to receive such
dividend and the TCI Ventures Group Net Proceeds of such Disposition; or
(ii) provided that there are assets of the Corporation legally
available therefor and the TCI Ventures Group Available Dividend Amount
would have been sufficient to pay a dividend in lieu thereof pursuant to
clause (i) of this paragraph 6(b), then:
(A) if such Disposition involves all (not merely substantially
all) of the properties and assets of the TCI Ventures Group, redeem
all outstanding shares of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock in exchange for cash and/or
securities or other property (other than Common Stock) in an aggregate
amount equal to the product of the Adjusted TCI Ventures Group
Outstanding Interest Fraction as of the date of such redemption and
the TCI Ventures Group Net Proceeds, such aggregate amount to be
allocated (subject to the last sentence of this paragraph 6(b)) to
shares of Series A TCI Ventures Group Common Stock and Series B TCI
Ventures Group Common Stock in the ratio of the number of shares of
each such series outstanding (so that the amount of consideration paid
for the redemption of each share of Series A TCI Ventures Group Common
Stock and each share of Series B TCI Ventures Group Common Stock is
the same); or
(B) if such Disposition involves substantially all (but not all)
of the properties and assets of the TCI Ventures Group, apply an
aggregate amount of cash and/or securities or other property (other
than Common Stock) equal to the
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product of the TCI Ventures Group Outstanding Interest Fraction as of
the date shares are selected for redemption and the TCI Ventures Group
Net Proceeds to the redemption of outstanding shares of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock, such aggregate amount to be allocated (subject to the last
sentence of this paragraph 6(b)) to shares of Series A TCI Ventures
Group Common Stock and Series B TCI Ventures Group Common Stock in the
ratio of the number of shares of each such series outstanding, and the
number of shares of each such series to be redeemed to equal the
lesser of (x) the whole number nearest the number determined by
dividing the aggregate amount so allocated to the redemption of such
series by the average Market Value of one share of Series A TCI
Ventures Group Common Stock during the ten-Trading Day period
beginning on the 16th Trading Day following the consummation of such
Disposition and (y) the number of shares of such series outstanding
(so that the amount of consideration paid for the redemption of each
share of Series A TCI Ventures Group Common Stock and each share of
Series B TCI Ventures Group Common Stock is the same);
such redemption to be effected in accordance with the applicable provisions
of paragraph 6(d) of this Section E; or
(iii) convert (A) each outstanding share of Series A TCI Ventures
Group Common Stock into a number (or fraction) of fully paid and
nonassessable shares of Series A TCI Group Common Stock and (B) each
outstanding share of Series B TCI Ventures Group Common Stock into a number
(or fraction) of fully paid and nonassessable shares of Series B TCI Group
Common Stock, in each case equal to 110% of the average daily ratio
(calculated to the nearest five decimal places) of the Market Value of one
share of Series A TCI Ventures Group Common Stock to the Market Value of
one share of Series A TCI Group Common Stock during the ten-Trading Day
period referred to in clause (ii)(B) of this paragraph 6(b).
For purposes of this paragraph 6(b):
(x) as of any date, "substantially all of the properties and assets
of the TCI Ventures Group" shall mean a portion of such properties and
assets that represents at least 80% of the then-current market value (as
determined by the Board of Directors) of the properties and assets of the
TCI Ventures Group as of such date;
(y) in the case of a Disposition of properties and assets in a
series of related transactions, such Disposition shall not be deemed to
have been consummated until the consummation of the last of such
transactions; and
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(z) the Corporation may pay the dividend or redemption price referred
to in clause (i) or (ii) of this subparagraph 6(b) either in the same form
as the proceeds of the Disposition were received or in any other
combination of cash or securities or other property (other than Common
Stock) that the Board of Directors determines will have an aggregate market
value on a fully distributed basis, of not less than the amount of the TCI
Ventures Group Net Proceeds. If the dividend or redemption price is paid
in the form of securities of an issuer other than the Corporation, the
Board of Directors may determine either to (1) pay the dividend or
redemption price in the form of separate classes or series of securities,
with one class or series of such securities to holders of Series A TCI
Ventures Group Common Stock and another class or series of securities to
holders of Series B TCI Ventures Group Common Stock, provided that such
securities (and, if such securities are convertible into or exercisable or
exchangeable for shares of another class or series of securities, the
securities so issuable upon such conversion, exercise or exchange) do not
differ in any respect other than their relative voting rights and related
differences in designation, conversion, redemption and share distribution
provisions, with holders of shares of Series B TCI Ventures Group Common
Stock receiving the class or series having the higher relative voting
rights (without regard to whether such rights differ to a greater or lesser
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series
A TCI Ventures Group Common Stock and the Series B TCI Ventures Group
Common Stock), provided that if such securities constitute capital stock of
a Subsidiary of the Corporation, such rights shall not differ to a greater
extent than the corresponding differences in voting rights, designation,
conversion, redemption and share distribution provisions between the Series
A TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock, and otherwise such securities shall be distributed on an equal per
share basis, or (2) pay the dividend or redemption price in the form of a
single class of securities without distinction between the shares received
by the holders of Series A TCI Ventures Group Common Stock and Series B TCI
Ventures Group Common Stock.
(c) CERTAIN PROVISIONS RESPECTING CONVERTIBLE SECURITIES. Unless the
provisions of any class or series of Pre-Exchange Offer Securities provide
specifically to the contrary, after any Conversion Date or Redemption Date on
which all outstanding shares of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock were converted or redeemed, any share
of Series A TCI Ventures Group Common Stock that is issued on conversion,
exercise or exchange of any Pre-Exchange Offer Securities shall, immediately
upon issuance pursuant to such conversion, exercise or exchange and without any
notice or any other action on the part of the Corporation or its Board of
Directors or the holder of such share of Series A TCI Ventures Group Common
Stock, be converted into (in case all such outstanding shares were converted) or
redeemed in exchange for (in case all such outstanding shares were redeemed) the
kind and amount of shares of capital stock, cash and/or other securities or
property that a holder of such Pre-Exchange Offer Securities would have been
entitled to receive pursuant
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to the terms of such securities had such terms provided that the conversion,
exercise or exchange privilege in effect immediately prior to any such
conversion or redemption of all outstanding shares of Series A TCI Ventures
Group Common Stock and Series B TCI Ventures Group Common Stock would be
adjusted so that the holder of any such Pre-Exchange Offer Securities thereafter
surrendered for conversion, exercise or exchange would be entitled to receive
the kind and amount of shares of capital stock, cash and/or other securities or
property such holder would have received as a result of such action had such
securities been exchanged immediately prior thereto. Unless the provisions of
any class or series of Convertible Securities (other than Pre-Exchange Offer
Securities) which are or become convertible into or exercisable or exchangeable
for shares of Series A TCI Ventures Group Common Stock or Series B TCI Ventures
Group Common Stock provide specifically to the contrary, after any Conversion
Date or Redemption Date on which all outstanding shares of Series A TCI Ventures
Group Common Stock and Series B TCI Ventures Group Common Stock were converted
or redeemed, any share of Series A TCI Ventures Group Common Stock or Series B
TCI Ventures Group Common Stock that is issued on conversion, exercise or
exchange of any such Convertible Securities will, immediately upon issuance
pursuant to such conversion, exercise or exchange and without any notice or any
other action on the part of the Corporation or its Board of Directors or the
holder of such share of Series A TCI Ventures Group Common Stock or Series B TCI
Ventures Group Common Stock, be redeemed in exchange for, to the extent assets
of the Corporation are legally available therefor, the amount of $.01 per share
in cash.
(d) GENERAL.
(i) Not later than the 10th Trading Day following the consummation of a
Disposition referred to in subparagraph 6(b) of this Section E, the Corporation
shall announce publicly by press release (A) the TCI Ventures Group Net Proceeds
of such Disposition, (B) the number of outstanding shares of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock, (C)
the number of shares of Series A TCI Ventures Group Common Stock and Series B
TCI Ventures Group Common Stock into or for which Convertible Securities are
then convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof (and stating which, if any, of such Convertible
Securities constitute Pre-Exchange Offer Securities), (D) the TCI Ventures Group
Outstanding Interest Fraction as of a recent date preceding the date of such
notice, and (E) the Adjusted TCI Ventures Group Outstanding Interest Fraction as
of a recent date preceding the date of such notice. Not earlier than the 26th
Trading Day and not later than the 30th Trading Day following the consummation
of such Disposition, the Corporation shall announce publicly by press release
which of the actions specified in clauses (i), (ii) or (iii) of paragraph 6(b)
of this Section E it has irrevocably determined to take.
(ii) If the Corporation determines to pay a dividend pursuant to clause (i)
of subparagraph 6(b) of this Section E, the Corporation shall, not later than
the 30th Trading Day following the consummation of such Disposition, cause to be
given to each holder of outstanding shares of Series A TCI Ventures Group Common
Stock and Series B TCI Ventures Group
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Common Stock, and to each holder of Convertible Securities convertible into or
exercisable or exchangeable for shares of either such series (unless provision
for notice is otherwise made pursuant to the terms of such Convertible
Securities), a notice setting forth (A) the record date for determining holders
entitled to receive such dividend, which shall be not earlier than the 40th
Trading Day and not later than the 50th Trading Day following the consummation
of such Disposition, (B) the anticipated payment date of such dividend (which
shall not be more than 85 Trading Days following the consummation of such
Disposition), (C) the kind of shares of capital stock, cash and/or other
securities or property to be distributed in respect of shares of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock, (D)
the TCI Ventures Group Net Proceeds of such Disposition, (E) the TCI Ventures
Group Outstanding Interest Fraction as of a recent date preceding the date of
such notice, (F) the number of outstanding shares of Series A TCI Ventures Group
Common Stock and Series B TCI Ventures Group Common Stock and the number of
shares of Series A TCI Ventures Group Common Stock and Series B TCI Ventures
Group Common Stock into or for which outstanding Convertible Securities are then
convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof and (G) in the case of a notice to holders of
Convertible Securities, a statement to the effect that holders of such
Convertible Securities shall be entitled to receive such dividend only if they
appropriately convert, exercise or exchange such Convertible Securities prior to
the record date referred to in clause (A) of this sentence. Such notice shall be
sent by first-class mail, postage prepaid, at such holder's address as the same
appears on the transfer books of the Corporation.
(iii) If the Corporation determines to undertake a redemption of shares
of Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group
Common Stock following a Disposition of all (not merely substantially all) of
the properties and assets of the TCI Ventures Group pursuant to clause (ii) (A)
of paragraph 6(b) of this Section E, the Corporation shall cause to be given to
each holder of outstanding shares of Series A TCI Ventures Group Common Stock
and Series B TCI Ventures Group Common Stock and to each holder of Convertible
Securities convertible into or exercisable or exchangeable for shares of either
such series (unless provision for notice is otherwise made pursuant to the terms
of such Convertible Securities), a notice setting forth (A) a statement that all
shares of Series A TCI Ventures Group Common Stock and Series B TCI Ventures
Group Common Stock outstanding on the Redemption Date shall be redeemed, (B) the
Redemption Date (which shall not be more than 85 Trading Days following the
consummation of such Disposition), (C) the kind of shares of capital stock, cash
and/or other securities or property to be paid as a redemption price in respect
of shares of Series A TCI Ventures Group Common Stock and Series B TCI Ventures
Group Common Stock outstanding on the Redemption Date, (D) the TCI Ventures
Group Net Proceeds of such Disposition, (E) the Adjusted TCI Ventures Group
Outstanding Interest Fraction as of a recent date preceding the date of such
notice, (F) the place or places where certificates for shares of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock,
properly endorsed or assigned for transfer (unless the Corporation waives such
requirement), are to be surrendered for delivery of certificates for shares of
such capital stock, cash and/or other securities or property,
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(G) the number of outstanding shares of Series A TCI Ventures Group Common Stock
and Series B TCI Ventures Group Common Stock and the number of shares of Series
A TCI Ventures Group Common Stock and Series B TCI Ventures Group Common Stock
into or for which outstanding Convertible Securities are then convertible,
exercisable or exchangeable and the conversion, exercise or exchange prices
thereof (and stating which, if any, of such Convertible Securities constitute
Pre-Exchange Offer Securities), and (H) in the case of a notice to holders of
Convertible Securities (other than Pre-Exchange Offer Securities), a statement
to the effect that holders of such Convertible Securities shall be entitled to
participate in such redemption only if such holders appropriately convert,
exercise or exchange such Convertible Securities on or prior to the Redemption
Date referred to in clause (B) of this sentence and a statement as to what, if
anything, such holders shall be entitled to receive pursuant to the terms of
such Convertible Securities or, if applicable, paragraph 6(c) of this Section E
if such holders convert, exercise or exchange such Convertible Securities
following such Redemption Date. Such notice shall be sent by first-class mail,
postage prepaid, not less than 35 Trading Days nor more than 45 Trading Days
prior to the Redemption Date, at such holder's address as the same appears on
the transfer books of the Corporation.
(iv) If the Corporation determines to undertake a redemption of shares of
Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock following a Disposition of substantially all (but not all) of the
properties and assets of the TCI Ventures Group pursuant to clause (ii)(B) of
paragraph 6(b) of this Section E, the Corporation shall, not later than the 30th
Trading Day following the consummation of such Disposition, cause to be given to
each holder of record of outstanding shares of Series A TCI Ventures Group
Common Stock and Series B TCI Ventures Group Common Stock, and to each holder of
Convertible Securities convertible into or exercisable or exchangeable for
shares of either such series (unless provision for notice is otherwise made
pursuant to the terms of such Convertible Securities), a notice setting forth
(A) a date not earlier than the 40th Trading Day and not later than the 50th
Trading Day following the consummation of such Disposition which shall be the
date on which shares of the Series A TCI Ventures Group Common Stock and Series
B TCI Ventures Group Common Stock then outstanding shall be selected for
redemption, (B) the anticipated Redemption Date (which shall not be more than 85
Trading Days following the consummation of such Disposition), (C) the kind of
shares of capital stock, cash and/or other securities or property to be paid as
a redemption price in respect of shares of Series A TCI Ventures Group Common
Stock and Series B TCI Ventures Group Common Stock selected for redemption, (D)
the TCI Ventures Group Net Proceeds of such Disposition, (E) the TCI Ventures
Group Outstanding Interest Fraction as of a recent date preceding the date of
such notice, (F) the number of outstanding shares of Series A TCI Ventures Group
Common Stock and Series B TCI Ventures Group Common Stock and the number of
shares of Series A TCI Ventures Group Common Stock and Series B TCI Ventures
Group Common Stock into or for which outstanding Convertible Securities are then
convertible, exercisable or exchangeable and the conversion or exercise prices
thereof, (G) in the case of a notice to holders of Convertible Securities, a
statement to the effect that holders of such Convertible Securities shall be
entitled to participate
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in such selection for redemption only if such holders appropriately convert,
exercise or exchange such Convertible Securities on or prior to the date
referred to in clause (A) of this sentence and a statement as to what, if
anything, such holders shall be entitled to receive pursuant to the terms of
such Convertible Securities if such holders convert, exercise or exchange such
Convertible Securities following such date and (H) a statement that the
Corporation will not be required to register a transfer of any shares of Series
A TCI Ventures Group Common Stock or Series B TCI Ventures Group Common Stock
for a period of 15 Trading Days next preceding the date referred to in clause
(A) of this sentence. Promptly following the date referred to in clause (A) of
the preceding sentence, but not earlier than the 40th Trading Day and not later
than the 50th Trading Day following the consummation of such Disposition, the
Corporation shall cause to be given to each holder of shares of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock to be
so redeemed, a notice setting forth (A) the number of shares of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock held by
such holder to be redeemed, (B) a statement that such shares of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock shall
be redeemed, (C) the Redemption Date (which shall not be more than 85 Trading
Days following the consummation of such Disposition), (D) the kind and per share
amount of shares of capital stock, cash and/or other securities or property to
be received by such holder with respect to each share of such Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock to be
redeemed, including details as to the calculation thereof, and (E) the place or
places where certificates for shares of such Series A TCI Ventures Group Common
Stock or Series B TCI Ventures Group Common Stock, properly endorsed or assigned
for transfer (unless the Corporation waives such requirement), are to be
surrendered for delivery of certificates for shares of such capital stock, cash
and/or other securities or property. The notices referred to in this clause (iv)
shall be sent by first-class mail, postage prepaid, at such holder's address as
the same appears on the transfer books of the Corporation. The outstanding
shares of Series A TCI Ventures Group Common Stock and Series B TCI Ventures
Group Common Stock to be redeemed shall be redeemed by the Corporation pro rata
among the holders of Series A TCI Ventures Group Common Stock and Series B TCI
Ventures Group Common Stock or by such other method as may be determined by the
Board of Directors to be equitable.
(v) In the event of any conversion pursuant to paragraph 2(e) of this
Section E or pursuant to this paragraph 6 (other than pursuant to paragraph
6(c)), the Corporation shall cause to be given to each holder of outstanding
shares of Series A TCI Ventures Group Common Stock and Series B TCI Ventures
Group Common Stock and to each holder of Convertible Securities convertible into
or exercisable or exchangeable for shares of either such series (unless
provision for such notice is otherwise made pursuant to the terms of such
Convertible Securities), a notice setting forth (A) a statement that all
outstanding shares of Series A TCI Ventures Group Common Stock and Series B TCI
Ventures Group Common Stock shall be converted, (B) the Conversion Date (which
shall not be more than 85 Trading Days following the consummation of such
Disposition in the event of a conversion pursuant to paragraph 6(b) and which
shall not be more than 120 days after the Appraisal Date in the event of a
conversion pursuant to paragraph
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2(e)), (C) the per share number of shares of Series A TCI Group Common Stock or
Series B TCI Group Common Stock, as applicable, to be received with respect to
each share of Series A TCI Ventures Group Common Stock or Series B TCI Ventures
Group Common Stock, including details as to the calculation thereof, (D) the
place or places where certificates for shares of Series A TCI Ventures Group
Common Stock or Series B TCI Ventures Group Common Stock, properly endorsed or
assigned for transfer (unless the Corporation shall waive such requirement), are
to be surrendered, (E) the number of outstanding shares of Series A TCI Ventures
Group Common Stock and Series B TCI Ventures Group Common Stock and the number
of shares of Series A TCI Ventures Group Common Stock and Series B TCI Ventures
Group Common Stock into or for which outstanding Convertible Securities are then
convertible, exercisable or exchangeable and the conversion, exercise or
exchange prices thereof and (F) in the case of a notice to holders of
Convertible Securities, a statement to the effect that holders of such
Convertible Securities shall be entitled to participate in such conversion only
if such holders appropriately convert, exercise or exchange such Convertible
Securities on or prior to the Conversion Date referred to in clause (B) of this
sentence and a statement as to what, if anything, such holders shall be entitled
to receive pursuant to the terms of such Convertible Securities or, if
applicable, paragraph 6(c) of this Section E if such holders convert, exercise
or exchange such Convertible Securities following such Conversion Date. Such
notice shall be sent by first-class mail, postage prepaid, not less than 35
Trading Days nor more than 45 Trading Days prior to the Conversion Date, at such
holder's address as the same appears on the transfer books of the Corporation.
(vi) If the Corporation determines to redeem shares of Series A TCI
Ventures Group Common Stock and Series B TCI Ventures Group Common Stock
pursuant to subparagraph (a) of this paragraph 6, the Corporation shall promptly
cause to be given to each holder of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock and to each holder of Convertible
Securities convertible into or exercisable or exchangeable for shares of either
such series (unless provision for such notice is otherwise made pursuant to the
terms of such Convertible Securities), a notice setting forth (A) a statement
that all outstanding shares of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock shall be redeemed in exchange for
shares of common stock of the TCI Ventures Group Subsidiaries, (B) the
Redemption Date, (C) the Adjusted TCI Ventures Group Outstanding Interest
Fraction as of a recent date preceding the date of such notice, (D) the place or
places where certificates for shares of Series A TCI Ventures Group Common Stock
and Series B TCI Ventures Group Common Stock, properly endorsed or assigned for
transfer (unless the Corporation shall waive such requirement), are to be
surrendered for delivery of certificates for shares of common stock of the TCI
Ventures Group Subsidiaries, (E) the number of outstanding shares of Series A
TCI Ventures Group Common Stock and Series B TCI Ventures Group Common Stock and
the number of shares of Series A TCI Ventures Group Common Stock and Series B
TCI Ventures Group Common Stock into or for which outstanding Convertible
Securities are then convertible, exercisable or exchangeable and the conversion,
exercise or exchange prices thereof (and stating which, if any, of such
Convertible Securities constitute Pre-
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<PAGE>
Exchange Offer Securities), and (F) in the case of a notice to holders of
Convertible Securities (other than Pre-Exchange Offer Securities), a statement
to the effect that holders of such Convertible Securities shall be entitled to
participate in such redemption only if such holders appropriately convert,
exercise or exchange such Convertible Securities on or prior to the Redemption
Date referred to in clause (B) of this sentence and a statement as to what, if
anything, such holders shall be entitled to receive pursuant to the terms of
such Convertible Securities or, if applicable, paragraph 6(c) of this Section E
if such holders convert, exercise or exchange such Convertible Securities
following the Redemption Date. Such notice shall be sent by first-class mail,
postage prepaid, not less than 35 Trading Days nor more than 45 Trading Days
prior to the Redemption Date, at such holder's address as the same appears on
the transfer books of the Corporation.
(vii) Neither the failure to mail any notice required by this paragraph
6(d) to any particular holder of Series A TCI Ventures Group Common Stock,
Series B TCI Ventures Group Common Stock or of Convertible Securities nor any
defect therein shall affect the sufficiency thereof with respect to any other
holder of outstanding shares of Series A TCI Ventures Group Common Stock or
Series B TCI Ventures Group Common Stock or of Convertible Securities, or the
validity of any conversion or redemption.
(viii) The Corporation shall not be required to issue or deliver
fractional shares of any class of capital stock or any fractional securities to
any holder of Series A TCI Ventures Group Common Stock or Series B TCI Ventures
Group Common Stock upon any conversion, redemption, dividend or other
distribution pursuant to paragraph 2(e) of this Section E or pursuant to this
paragraph 6. In connection with the determination of the number of shares of
any class of capital stock that shall be issuable or the amount of securities
that shall be deliverable to any holder of record upon any such conversion,
redemption, dividend or other distribution (including any fractions of shares or
securities), the Corporation may aggregate the number of shares of Series A TCI
Ventures Group Common Stock or Series B TCI Ventures Group Common Stock held at
the relevant time by such holder of record. If the number of shares of any
class of capital stock or the amount of securities remaining to be issued or
delivered to any holder of Series A TCI Ventures Group Common Stock or Series B
TCI Ventures Group Common Stock is a fraction, the Corporation shall, if such
fraction is not issued or delivered to such holder, pay a cash adjustment in
respect of such fraction in an amount equal to the fair market value of such
fraction on the fifth Trading Day prior to the date such payment is to be made
(without interest). For purposes of the preceding sentence, "fair market value"
of any fraction shall be (A) in the case of any fraction of a share of capital
stock of the Corporation, the product of such fraction and the Market Value of
one share of such capital stock and (B) in the case of any other fractional
security, such value as is determined by the Board of Directors.
(ix) No adjustments in respect of dividends shall be made upon the
conversion or redemption of any shares of Series A TCI Ventures Group Common
Stock or Series B TCI Ventures Group Common Stock; provided, however, that if
the Conversion Date or the
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Redemption Date with respect to the Series A TCI Ventures Group Common Stock or
Series B TCI Ventures Group Common Stock shall be subsequent to the record date
for the payment of a dividend or other distribution thereon or with respect
thereto, the holders of shares of Series A TCI Ventures Group Common Stock or
Series B TCI Ventures Group Common Stock at the close of business on such record
date shall be entitled to receive the dividend or other distribution payable on
or with respect to such shares on the date set for payment of such dividend or
other distribution, notwithstanding the conversion or redemption of such shares
or the Corporation's default in payment of the dividend or distribution due on
such date.
(x) Before any holder of shares of Series A TCI Ventures Group Common Stock
or Series B TCI Ventures Group Common Stock shall be entitled to receive
certificates representing shares of any kind of capital stock or cash and/or
securities or other property to be received by such holder with respect to
shares of Series A TCI Ventures Group Common Stock or Series B TCI Ventures
Group Common Stock pursuant to paragraph 2(e) of this Section E or pursuant to
this paragraph 6, such holder shall surrender at such place as the Corporation
shall specify certificates for such shares of Series A TCI Ventures Group Common
Stock or Series B TCI Ventures Group Common Stock, properly endorsed or assigned
for transfer (unless the Corporation shall waive such requirement). The
Corporation shall as soon as practicable after such surrender of certificates
representing shares of Series A TCI Ventures Group Common Stock or Series B TCI
Ventures Group Common Stock deliver to the person for whose account shares of
Series A TCI Ventures Group Common Stock or Series B TCI Ventures Group Common
Stock were so surrendered, or to the nominee or nominees of such person,
certificates representing the number of whole shares of the kind of capital
stock or cash and/or securities or other property to which such person shall be
entitled as aforesaid, together with any payment for fractional securities
contemplated by paragraph 6(d)(viii). If less than all of the shares of Series
A TCI Ventures Group Common Stock or Series B TCI Ventures Group Common Stock
represented by any one certificate are to be redeemed, the Corporation shall
issue and deliver a new certificate for the shares of Series A TCI Ventures
Group Common Stock or Series B TCI Ventures Group Common Stock not redeemed.
The Corporation shall not be required to register a transfer of (1) any shares
of Series A TCI Ventures Group Common Stock or Series B TCI Ventures Group
Common Stock for a period of 15 Trading Days next preceding any selection of
shares of Series A TCI Ventures Group Common Stock or Series B TCI Ventures
Group Common Stock to be redeemed or (2) any shares of Series A TCI Ventures
Group Common Stock or Series B TCI Ventures Group Common Stock selected or
called for redemption. Shares selected for redemption may not thereafter be
converted pursuant to paragraph 2(c) of this Section E.
(xi) From and after any applicable Conversion Date or Redemption Date, all
rights of a holder of shares of Series A TCI Ventures Group Common Stock or
Series B TCI Ventures Group Common Stock that were converted or redeemed shall
cease except for the right, upon surrender of the certificates representing
shares of Series A TCI Ventures Group Common Stock or Series B TCI Ventures
Group Common Stock, to receive certificates representing shares of the
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<PAGE>
kind and amount of capital stock or cash and/or securities or other property for
which such shares were converted or redeemed, together with any payment for
fractional securities contemplated by paragraph 6(d)(viii) of this Section E and
such holder shall have no other or further rights in respect of the shares of
Series A TCI Ventures Group Common Stock or Series B TCI Ventures Group Common
Stock so converted or redeemed, including, but not limited to, any rights with
respect to any cash, securities or other properties which are reserved or
otherwise designated by the Corporation as being held for the satisfaction of
the Corporation's obligations to pay or deliver any cash, securities or other
property upon the conversion, exercise or exchange of any Convertible Securities
outstanding as of the date of such conversion or redemption. No holder of a
certificate that, immediately prior to the applicable Conversion Date or
Redemption Date for the Series A TCI Ventures Group Common Stock or Series B TCI
Ventures Group Common Stock, represented shares of Series A TCI Ventures Group
Common Stock or Series B TCI Ventures Group Common Stock shall be entitled to
receive any dividend or other distribution with respect to shares of any kind of
capital stock into or in exchange for which the Series A TCI Ventures Group
Common Stock or Series B TCI Ventures Group Common Stock was converted or
redeemed until surrender of such holder's certificate for a certificate or
certificates representing shares of such kind of capital stock. Upon such
surrender, there shall be paid to the holder the amount of any dividends or
other distributions (without interest) which theretofore became payable with
respect to a record date after the Conversion Date or Redemption Date, as the
case may be, but that were not paid by reason of the foregoing, with respect to
the number of whole shares of the kind of capital stock represented by the
certificate or certificates issued upon such surrender. From and after a
Conversion Date or Redemption Date, as the case may be, for any shares of Series
A TCI Ventures Group Common Stock or Series B TCI Ventures Group Common Stock,
the Corporation shall, however, be entitled to treat the certificates for shares
of Series A TCI Ventures Group Common Stock or Series B TCI Ventures Group
Common Stock that have not yet been surrendered for conversion or redemption as
evidencing the ownership of the number of whole shares of the kind or kinds of
capital stock for which the shares of Series A TCI Ventures Group Common Stock
or Series B TCI Ventures Group Common Stock represented by such certificates
shall have been converted or redeemed, notwithstanding the failure to surrender
such certificates.
(xii) The Corporation shall pay any and all documentary, stamp or
similar issue or transfer taxes that may be payable in respect of the issue or
delivery of any shares of capital stock and/or other securities on conversion or
redemption of shares of Series A TCI Ventures Group Common Stock or Series B TCI
Ventures Group Common Stock pursuant to this Section E. The Corporation shall
not, however, be required to pay any tax that may be payable in respect of any
transfer involved in the issue and delivery of any shares of capital stock in a
name other than that in which the shares of Series A TCI Ventures Group Common
Stock or Series B TCI Ventures Group Common Stock so converted or redeemed were
registered and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any such
tax, or has established to the satisfaction of the Corporation that such tax has
been paid.
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7. Liquidation.
-----------
In the event of a liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the Corporation and subject to the
prior payment in full of the preferential amounts to which any class or series
of Preferred Stock is entitled, (a) the holders of the shares of Series A TCI
Group Common Stock and the holders of the shares of Series B TCI Group Common
Stock shall share equally, on a share for share basis, in a percentage of the
funds of the Corporation remaining for distribution to its common stockholders
equal to 100% multiplied by the average daily ratio (expressed as a decimal) of
W/Z for the 20-Trading Day period ending on the Trading Day prior to the date of
the public announcement of such liquidation, dissolution or winding up, (b) the
holders of the shares of Series A Liberty Media Group Common Stock and the
holders of the shares of Series B Liberty Media Group Common Stock shall share
equally, on a share for share basis, in a percentage of the funds of the
Corporation remaining for distribution to its common stockholders equal to 100%
multiplied by the average daily ratio (expressed as a decimal) of X/Z for such
20-Trading Day period, and (c) the holders of the shares of Series A TCI
Ventures Group Common Stock and the holders of the Series B TCI Ventures Group
Common Stock shall share equally, on a share for share basis, in a percentage of
the funds of the Corporation remaining for distribution to its common
stockholders equal to 100% multiplied by the average daily ratio (expressed as a
decimal) of Y/Z for such 20-Trading Day period, where W is the aggregate Market
Capitalization of the Series A TCI Group Common Stock and the Series B TCI Group
Common Stock, X is the aggregate Market Capitalization of the Series A Liberty
Media Group Common Stock and the Series B Liberty Media Group Common Stock, Y is
the aggregate Market Capitalization of the Series A TCI Ventures Group Common
Stock and the Series B TCI Ventures Group Common Stock, and Z is the aggregate
Market Capitalization of the Series A TCI Group Common Stock, the Series B TCI
Group Common Stock, the Series A Liberty Media Group Common Stock, the Series B
Liberty Media Group Common Stock, the Series A TCI Ventures Group Common Stock
and the Series B TCI Ventures Group Common Stock. Neither the consolidation or
merger of the Corporation with or into any other corporation or corporations nor
the sale, transfer or lease of all or substantially all of the assets of the
Corporation shall itself be deemed to be a liquidation, dissolution or winding
up of the Corporation within the meaning of this paragraph 7.
8. Determinations by the Board of Directors.
----------------------------------------
Any determinations made by the Board of Directors under any provision in
this Section E shall be final and binding on all stockholders of the
Corporation, except as may otherwise be required by law. The Corporation shall
prepare a statement of any such determination by the Board of Directors
respecting the fair market value of any properties, assets or securities and
shall file such statement with the Secretary of the Corporation.
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9. Certain Definitions.
-------------------
Unless the context otherwise requires, the terms defined in this paragraph
9 shall have, for all purposes of this Section E, the meanings herein specified:
"Adjusted Liberty Media Group Outstanding Interest Fraction," as of any
date, shall mean a fraction the numerator of which is the aggregate number of
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock outstanding on such date and the denominator of which is the
sum of (a) such aggregate number of shares of Series A Liberty Media Group
Common Stock and Series B Liberty Media Group Common Stock outstanding on such
date, (b) the Number of Shares Issuable with Respect to the Liberty Media Group
Inter-Group Interest as of such date, (c) the aggregate number of shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock issuable, determined as of such date, upon conversion, exercise or
exchange of Pre-Distribution Convertible Securities and (d) the number of
Committed Acquisition Shares issuable, determined as of such date.
"Adjusted TCI Ventures Group Outstanding Interest Fraction", as of any
date, shall mean a fraction the numerator of which is the aggregate number of
shares of Series A TCI Ventures Group Common Stock and Series B TCI Ventures
Group Common Stock outstanding on such date and the denominator of which is the
sum of (a) such aggregate number of shares of Series A TCI Ventures Group Common
Stock and Series B TCI Ventures Group Common Stock outstanding on such date, (b)
the Number of Shares Issuable with Respect to the TCI Ventures Group Inter-Group
Interest as of such date, and (c) the aggregate number of shares of Series A TCI
Ventures Group Common Stock issuable, determined as of such date, upon
conversion, exercise or exchange of Pre-Exchange Offer Securities.
"Appraisal Date" with respect to any determination of the Liberty Media
Group Private Market Value or the TCI Ventures Group Private Market Value, shall
mean the last day of the calendar month preceding the month in which the
Selection Date occurs.
"Appraiser" means each of the First Appraiser, the Second Appraiser and the
Mutually Designated Appraiser.
"Committed Acquisition Shares" shall mean (a) the shares of Series A
Liberty Media Group Common Stock that the Corporation had, prior to the record
date for the Liberty Media Group Distribution, agreed to issue, but as of such
record date had not issued, and (b) the shares of Series A Liberty Media Group
Common Stock that are issuable upon conversion, exercise or exchange of
Convertible Securities that the Corporation had, prior to the record date for
the Liberty Media Group Distribution, agreed to issue, but as of such record
date has not issued, in each case including obligations of the Corporation to
issue shares of the Corporation's Class A Common Stock, par value $1.00 per
share, which as a result of the Liberty Media Group
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Distribution, constitute obligations to issue, among other securities, Series A
Liberty Media Group Common Stock or Convertible Securities which are convertible
into or exercisable or exchangeable for Series A Liberty Media Group Common
Stock; provided, however, that Committed Acquisition Shares shall not include
any shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock issuable upon conversion, exercise or exchange of Pre-
Distribution Convertible Securities. The type and amount of Committed
Acquisition Shares issuable shall be appropriately adjusted to reflect
subdivisions and combinations of the Series A Liberty Media Group Common Stock
and dividends or distributions of shares of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock to holders of Series A
Liberty Media Group Common Stock and other reclassifications of the Series A
Liberty Media Group Common Stock, in each case occurring (or the record date for
which occurs) after the Liberty Media Group Distribution.
"Conversion Date" shall mean any date fixed by the Board of Directors for a
conversion of shares of (i) Series A Liberty Media Group Common Stock and Series
B Liberty Media Group Common Stock, or (ii) Series A TCI Ventures Group Common
Stock and Series B TCI Ventures Group Common Stock, as the case may be, as set
forth in a notice to holders of the applicable series of Common Stock pursuant
to paragraph 5(d) or 6(d), as applicable, of this Section E.
"Convertible Securities" shall mean any securities of the Corporation
(other than any series of Common Stock) or any Subsidiary thereof that are
convertible into, exchangeable for or evidence the right to purchase any shares
of any series of Common Stock, whether upon conversion, exercise, exchange,
pursuant to antidilution provisions of such securities or otherwise.
"Corporation Earnings (Loss) Attributable to the Liberty Media Group" for
any period, shall mean the net earnings or loss of the Liberty Media Group for
such period determined on a basis consistent with the determination of the net
earnings or loss of the Liberty Media Group for such period as presented in the
combined financial statements of the Liberty Media Group for such period,
including income and expenses of the Corporation attributed to the operations of
the Liberty Media Group on a substantially consistent basis, including without
limitation, corporate administrative costs, net interest and income taxes.
"Corporation Earnings (Loss) Attributable to the TCI Group" for any period,
shall mean the net earnings or loss of the TCI Group for such period determined
on a basis consistent with the determination of the net earnings or loss of the
TCI Group for such period as presented in the combined financial statements of
the TCI Group for such period, including income and expenses of the Corporation
attributed to the operations of the TCI Group on a substantially consistent
basis, including without limitation, corporate administrative costs, net
interest and income taxes.
"Corporation Earnings (Loss) Attributable to the TCI Ventures Group" for
any period, shall mean the net earnings or loss of the TCI Ventures Group for
such period determined on a
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basis consistent with the determination of the net earnings or loss of the TCI
Ventures Group for such period as presented in the combined financial statements
of the TCI Ventures Group for such period, including income and expenses of the
Corporation attributed to the operations of the TCI Ventures Group on a
substantially consistent basis, including without limitation, corporate
administrative costs, net interest and income taxes.
"Disposition" shall mean the sale, transfer, assignment or other
disposition (whether by merger, consolidation, sale or contribution of assets or
stock or otherwise) of properties or assets.
"Exchange Offers" means those certain offers made by the Corporation to
exchange shares of Series A TCI Ventures Group Common Stock for shares of Series
A TCI Group Common Stock, and to exchange shares of Series B TCI Ventures Group
Common Stock for shares of Series B TCI Group Common Stock, on the terms and
subject to the conditions set forth in the Offering Circular, dated August 7,
1997, and the related Letter of Transmittal.
"First Appraiser" means, with respect to any determination of the Liberty
Media Group Private Market Value or the TCI Ventures Group Private Market Value,
an investment banking firm of recognized national standing selected by the
Corporation to make such determination.
"Higher Appraised Amount," with respect to any determination of the
Liberty Media Group Private Market Value or the TCI Ventures Group Private
Market Value, shall mean the higher of the respective final views of the First
Appraiser and the Second Appraiser as to such private market value.
"Independent Committee" means a committee of the Board of Directors of the
Corporation formed in order to select the Second Appraiser, all of whose members
are "independent directors" as determined under Nasdaq National Market rules.
"Initial Ventures Options" means those certain options to purchase shares
of Series A TCI Ventures Group Common Stock that are issued effective upon the
consummation of the Exchange Offers, in connection with the adjustment of the
Adjustable Options. For purposes of this definition, the term "Adjustable
Options" means those options to purchase shares of Series A TCI Group Common
Stock that are outstanding immediately prior to the consummation of the Exchange
Offers under any Existing Stock Plan (as defined below), which options the Board
of Directors and, if applicable, the committee of the Board of Directors charged
with the administration of such Existing Stock Plan, determined to adjust for
the effects of the Exchange Offers by the issuance, in substitution for and in
cancellation of each such Adjustable Option effective upon the consummation of
the Exchange Offers, of an Initial Ventures Option to purchase a number of
shares of Series A TCI Ventures Group Common Stock initially equal to 30%
(rounded up to the next whole number) of the number of shares of Series A TCI
Group Common Stock that would have been issuable upon exercise of such
Adjustable Option immediately prior to the consummation of the Exchange Offers,
and an option to purchase a
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number of shares of Series A TCI Group Common Stock equal to 70% (rounded down
to the next whole number) of the number of shares of Series A TCI Group Common
Stock that would have been issuable upon exercise of such Adjustable Option
immediately prior to the consummation of the Exchange Offers, together with such
other securities as were then issuable upon exercise of such Adjustable Option
(and in each case, having such other terms consistent with the terms of the
Adjustable Option for which they are exchanged as the Board of Directors or the
committee, as applicable, determines). The term "Existing Stock Plans" means
each of the following: the Tele-Communications, Inc. 1994 Stock Incentive Plan,
the Tele-Communications, Inc. 1995 Employee Stock Incentive Plan and the Tele-
Communications, Inc. 1996 Incentive Plan.
"Liberty Media Group" shall mean, as of any date that any shares of Series
A Liberty Media Group Common Stock or Series B Liberty Media Group Common Stock
have been issued and continue to be outstanding:
(a) the interest of the Corporation or of any of its subsidiaries
in Liberty Media Corporation or any of its subsidiaries (including any
successor thereto by merger, consolidation or sale of all or substantially
all of its assets, whether or not in connection with a Related Business
Transaction) and their respective properties and assets,
(b) all assets and liabilities of the Corporation or any of its
subsidiaries to the extent attributed to any of the properties or assets
referred to in clause (a) of this sentence, whether or not such assets or
liabilities are assets and liabilities of Liberty Media Corporation or any
of its subsidiaries (or a successor as described in clause (a) of this
sentence),
(c) all assets and properties contributed or otherwise transferred
to the Liberty Media Group from the TCI Group, and
(d) the interest of the Corporation or any of its subsidiaries in
the businesses, assets and liabilities acquired by the Corporation or any
of its subsidiaries for the Liberty Media Group, as determined by the Board
of Directors;
provided that (i) from and after any dividend or other distribution with respect
to any shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock (other than a dividend or other distribution payable in
shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock, with respect to which adjustment shall be made as provided
in clause (a) of the definition of "Number of Shares Issuable with Respect to
the Liberty Media Group Inter-Group Interest," or in other securities of the
Corporation attributed to the Liberty Media Group for which provision shall be
made as set forth in the penultimate sentence of this definition), the Liberty
Media Group shall no longer include an amount of assets or properties equal to
the aggregate amount of such kind of assets or
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properties so paid in respect of shares of Series A Liberty Media Group Common
Stock or Series B Liberty Media Group Common Stock multiplied by a fraction the
numerator of which is equal to the Liberty Media Group Inter-Group Interest
Fraction in effect immediately prior to the record date for such dividend or
other distribution and the denominator of which is equal to the Liberty Media
Group Outstanding Interest Fraction in effect immediately prior to the record
date for such dividend or other distribution and (ii) from and after any
transfer of assets or properties from the Liberty Media Group to the TCI Group,
the Liberty Media Group shall no longer include the assets or properties so
transferred. If the Corporation shall pay a dividend or make any other
distribution with respect to shares of Series A Liberty Media Group Common Stock
or Series B Liberty Media Group Common Stock payable in securities of the
Corporation attributed to the Liberty Media Group other than Series A Liberty
Media Group Common Stock and Series B Liberty Media Group Common Stock, the TCI
Group shall be deemed to hold an amount of such other securities equal to the
amount so distributed multiplied by the fraction specified in clause (i) of this
definition (determined as of a time immediately prior to the record date for
such dividend or other distribution), and to the extent interest or dividends
are paid or other distributions are made on such other securities so distributed
to the holders of Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock, the Liberty Media Group shall no longer include a
corresponding ratable amount of the kind of assets paid as such interest or
dividends or other distributions in respect of such securities so deemed to be
held by the TCI Group. The Corporation may also, to the extent any such other
securities constitute Convertible Securities which are at the time convertible,
exercisable or exchangeable, cause such Convertible Securities deemed to be held
by the TCI Group to be deemed to be converted, exercised or exchanged (and to
the extent the terms of such Convertible Securities require payment or delivery
of consideration in order to effect such conversion, exercise or exchange, the
Liberty Media Group shall in such case include an amount of the kind of
properties or assets required to be paid or delivered as such consideration for
the amount of the Convertible Securities deemed converted, exercised or
exchanged as if such Convertible Securities were outstanding), in which case
such Convertible Securities shall no longer be deemed to be held by the TCI
Group or attributed to the Liberty Media Group.
"Liberty Media Group Available Dividend Amount," as of any date, shall mean
the product of the Liberty Media Group Outstanding Interest Fraction and either:
(a) the excess of (i) an amount equal to the total assets of the Liberty Media
Group less the total liabilities (not including preferred stock) of the Liberty
Media Group as of such date over (ii) the aggregate par value of, or any greater
amount determined to be capital in respect of, all outstanding shares of Series
A Liberty Media Group Common Stock, Series B Liberty Media Group Common Stock
and each class or series of Preferred Stock attributed to the Liberty Media
Group or (b) in case there is no such excess, an amount equal to the Corporation
Earnings (Loss) Attributable to the Liberty Media Group (if positive) for the
fiscal year in which such date occurs and/or the preceding fiscal year.
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"Liberty Media Group Distribution" shall mean the share distribution of
shares of Series A Liberty Media Group Common Stock and Series B Liberty Media
Group Common Stock made to the holders of record of Series A TCI Group Common
Stock and Series B TCI Group Common Stock as of the close of business on August
4, 1995.
"Liberty Media Group Inter-Group Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the Number of Shares Issuable with
Respect to the Liberty Media Group Inter-Group Interest as of such date and the
denominator of which is the sum of (a) such Number of Shares Issuable with
Respect to the Liberty Media Group Inter-Group Interest as of such date and (b)
the aggregate number of shares of Series A Liberty Media Group Common Stock and
Series B Liberty Media Group Common Stock outstanding as of such date.
"Liberty Media Group Net Proceeds" shall mean, as of any date, with respect
to any Disposition of any of the properties and assets of the Liberty Media
Group, an amount, if any, equal to the gross proceeds of such Disposition after
any payment of, or reasonable provision for, (a) any taxes payable by the
Corporation in respect of such Disposition or in respect of any resulting
dividend or redemption pursuant to clause (i) or (ii), respectively, of
paragraph 5(b) of this Section E (or which would have been payable but for the
utilization of tax benefits attributable to the TCI Group or the TCI Ventures
Group), (b) any transaction costs, including, without limitation, any legal,
investment banking and accounting fees and expenses and (c) any liabilities and
other obligations (contingent or otherwise) of, or attributed to, the Liberty
Media Group, including, without limitation, any indemnity or guarantee
obligations incurred in connection with the Disposition or any liabilities for
future purchase price adjustments and any preferential amounts plus any
accumulated and unpaid dividends and other obligations (without duplication of
amounts allocated for the satisfaction of the Corporation's obligations with
respect to Pre-Distribution Convertible Securities and Committed Acquisition
Shares issuable which are included in the determination of the Adjusted Liberty
Media Group Outstanding Interest Fraction) in respect of Preferred Stock
attributed to the Liberty Media Group. For purposes of this definition, any
properties and assets of the Liberty Media Group remaining after such
Disposition shall constitute "reasonable provision" for such amount of taxes,
costs and liabilities (contingent or otherwise) as can be supported by such
properties and assets. To the extent the proceeds of any Disposition include
any securities or other property other than cash, the Board of Directors shall
determine the value of such securities or property, including for the purpose of
determining the equivalent value thereof if the Board of Directors determines to
pay a dividend or redemption price in cash or securities or other property as
provided in clause (z) of paragraph 5(b) of this Section E.
"Liberty Media Group Outstanding Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the aggregate number of shares of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock outstanding on such date and the denominator of which is the sum of
(a) such aggregate number of shares of Series A Liberty Media Group Common Stock
and Series B Liberty Media Group Common Stock
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outstanding on such date and (b) the Number of Shares Issuable with Respect to
the Liberty Media Group Inter-Group Interest as of such date.
"Liberty Media Group Private Market Value" shall mean an amount equal to
the private market value of the Liberty Media Group as of the Appraisal Date.
Each of the First Appraiser, the Second Appraiser and the Mutually Designated
Appraiser, if any, shall be instructed to determine the private market value of
the Liberty Media Group as of the Appraisal Date based upon the amount a willing
purchaser would pay to a willing seller, in an arm's length transaction, if it
were acquiring the Liberty Media Group, as if the Liberty Media Group were a
publicly traded non-controlled corporation and the purchaser was acquiring all
of the capital stock of such corporation, and without consideration of any
potential regulatory constraints limiting the potential purchasers of the
Liberty Media Group other than that which would have existed if the Liberty
Media Group were a publicly traded non-controlled entity.
"Lower Appraised Amount," with respect to any determination of the Liberty
Media Group Private Market Value or the TCI Ventures Group Private Market Value,
shall mean the lower of the respective final views of the First Appraiser and
the Second Appraiser as to such private market value.
"Market Capitalization" of any class or series of capital stock of the
Corporation on any Trading Day shall mean the product of (i) the Market Value of
one share of such class or series on such Trading Day and (ii) the number of
shares of such class or series outstanding on such Trading Day.
"Market Value" of any class or series of capital stock of the Corporation
on any day shall mean the average of the high and low reported sales prices
regular way of a share of such class or series on such day (if such day is a
Trading Day, and if such day is not a Trading Day, on the Trading Day
immediately preceding such day) or in case no such reported sale takes place on
such Trading Day the average of the reported closing bid and asked prices
regular way of a share of such class or series on such Trading Day, in either
case on the Nasdaq National Market, or if the shares of such class or series are
not quoted on such Nasdaq National Market on such Trading Day, the average of
the closing bid and asked prices of a share of such class or series in the over-
the-counter market on such Trading Day as furnished by any New York Stock
Exchange member firm selected from time to time by the Corporation, or if such
closing bid and asked prices are not made available by any such New York Stock
Exchange member firm on such Trading Day, the market value of a share of such
class or series as determined by the Board of Directors; provided that for
purposes of determining the ratios set forth in paragraphs 2(d), 2(e), 5(b),
6(b) and 7 of this Section E, (a) the "Market Value" of any share of any series
of Common Stock on any day prior to the "ex" date or any similar date for any
dividend or distribution paid or to be paid with respect to such series of
Common Stock shall be reduced by the fair market value of the per share amount
of such dividend or distribution as determined by the Board of Directors and (b)
the "Market Value" of any share of any series of Common Stock on any day
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prior to (i) the effective date of any subdivision (by stock split or otherwise)
or combination (by reverse stock split or otherwise) of outstanding shares of
such series of Common Stock or (ii) the "ex" date or any similar date for any
dividend or distribution with respect to any such series of Common Stock in
shares of such series of Common Stock shall be appropriately adjusted to reflect
such subdivision, combination, dividend or distribution.
"Mutually Appraised Amount," with respect to any determination of the
Liberty Media Group Private Market Value or the TCI Ventures Group Private
Market Value, shall mean the determination by the Mutually Designated Appraiser
of such private market value.
"Mutually Designated Appraiser" shall mean, if required with respect to any
determination of the Liberty Media Group Private Market Value or the TCI
Ventures Group Private Market Value, the investment banking firm of recognized
national standing jointly designated by the First Appraiser and the Second
Appraiser to make such determination.
"Number of Shares Issuable with Respect to the Liberty Media Group Inter-
Group Interest" after the Liberty Media Group Distribution shall be zero and
shall from time to time thereafter, as applicable, be
(a) adjusted as appropriate to reflect subdivisions (by stock split
or otherwise) and combinations (by reverse stock split or otherwise) of the
Series A Liberty Media Group Common Stock and dividends or distributions of
shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock to holders of Series A Liberty Media Group Common
Stock and other reclassifications of Series A Liberty Media Group Common
Stock,
(b) decreased (but not to less than zero) by (i) the aggregate
number of shares of Series A Liberty Media Group Common Stock issued or
sold by the Corporation after the Liberty Media Group Distribution other
than Committed Acquisition Shares, the proceeds of which are attributed to
the TCI Group, (ii) the aggregate number of shares of Series A Liberty
Media Group Common Stock issued or delivered upon conversion, exercise or
exchange of Convertible Securities (other than Pre-Distribution Convertible
Securities and Convertible Securities which are convertible into or
exercisable or exchangeable for Committed Acquisition Shares), the proceeds
of which are attributed to the TCI Group, (iii) the aggregate number of
shares of Series A Liberty Media Group Common Stock issued or delivered by
the Corporation as a dividend or distribution to holders of Series A TCI
Group Common Stock and Series B TCI Group Common Stock, (iv) the aggregate
number of shares of Series A Liberty Media Group Common Stock issued or
delivered upon the conversion, exercise or exchange of any Convertible
Securities (other than Pre-Distribution Convertible Securities and
Convertible Securities which are convertible into or exercisable or
exchangeable for Committed Acquisition Shares) issued or delivered by the
Corporation after the Liberty Media Group Distribution
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as a dividend or distribution or by reclassification or exchange to holders
of Series A TCI Group Common Stock and Series B TCI Group Common Stock and
(v) the aggregate number of shares of Series A Liberty Media Group Common
Stock (rounded, if necessary, to the nearest whole number), equal to the
aggregate fair value (as determined by the Board of Directors) of assets or
properties attributed to the Liberty Media Group that are transferred from
the Liberty Media Group to the TCI Group in consideration of a reduction in
the Number of Shares Issuable with Respect to the Liberty Media Group
Inter-Group Interest, divided by the Market Value of one share of Series A
Liberty Media Group Common Stock as of the date of such transfer, and
(c) increased by (i) the aggregate number of any shares of Series A
Liberty Media Group Common Stock and Series B Liberty Media Group Common
Stock which are retired or otherwise cease to be outstanding following
their purchase with funds attributed to the TCI Group, (ii) a number
(rounded, if necessary, to the nearest whole number), equal to the fair
value (as determined by the Board of Directors) of assets or properties
theretofore attributed to the TCI Group that are contributed to the Liberty
Media Group in consideration of an increase in the Number of Shares
Issuable with Respect to the Liberty Media Group Inter-Group Interest,
divided by the Market Value of one share of Series A Liberty Media Group
Common Stock as of the date of such contribution and (iii) the aggregate
number of shares of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock into or for which Convertible Securities
are deemed to be converted, exercised or exchanged pursuant to the last
sentence of the definition of "TCI Group" in this paragraph 9. The
Corporation shall not issue or sell shares of Series B Liberty Media Group
Common Stock in respect of a reduction in the Number of Shares Issuable
with Respect to the Liberty Media Group Inter-Group Interest.
Whenever a change in the Number of Shares Issuable with Respect to the
Liberty Media Group Inter-Group Interest occurs, the Corporation shall prepare
and file a statement of such change with the Secretary of the Corporation.
"Number of Shares Issuable with Respect to the TCI Ventures Group Inter-
Group Interest" shall initially be 204,927,700 and, immediately following the
consummation of the Exchange Offers and the attribution of the TCI Ventures
Group Preferred Interest to the TCI Group, shall be zero and thereafter shall
from time to time, as applicable, be
(a) adjusted as appropriate to reflect subdivisions (by stock split
or otherwise) and combinations (by reverse stock split or otherwise) of the
Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group
Common Stock and dividends or distributions of shares of Series A TCI
Ventures Group Common Stock or Series B TCI Ventures Group Common Stock to
holders of Series A TCI Ventures Group Common Stock and Series B TCI
Ventures Group Common Stock and other
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reclassifications of the Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock,
(b) decreased (but not to less than zero) by (i) the aggregate
number of shares of Series A TCI Ventures Group Common Stock or Series B
TCI Ventures Group Common Stock issued or sold by the Corporation after the
consummation of the Exchange Offers the proceeds of which are attributed to
the TCI Group, (ii) the aggregate number of shares of Series A TCI Ventures
Group Common Stock or Series B TCI Ventures Group Common Stock issued or
delivered upon conversion, exercise or exchange of Convertible Securities
(other than Pre-Exchange Offer Securities), the proceeds of which are
attributed to the TCI Group, (iii) the aggregate number of shares of Series
A TCI Ventures Group Common Stock or Series B TCI Ventures Group Common
Stock issued or delivered by the Corporation as a dividend or distribution
to holders of Series A TCI Group Common Stock and Series B TCI Group Common
Stock, (iv) the aggregate number of shares of Series A TCI Ventures Group
Common Stock or Series B TCI Ventures Group Common Stock issued or
delivered upon the conversion, exercise or exchange of any Convertible
Securities (other than Pre-Exchange Offer Securities) issued or delivered
by the Corporation after the consummation of the Exchange Offers as a
dividend or distribution or by reclassification or exchange to holders of
Series A TCI Group Common Stock and Series B TCI Group Common Stock and (v)
the aggregate number of shares of Series A TCI Ventures Group Common Stock
and Series B TCI Ventures Group Common Stock (rounded, if necessary, to the
nearest whole number), equal to the aggregate fair value (as determined by
the Board of Directors) of assets or properties attributed to the TCI
Ventures Group that are transferred from the TCI Ventures Group to the TCI
Group in consideration of a reduction in the Number of Shares Issuable with
Respect to the TCI Ventures Group Inter-Group Interest, divided by the
Market Value of one share of Series A TCI Ventures Group Common Stock as of
the date of such transfer, and
(c) increased by (i) the aggregate number of any shares of Series A
TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock which are retired or otherwise cease to be outstanding following
their purchase with funds attributed to the TCI Group, (ii) a number
(rounded, if necessary, to the nearest whole number), equal to the fair
value (as determined by the Board of Directors) of assets or properties
theretofore attributed to the TCI Group that are contributed to the TCI
Ventures Group in consideration of an increase in the Number of Shares
Issuable with Respect to the TCI Ventures Group Inter-Group Interest,
divided by the Market Value of one share of Series A TCI Ventures Group
Common Stock as of the date of such contribution and (iii) the aggregate
number of shares of Series A TCI Ventures Group Common Stock and Series B
TCI Ventures Group Common Stock into or for which Convertible Securities
are deemed to be converted, exercised or exchanged pursuant to the last
sentence of the definition of "TCI Group" in this paragraph 9.
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Whenever a change in the Number of Shares Issuable with Respect to the TCI
Ventures Group Inter-Group Interest occurs, the Corporation shall prepare and
file a statement of such change with the Secretary of the Corporation.
"Pre-Distribution Convertible Securities" shall mean Convertible Securities
that were outstanding on the record date for the Liberty Media Group
Distribution and were, prior to such date, convertible into or exercisable or
exchangeable for shares of the Class A Common Stock, par value $1.00 per share,
of the Corporation.
"Pre-Exchange Offer Securities" shall mean the TCI-UA Notes and the Initial
Ventures Options.
"Qualifying Subsidiary" shall mean a Subsidiary of the Corporation in which
(i) the Corporation's ownership and voting interest is sufficient to satisfy the
requirements of the Internal Revenue Service for (x), in the case of a
Subsidiary that holds assets attributed to the Liberty Media Group, a
distribution of the Corporation's interest in such Subsidiary to the holders of
Series A Liberty Media Group Common Stock and Series B Liberty Media Group
Common Stock that is tax free to such holders or (y), in the case of a
Subsidiary that holds assets attributed to the TCI Ventures Group, a
distribution of the Corporation's interest in such Subsidiary to the holders of
Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock that is tax free to such holders or (ii) the Corporation owns, directly or
indirectly, all of the issued and outstanding capital stock.
"Redemption Date" shall mean any date fixed for a redemption or purchase of
shares of (i) Series A Liberty Media Group Common Stock and Series B Liberty
Media Group Common Stock or (ii) Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock, as the case may be, as set forth in a
notice to holders of such series pursuant to this Certificate.
"Related Business Transaction" shall mean any Disposition of all or
substantially all of the properties and assets of the Liberty Media Group or the
TCI Ventures Group, as the case may be, in which the Corporation receives as
proceeds of such Disposition primarily equity securities (including, without
limitation, capital stock, convertible securities, partnership or limited
partnership interests and other types of equity securities, without regard to
the voting power or contractual or other management or governance rights related
to such equity securities) of the purchaser or acquiror of such assets and
properties of the Liberty Media Group or the TCI Ventures
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Group, as the case may be, any entity which succeeds (by merger, formation of a
joint venture enterprise or otherwise) to such assets and properties of the
Liberty Media Group or the TCI Ventures Group, as the case may be, or a third
party issuer, which purchaser, acquiror or other issuer is engaged or proposes
to engage primarily in one or more businesses similar or complementary to the
businesses conducted by the Liberty Media Group or the TCI Ventures Group, as
the case may be, prior to such Disposition, as determined in good faith by the
Board of Directors.
"Second Appraiser" means, with respect to any determination of the Liberty
Media Group Private Market Value or the TCI Ventures Group Private Market Value,
an investment banking firm of recognized national standing selected by the
Independent Committee to make such determination.
"Selection Date," with respect to any determination of the Liberty Media
Group Private Market Value or the TCI Ventures Group Private Market Value, shall
mean the date upon which the Second Appraiser for such determination is selected
by the Independent Committee.
"Subsidiary" shall mean, with respect to any person or entity, any
corporation or partnership 50% or more of whose outstanding voting securities or
partnership interests, as the case may be, are directly or indirectly owned by
such person or entity.
"TCI Group" shall mean, as of any date:
(a) the interest of the Corporation or any of its subsidiaries in
all of the businesses in which the Corporation or any of its subsidiaries
(or any of their predecessors or successors) is or has been engaged,
directly or indirectly, and the respective assets and liabilities of the
Corporation or any of its subsidiaries, other than any businesses, assets
or liabilities of the Liberty Media Group or the TCI Ventures Group;
(b) a proportionate interest in the businesses, assets and
liabilities of the Liberty Media Group equal to the Liberty Media Group
Inter-Group Interest Fraction as of such date;
(c) a proportionate interest in the businesses, assets and
liabilities of the TCI Ventures Group equal to the TCI Ventures Group
Inter-Group Interest Fraction as of such date;
(d) from and after any dividend or other distribution with respect
to shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock (other than a dividend or other distribution
payable in shares of Series A Liberty Media Group Common Stock or Series B
Liberty Media Group Common Stock, with respect to which adjustment shall be
made as provided in clause (a) of the definition of "Number of Shares
Issuable with Respect to the Liberty Media Group Inter-Group Interest," or
in other securities of the Corporation attributed to the Liberty Media
Group, for which provision shall be made as set forth in the penultimate
sentence of this definition), an amount of assets or properties theretofore
included in the Liberty Media
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Group equal to the aggregate amount of such kind of assets or properties so
paid in respect of such dividend or other distribution with respect to
shares of Series A Liberty Media Group Common Stock or Series B Liberty
Media Group Common Stock multiplied by a fraction the numerator of which is
equal to the Liberty Media Group Inter-Group Interest Fraction in effect
immediately prior to the record date for such dividend or other
distribution and the denominator of which is equal to the Liberty Media
Group Outstanding Interest Fraction in effect immediately prior to the
record date for such dividend or other distribution; and
(e) from and after any dividend or other distribution with respect
to shares of Series A TCI Ventures Group Common Stock or Series B TCI
Ventures Group Common Stock (other than a dividend or other distribution
payable in shares of Series A TCI Ventures Group Common Stock or Series B
TCI Ventures Group Common Stock, with respect to which adjustment shall be
made as provided in clause (a) of the definition of "Number of Shares
Issuable with Respect to the TCI Ventures Group Inter-Group Interest," or
in other securities of the Corporation attributed to the TCI Ventures
Group, for which provision shall be made as set forth in the penultimate
sentence of this definition), an amount of assets or properties theretofore
included in the TCI Ventures Group equal to the aggregate amount of such
kind of assets or properties so paid in respect of such dividend or other
distribution with respect to shares of Series A TCI Ventures Group Common
Stock or Series B TCI Ventures Group Common Stock multiplied by a fraction
the numerator of which is equal to the TCI Ventures Group Inter-Group
Interest Fraction in effect immediately prior to the record date for such
dividend or other distribution and the denominator of which is equal to the
TCI Ventures Group Outstanding Interest Fraction in effect immediately
prior to the record date for such dividend or other distribution;
(f) any assets or properties transferred from the Liberty Media
Group or the TCI Ventures Group to the TCI Group; and
(g) the TCI Ventures Group Preferred Interest;
provided that, from and after any contribution or transfer of any assets or
properties from the TCI Group to the Liberty Media Group or the TCI Ventures
Group, the TCI Group shall no longer include such assets or properties so
contributed or transferred (other than pursuant to its interest in the
businesses, assets and liabilities of the Liberty Media Group or the TCI
Ventures Group pursuant to clauses (b) or (c), respectively, above). If (1) the
Corporation shall pay a dividend or make any other distribution with respect to
shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock payable in other securities of the Corporation attributed to
the Liberty Media Group, the TCI Group shall be deemed to hold an amount of such
other securities equal to the amount so distributed multiplied by the fraction
specified in clause (d) of this definition (determined as of a time immediately
prior to the record
53
<PAGE>
date for such dividend or other distribution), and to the extent interest or
dividends are paid or other distributions are made on such other securities so
distributed to holders of Series A Liberty Media Group Common Stock and Series B
Liberty Media Group Common Stock, the TCI Group shall include a corresponding
ratable amount of the kind of assets paid as such interest or dividends or other
distributions in respect of such securities so deemed to be held by the TCI
Group, or (2) the Corporation shall pay a dividend or make any other
distribution with respect to shares of Series A TCI Ventures Group Common Stock
or Series B TCI Ventures Group Common Stock payable in other securities of the
Corporation attributed to the TCI Ventures Group, the TCI Group shall be deemed
to hold an amount of such other securities equal to the amount so distributed
multiplied by the fraction specified in clause (e) of this definition
(determined as of a time immediately prior to the record date for such dividend
or other distribution), and to the extent interest or dividends are paid or
other distributions are made on such other securities so distributed to holders
of Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group
Common Stock, the TCI Group shall include a corresponding ratable amount of the
kind of assets paid as such interest or dividends or other distributions in
respect of such securities so deemed to be held by the TCI Group. The
Corporation may also, to the extent any such other securities constitute
Convertible Securities which are at the time convertible, exercisable or
exchangeable, cause such Convertible Securities deemed to be held by the TCI
Group to be deemed to be converted, exercised or exchanged (and to the extent
the terms of such Convertible Securities require payment or delivery of
consideration in order to effect such conversion, exercise or exchange, the TCI
Group shall in such case no longer include an amount of the kind of properties
or assets required to be paid or delivered as such consideration for the amount
of the Convertible Securities deemed converted, exercised or exchanged as if
such Convertible Securities were outstanding), in which case such Convertible
Securities shall no longer be deemed to be held by the TCI Group or attributed
to the Liberty Media Group or the TCI Ventures Group.
"TCI Group Available Dividend Amount," as of any date, shall mean either:
(a) the excess of (i) an amount equal to the total assets of the TCI Group less
the total liabilities (not including preferred stock) of the TCI Group as of
such date over (ii) the aggregate par value of, or any greater amount determined
to be capital in respect of, all outstanding shares of Series A TCI Group Common
Stock, Series B TCI Group Common Stock and each class or series of Preferred
Stock attributed to the TCI Group or (b) in case there is no such excess, an
amount equal to the Corporation Earnings (Loss) Attributable to the TCI Group
(if positive) for the fiscal year in which such date occurs and/or the preceding
fiscal year.
"TCI-UA Notes" shall mean those certain convertible notes due December 12,
2021 issued by TCI UA, Inc., a Subsidiary of the Corporation, which notes were,
prior to the consummation of the Exchange Offers, exchangeable for shares of
Series A TCI Group Common Stock and Series A Liberty Media Group Common Stock.
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"TCI Ventures Group" shall mean, as of any date that any shares of Series A
TCI Ventures Group Common Stock or Series B TCI Ventures Group Common Stock have
been issued and continue to be outstanding:
(a) the interest of the Corporation or of any of its subsidiaries
in any of the following Persons or any of their respective subsidiaries
(including any successor thereto by merger, consolidation or sale of all or
substantially all of its assets, whether or not in connection with a
Related Business Transaction) and their respective properties and assets:
TCI Ventures Group, LLC, Tele-Communications International, Inc., TCI
Telephony Holdings, Inc., New Jersey Fiber Technologies, L.P., Louisville
Lightwave, Western Tele-Communications, Inc., TCI GCI, Inc., TCI UVSG,
Inc., Acclaim Entertainment, Inc., TCI TSX, Inc., Intessera, Inc., TCI-
TVGOS, Inc., TCI MCNS Holdings, Inc., TCI ETC Holdings, Inc., TCI Internet
Holdings, Inc., TCI Online Sports Holdings, Inc., TCI Online Village
Holdings, Inc., TCI INZ Sports Holdings, Inc., TCI Netscape Holdings, Inc.,
TCI Java, Inc., National Digital Television Center, Inc., TCI SUMMITrak of
Texas, Inc., TCI SUMMITrak, LLC, DigiVentures, LLC, Kitty Hawk Capital
Limited Partners, II, New Enterprise Associates IV, Limited Partnership,
Venture First II, L.P., TVSM, Inc.,
(b) all assets and liabilities of the Corporation or any of its
subsidiaries to the extent attributed to any of the properties or assets
referred to in clause (a) of this sentence, whether or not such assets or
liabilities are assets and liabilities of any of the Persons named in
clause (a) or any of their respective subsidiaries (or any successor as
described in clause (a) of this sentence),
(c) the proceeds of exercise of the Initial Ventures Options and
the expense of exercise of any related stock appreciation rights,
(d) all assets and properties contributed or otherwise transferred
to the TCI Ventures Group from the TCI Group, and
(e) the interest of the Corporation or any of its subsidiaries in
the businesses, assets and liabilities acquired by the Corporation or any
of its subsidiaries for the TCI Ventures Group, as determined by the Board
of Directors;
provided that (i) from and after any dividend or other distribution with respect
to any shares of Series A TCI Ventures Group Common Stock or Series B TCI
Ventures Group Common Stock (other than a dividend or other distribution payable
in shares of Series A TCI Ventures Group Common Stock or Series B TCI Ventures
Group Common Stock, with respect to which adjustment shall be made as provided
in clause (a) of the definition of "Number of Shares Issuable with Respect to
the TCI Ventures Group Inter-Group Interest," or in other securities of the
Corporation attributed to the TCI Ventures Group for which provision shall be
made as set
55
<PAGE>
forth in the penultimate sentence of this definition), the TCI Ventures Group
shall no longer include an amount of assets or properties equal to the aggregate
amount of such kind of assets or properties so paid in respect of shares of
Series A TCI Ventures Group Common Stock or Series B TCI Ventures Group Common
Stock multiplied by a fraction the numerator of which is equal to the TCI
Ventures Group Inter-Group Interest Fraction in effect immediately prior to the
record date for such dividend or other distribution and the denominator of which
is equal to the TCI Ventures Group Outstanding Interest Fraction in effect
immediately prior to the record date for such dividend or other distribution and
(ii) from and after any transfer of assets or properties from the TCI Ventures
Group to the TCI Group, the TCI Ventures Group shall no longer include the
assets or properties so transferred. If the Corporation shall pay a dividend or
make any other distribution with respect to shares of Series A TCI Ventures
Group Common Stock or Series B TCI Ventures Group Common Stock payable in
securities of the Corporation attributed to the TCI Ventures Group other than
Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock, the TCI Group shall be deemed to hold an amount of such other securities
equal to the amount so distributed multiplied by the fraction specified in
clause (i) of this definition (determined as of a time immediately prior to the
record date for such dividend or other distribution), and to the extent interest
or dividends are paid or other distributions are made on such other securities
so distributed to the holders of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock, the TCI Ventures Group shall no longer
include a corresponding ratable amount of the kind of assets paid as such
interest or dividends or other distributions in respect of such securities so
deemed to be held by the TCI Group. The Corporation may also, to the extent any
such other securities constitute Convertible Securities which are at the time
convertible, exercisable or exchangeable, cause such Convertible Securities
deemed to be held by the TCI Group to be deemed to be converted, exercised or
exchanged (and to the extent the terms of such Convertible Securities require
payment or delivery of consideration in order to effect such conversion,
exercise or exchange, the TCI Ventures Group shall in such case include an
amount of the kind of properties or assets required to be paid or delivered as
such consideration for the amount of the Convertible Securities deemed
converted, exercised or exchanged as if such Convertible Securities were
outstanding), in which case such Convertible Securities shall no longer be
deemed to be held by the TCI Group or attributed to the TCI Ventures Group.
"TCI Ventures Group Available Dividend Amount," as of any date, shall mean
the product of the TCI Ventures Group Outstanding Interest Fraction and either:
(a) the excess of (i) an amount equal to the total assets of the TCI Ventures
Group less the total liabilities (not including preferred stock) of the TCI
Ventures Group as of such date over (ii) the aggregate par value of, or any
greater amount determined to be capital in respect of, all outstanding shares of
Series A TCI Ventures Group Common Stock, Series B TCI Ventures Group Common
Stock, each class or series of Preferred Stock attributed to the TCI Ventures
Group and the TCI Ventures Group Preferred Interest or (b) in case there is no
such excess, an amount equal to the Corporation Earnings (Loss) Attributable to
the TCI Ventures Group (if positive) for the fiscal year in which such date
occurs and/or the preceding fiscal year.
56
<PAGE>
"TCI Ventures Group Inter-Group Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the Number of Shares Issuable with
Respect to the TCI Ventures Group Inter-Group Interest as of such date and the
denominator of which is the sum of (a) such Number of Shares Issuable with
Respect to the TCI Ventures Group Inter-Group Interest as of such date and (b)
the aggregate number of shares of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock outstanding as of such date.
"TCI Ventures Group Net Proceeds" shall mean, as of any date, with respect
to any Disposition of any of the properties and assets of the TCI Ventures
Group, an amount, if any, equal to the gross proceeds of such Disposition after
any payment of, or reasonable provision for, (a) any taxes payable by the
Corporation in respect of such Disposition or in respect of any resulting
dividend or redemption pursuant to clause (i) or (ii), respectively, of
paragraph 6(b) of this Section E (or which would have been payable but for the
utilization of tax benefits attributable to the TCI Group or the Liberty Media
Group), (b) any transaction costs, including, without limitation, any legal,
investment banking and accounting fees and expenses and (c) any liabilities and
other obligations (contingent or otherwise) of, or attributed to, the TCI
Ventures Group, including, without limitation, any indemnity or guarantee
obligations incurred in connection with the Disposition or any liabilities for
future purchase price adjustments and any preferential amounts plus any
accumulated and unpaid dividends and other obligations (without duplication of
amounts allocated for the satisfaction of the Corporation's obligations with
respect to Pre-Exchange Offer Securities which are included in the determination
of the Adjusted TCI Ventures Group Outstanding Interest Fraction) in respect of
Preferred Stock attributed to the TCI Ventures Group and in respect of the TCI
Ventures Group Preferred Interest. For purposes of this definition, any
properties and assets of the TCI Ventures Group remaining after such Disposition
shall constitute "reasonable provision" for such amount of taxes, costs and
liabilities (contingent or otherwise) as can be supported by such properties and
assets. To the extent the proceeds of any Disposition include any securities or
other property other than cash, the Board of Directors shall determine the value
of such securities or property, including for the purpose of determining the
equivalent value thereof if the Board of Directors determines to pay a dividend
or redemption price in cash or securities or other property as provided in
clause (z) of paragraph 6(b) of this Section E.
"TCI Ventures Group Outstanding Interest Fraction," as of any date, shall
mean a fraction the numerator of which is the aggregate number of shares of
Series A TCI Ventures Group Common Stock and Series B TCI Ventures Group Common
Stock outstanding on such date and the denominator of which is the sum of (a)
such aggregate number of shares of Series A TCI Ventures Group Common Stock and
Series B TCI Ventures Group Common Stock outstanding on such date and (b) the
Number of Shares Issuable with Respect to the TCI Ventures Group Inter-Group
Interest as of such date.
"TCI Ventures Group Preferred Interest" means the preferred equity interest
in the TCI Ventures Group that shall be attributed to the TCI Group following
the consummation of the
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Exchange Offers if the number of shares of Series A TCI Group Common Stock
validly tendered pursuant to the Exchange Offers and not withdrawn is less than
188,661,300 (the amount of such shortfall being the "Series A Number"), or if
the number of shares of Series B TCI Group Common Stock validly tendered
pursuant to the Exchange Offers and not withdrawn is less than 16,266,400 (the
amount of such shortfall being the "Series B Number"). The stated liquidation
value of the TCI Ventures Group Preferred Interest, if any, shall equal the
product of (x) the sum of the Series A Number and the Series B Number,
multiplied by (y) the Market Value of the Series A TCI Group Common Stock on the
last Trading Day preceding the consummation of the Exchange Offers. The TCI
Group will be entitled to receive cumulative dividends on the TCI Ventures Group
Preferred Interest, which shall accrue at the rate of 5% per annum of the
Liquidation Preference thereof, from the date the Exchange Offers are
consummated to and including the date that the TCI Ventures Group makes the
Liquidation Preference available to the TCI Group. Accrued dividends on the TCI
Ventures Group Preferred Interest shall accumulate and compound annually (but
not be payable currently) until the fifth anniversary of the closing of the
Exchange Offers. On and after such fifth anniversary, accrued dividends shall be
payable annually on each anniversary of the closing of the Exchange Offers and
will accumulate and compound to the extent not paid on any such anniversary.
When dividends become payable currently they could be paid (i) through the
transfer of cash or other assets from the TCI Ventures Group to the TCI Group,
(ii) through the reduction of amounts owed by the TCI Group to the TCI Ventures
Group, (iii) through the deemed transfer of taxable losses of the TCI Ventures
Group to the TCI Group pursuant to the tax sharing agreement among the TCI
Ventures Group, the TCI Group and the Liberty Media Group, effective for periods
after October 1, 1997 (in an amount equal to the highest corporate tax rate in
effect at the time of the dividend multiplied by the amount of taxable losses
deemed transferred), but only if such taxable losses have not been utilized in
any calculation under such tax sharing agreement or (iv) through the
cancellation of amounts owed by the TCI Group under such tax sharing agreement
with respect to utilized tax benefits of the TCI Ventures Group. The Liquidation
Preference of the TCI Ventures Group Preferred Interest as of any relevant date
shall be an amount equal to the sum of (a) the stated liquidation value of the
TCI Ventures Group Preferred Interest plus (b) an amount equal to all dividends
accrued thereon as of any annual dividend payment date that have not been paid
on such date (which dividends shall remain a part of the Liquidation Preference
until such accrued dividends and all dividends accrued thereon have been paid in
full), plus (c) for purposes of determining the amounts payable with respect to
the TCI Ventures Group Preferred Interest upon redemption thereof or the
liquidation, dissolution and winding up of the TCI Ventures Group, an amount
equal to all unpaid dividends accrued on the sum of the amounts specified in
clauses (a) and (b) during the period from the immediately preceding dividend
payment date to such date. The TCI Ventures Group Preferred Interest shall be
redeemed in full on the fifteenth (15th) anniversary of the consummation of the
Exchange Offers, and may be redeemed, in whole or in part, at the discretion of
the Board of Directors at any time prior thereto, for a redemption price,
payable in cash, equal to the Liquidation Preference thereof as of the
redemption date.
58
<PAGE>
"TCI Ventures Group Private Market Value" shall mean an amount equal to the
private market value of the TCI Ventures Group as of the Appraisal Date. Each
of the First Appraiser, the Second Appraiser and the Mutually Designated
Appraiser, if any, shall be instructed to determine the private market value of
the TCI Ventures Group as of the Appraisal Date based upon the amount a willing
purchaser would pay to a willing seller, in an arm's length transaction, if it
were acquiring the TCI Ventures Group, as if the TCI Ventures Group were a
publicly traded non-controlled corporation and the purchaser was acquiring all
of the capital stock of such corporation, and without consideration of any
potential regulatory constraints limiting the potential purchasers of the TCI
Ventures Group other than that which would have existed if the TCI Ventures
Group were a publicly traded non-controlled entity.
"Trading Day" shall mean each weekday other than any day on which any
relevant class or series of capital stock of the Corporation is not traded on
the Nasdaq National Market System or in the over-the-counter market."
(ii) Section C of Article V of the Restated Certificate of Incorporation of the
Corporation is hereby amended to read in its entirety as follows:
"SECTION C
REMOVAL OF DIRECTORS
Subject to the rights of the holders of any class or series of Preferred
Stock, directors may be removed from office only for cause (as hereinafter
defined) upon the affirmative vote of the holders of 66 2/3% of the total voting
power of the then outstanding shares of Series A TCI Group Common Stock, Series
B TCI Group Common Stock, Series A Liberty Media Group Common Stock, Series B
Liberty Media Group Common Stock, Series A TCI Ventures Group Common Stock,
Series B TCI Ventures Group Common Stock and any class or series of Preferred
Stock entitled to vote at an election of directors, voting together as a single
class. Except as may be provided by law, "cause" for removal, for purposes of
this Section C, shall exist only if: (i) the director whose removal is proposed
has been convicted of a felony, or has been granted immunity to testify in an
action where another has been convicted of a felony, by a court of competent
jurisdiction and such conviction is no longer subject to direct appeal; (ii)
such director has become mentally incompetent, whether or not so adjudicated,
which mental incompetence directly affects his ability as a director of the
Corporation, as determined by at least 66 2/3% of the members of the Board of
Directors then in office (other than such director); or (iii) such director's
actions or failure to act have been determined by at least 66 2/3% of the
members of the Board of Directors then in office (other than such director) to
be in derogation of the director's duties."
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(Iii) Section A of Article VIII of the Restated Certificate of Incorporation
of the Corporation is hereby amended to read in its entirety as follows:
"ARTICLE VIII
MEETINGS OF STOCKHOLDERS
SECTION A
ANNUAL AND SPECIAL MEETINGS
Subject to the rights of the holders of any class or series of Preferred
Stock, stockholder action may be taken only at an annual or special meeting.
Except as otherwise provided in the terms of any class or series of Preferred
Stock or unless otherwise prescribed by law or by another provision of this
Certificate, special meetings of the stockholders of the Corporation, for any
purpose or purposes, shall be called by the Secretary of the Corporation (i)
upon the written request of the holders of not less than 66 2/3% of the total
voting power of the outstanding Voting Securities (as hereinafter defined) or
(ii) at the request of at least 75% of the members of the Board of Directors
then in office. The term "Voting Securities" shall include the Series A TCI
Group Common Stock, the Series B TCI Group Common Stock, the Series A Liberty
Media Group Common Stock, the Series B Liberty Media Group Common Stock, the
Series A TCI Ventures Group Common Stock, the Series B TCI Ventures Group Common
Stock and any class or series of Preferred Stock entitled to vote with the
holders of Common Stock generally upon all matters which may be submitted to a
vote of stockholders at any annual meeting or special meeting thereof."
SECOND: That said amendments were duly adopted by the Board of Directors of
the Corporation, and pursuant to resolution of the Board of Directors of the
Corporation, the annual meeting of the stockholders of the Corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, at which meeting the necessary number
of shares as required by statute and the Restated Certificate of Incorporation
of the Corporation were voted in favor of said amendments.
THIRD: That said amendments were duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
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IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Amendment this 28th day of August, 1997.
TELE-COMMUNICATIONS, INC.
By: /s/ Leo J. Hindery, Jr.
-------------------------------
Name: Leo J. Hindery, Jr.
Title: President
ATTEST:
By: /s/ Stephen M Brett
-------------------------------
Name: Stephen M Brett
Title: Secretary
<PAGE>
State of Delaware
PAGE 1
Office of the Secretary of State
----------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE THIRTY-
FIRST DAY OF DECEMBER, A.D. 1997, AT 9 O'CLOCK A.M.
[SEAL]
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8852766
2371729 8100 DATE: 01-07-98
981006506
<PAGE>
Series C-Liberty Media Group
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATIONS
---------------
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED AS
"CONVERTIBLE PREFERRED STOCK, SERIES C-LIBERTY MEDIA GROUP"
ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
---------------
The undersigned, an Executive Vice President of TELE-COMMUNICATIONS,
INC., a Delaware corporation (this "Corporation"), HEREBY CERTIFIES that the
Board of Directors of this Corporation on December 16, 1997, duly adopted the
following resolutions creating a new series of this Corporation's Series
Preferred Stock:
"BE IT RESOLVED, that pursuant to authority expressly granted by the
provisions of Article IV, Section D of the Restated Certificate of Incorporation
of this Corporation, the Board of Directors hereby creates and authorizes the
issuance of a new series of this Corporation's Series Preferred Stock, par value
$.01 per share ("Series Preferred Stock"), and hereby fixes the powers,
designations, dividend rights, voting powers, rights on liquidation, conversion
rights, redemption rights and other preferences and relative, participating,
optional or other special rights and the qualifications, limitations or
restrictions of the shares of such series (in addition to the powers,
designations, preferences and relative, participating, optional or other special
rights and the qualifications, limitations or restrictions thereof set forth in
the Restated Certificate of Incorporation that are applicable to each class and
series of this Corporation's preferred stock, par value $.01 per share
("Preferred Stock")), as follows:
1. Designation and Number. The designation of the series of Series
----------------------
Preferred Stock, par value $.01 per share, of this Corporation authorized hereby
is "Convertible Preferred Stock, Series C-Liberty Media Group" (the "Series C-
Liberty Media Group Preferred Stock"). The number of shares constituting the
Series C-Liberty Media Group Preferred Stock shall be 70,575.
<PAGE>
2. Certain Definitions. Unless the context otherwise requires,
-------------------
the terms defined in this paragraph 2 shall, for all purposes of this
Certificate of Designations, have the meanings herein specified:
"Board of Directors": The Board of Directors of this Corporation and,
to the extent permitted by law, unless the context indicates otherwise, any
committee thereof authorized with respect to any particular matter to exercise
the power of the Board of Directors of this Corporation with respect to such
matter.
"Capital Stock": Any and all shares, interests, participations or
other equivalents (however designated) of corporate stock of this Corporation.
"Class B Preferred Stock": The Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock, par value $.01 per share, of this
Corporation.
"Closing Price": Of any security for any day, the last reported sale
price of such security regular way or, in case no such reported sale takes place
on such day, the average of the reported closing bid and asked prices regular
way, in either case on the composite tape, or if such security is not quoted on
the composite tape, on the principal United States securities exchange
registered under the Exchange Act on which such security is listed or admitted
to trading, or if such security is not listed or admitted to trading on any such
exchange, the last reported sale price (or the average of the quoted closing bid
and asked prices if there were no reported sales) on The Nasdaq Stock Market or
any comparable quotation system, or if such security is not quoted on The Nasdaq
Stock Market or any comparable system, the average of the closing bid and asked
prices as furnished by any member of the National Association of Securities
Dealers, Inc. selected from time to time by this Corporation for that purpose
or, in the absence of such quotations, such other method of determining market
value as the Board of Directors shall from time to time deem to be fair.
"Common Stock": The Common Stock, $1.00 par value per share, of this
Corporation, and all series thereof now existing or hereafter created.
"Conversion Rate": The kind and amount of securities, assets or other
property that as of any date are issuable or deliverable upon conversion of a
share of Series C-Liberty Media Group Preferred Stock. The Conversion Rate of
Series C-Liberty Media Group Preferred Stock shall initially be as set forth in
paragraph 4(b), subject to adjustment as set forth in paragraph 4 of this
Certificate of Designations. In the event that pursuant to paragraph 4 the
Series C-Liberty Media Group Preferred Stock becomes convertible into more than
one class or series of capital stock of this Corporation, the term Conversion
Rate, when used with respect to any such class or series, shall mean the number
or fraction of shares or other units of such capital stock that as of
2
<PAGE>
any date would be issued upon conversion of a share of Series C-Liberty Media
Group Preferred Stock.
"Convertible Securities": Securities, other than the Series B Liberty
Media Group Common Stock, that are convertible at the option of the holder into
Series A Liberty Media Group Common Stock.
"Debt Instrument": Any bond, debenture, note, indenture, guarantee or
other instrument or agreement evidencing any Indebtedness, whether existing at
the Issue Date or thereafter created, incurred, assumed or guaranteed.
"Determination Date": For any issuance of rights or warrants or any
distribution to which paragraph 4(d) or 4(e) applies, the earlier of (i) the
record date for the determination of stockholders entitled to receive the rights
or warrants or the distribution to which such paragraph applies and (ii) the Ex-
Dividend Date for such rights, warrants or distribution.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Exchange Offer": An issuer tender offer (within the meaning of Rule
13e-4(a)(2) of the rules and regulations promulgated by the Securities and
Exchange Commission under the Exchange Act, as such Rule is in effect on the
date hereof), including, without limitation, one that is effected through the
distribution of rights or warrants, made to holders of Series A Liberty Media
Group Common Stock (or to holders of other stock of this Corporation receivable
by a holder of Series C-Liberty Media Group Preferred Stock upon conversion
thereof), to issue stock of this Corporation or of a Subsidiary of this
Corporation and/or other property to a tendering stockholder in exchange for
shares of Series A Liberty Media Group Common Stock (or such other stock)
validly tendered pursuant to such issuer tender offer.
"Exchange Preferred Stock": A series of convertible preferred stock of
this Corporation, having terms, conditions, designations, dividend rights,
voting powers, rights on liquidation and other preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof that are identical, or as nearly so as is practicable in
the judgment of the Board of Directors, to those of the Series C-Liberty Media
Group Preferred Stock for which such Exchange Preferred Stock is exchanged,
except that (i) the liquidation preference will be determined as provided in
paragraph 4(h) or 4(i), as applicable, (ii) the running of any time periods
pursuant to the terms of the Series C-Liberty Media Group Preferred Stock shall
be tacked to the corresponding time periods in the Exchange Preferred Stock and
(iii) the Exchange Preferred Stock will not be convertible into, and the holders
will have no conversion rights thereunder with respect to, (x) in the case of a
redemption of Series A Liberty Media Group Common Stock or Redeemable Capital
Stock, the Series A Liberty Media Group Common Stock
3
<PAGE>
or Redeemable Capital Stock, as applicable, redeemed, or the Redemption
Securities issued, in the Redemption Event, and (y) in the case of a Spin Off,
the Spin Off Securities.
"Exchange Securities": Stock of this Corporation or of a Subsidiary of
this Corporation that is issued in exchange for shares of Series A Liberty Media
Group Common Stock (or other stock of this Corporation receivable by a holder of
Series C-Liberty Media Group Preferred Stock upon conversion thereof) pursuant
to an Exchange Offer.
"Ex-Dividend Date": The date on which "ex-dividend" trading commences
for a dividend, an issuance of rights or warrants or a distribution to which
paragraph 4(c), 4(d) or 4(e) applies in the over-the-counter market or the
principal exchange on which the Series A Liberty Media Group Common Stock is
then quoted or listed.
"Indebtedness": Any (i) liability, contingent or otherwise, of this
Corporation (x) for borrowed money whether or not the recourse of the lender is
to the whole of the assets of this Corporation or only to a portion thereof),
(y) evidenced by a note, debenture or similar instrument (including a purchase
money obligation) given other than in connection with the acquisition of
inventory or similar property in the ordinary course of business, or (z) for the
payment of money relating to an obligation under a lease that is required to be
capitalized for financial accounting purposes in accordance with generally
accepted accounting principles; (ii) liability of others described in the
preceding clause (i) which this Corporation has guaranteed or which is otherwise
its legal liability; (iii) obligations secured by a mortgage, pledge, lien,
charge or other encumbrance to which the property or assets of this Corporation
are subject whether or not the obligations secured thereby shall have been
assumed by or shall otherwise be this Corporation's legal liability; and (iv)
any amendment, renewal, extension or refunding of any liability of the types
referred to in clauses (i), (ii) and (iii) above.
"Issue Date": December 31, 1997, such date being the first date on
which any shares of the Series C-Liberty Media Group Preferred Stock are first
issued or deemed to have been issued.
"Junior Securities": All shares of Class B Preferred Stock, Series A
TCI Group Common Stock, Series B TCI Group Common Stock, Series A Liberty Media
Group Common Stock, Series B Liberty Media Group Common Stock, Series A TCI
Ventures Group Common Stock, Series B TCI Ventures Group Common Stock, any other
series of Common Stock and for purposes of paragraph 3 hereof, any class or
series of stock of this Corporation not entitled to receive any assets upon
liquidation, dissolution or winding up of the affairs of this Corporation until
the Series C-Liberty Media Group Preferred Stock shall have received the entire
amount to which such stock is entitled upon such liquidation, dissolution or
winding up.
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"Liquidation Value": Measured per Share of the Series C-Liberty Media
Group Preferred Stock as of any particular date, $579.31.
"Mirror Preferred Stock": Convertible preferred stock issued by (a) in
the case of a redemption of Series A Liberty Media Group Common Stock or
Redeemable Capital Stock, the issuer of the applicable Redemption Securities,
(b) in the case of a Spin Off, the issuer of the applicable Spin Off Securities,
and (c) in the case of an Exchange Offer, the issuer of the applicable Exchange
Securities, and having terms, conditions, designations, dividend rights, voting
powers, rights on liquidation and other preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof that are identical, or as nearly so as practicable in the
judgment of the Board of Directors, to those of the Series C-Liberty Media Group
Preferred Stock for which such Mirror Preferred Stock is exchanged, except that
(i) the liquidation preference will be determined as provided in paragraph 4(h),
4(i) or 5, as applicable, (ii) the running of any time periods pursuant to the
terms of the Series C-Liberty Media Group Preferred Stock shall be tacked to the
corresponding time periods in the Mirror Preferred Stock, and (iii) the Mirror
Preferred Stock shall be convertible into the kind and amount of Redemption
Securities, Spin Off Securities or Exchange Securities, as applicable, and other
securities and property that the holder of a share of Series C-Liberty Media
Group Preferred Stock in respect of which such Mirror Preferred Stock is issued
pursuant to the terms hereof would have received (x) in the case of the
redemption of Series A Liberty Media Group Common Stock or Redeemable Capital
Stock, as the case may be, upon such redemption had such share of Series C-
Liberty Media Group Preferred Stock been converted immediately prior to the
effective date of the Redemption Event, (y) in the case of a Spin Off, in such
Spin Off had such share of Series C-Liberty Media Group Preferred Stock been
converted immediately prior to the record date for such Spin Off and (z) in the
case of an Exchange Offer, upon consummation thereof had such share of Series C-
Liberty Media Group Preferred Stock that such holder elects to tender pursuant
to Section 5 been converted and the shares of Series A Liberty Media Group
Common Stock received upon such conversion been tendered in full pursuant to
such Exchange Offer prior to the expiration thereof and the same percentage of
such tendered shares had been accepted for exchange as the percentage of validly
tendered shares of Series A Liberty Media Group Common Stock were accepted for
exchange pursuant to such Exchange Offer, as the case may be.
"Parity Securities": Any class or series of stock of this Corporation
entitled to receive assets upon liquidation, dissolution or winding up of the
affairs of this Corporation on a parity with the Series C-Liberty Media
Preferred Group Preferred Stock. The Series C-TCI Group Preferred Stock, the
Series D Preferred Stock, the Series F Preferred Stock, the Series G Preferred
Stock and the Series H Preferred Stock rank on a parity with the Series C-
Liberty Media Group Preferred Stock as to rights to receive assets upon
liquidation, dissolution or winding up of the affairs of this Corporation and
accordingly, constitute "Parity Securities" for purposes of this Certificate of
Designations.
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"person": A natural person, corporation, limited liability company,
partnership or other legal entity.
"Redeemable Capital Stock": A class or series of Capital Stock of this
Corporation that provides by its terms a right in favor of this Corporation to
call, redeem, exchange or otherwise acquire all of the outstanding shares or
units of such class or series.
"Redemption Date": As to any Share, the date fixed for redemption of
such Share as specified in the notice of redemption given in accordance with
paragraph 6(c), provided that no such date will be a Redemption Date unless the
applicable Redemption Price is actually paid on such date or the consideration
sufficient for the payment thereof, and for no other purpose, has been set
apart, and if the Redemption Price is not so paid in full or the consideration
sufficient therefor so set apart then the Redemption Date will be the date on
which such Redemption Price is fully paid or the consideration sufficient for
the payment thereof, and for no other purpose, has been set apart.
"Redemption Price": As to any Share that is to be redeemed on any
Redemption Date, the Liquidation Value as in effect on such Redemption Date.
"Redemption Securities": With respect to the redemption of the Series
A Liberty Media Group Common Stock or any Redeemable Capital Stock, stock of a
Subsidiary of this Corporation that is distributed by this Corporation in
payment, in whole or in part, of the redemption price for the Series A Liberty
Media Group Common Stock or such Redeemable Capital Stock, as the case may be.
"Senior Securities": Any class or series of stock of this Corporation
ranking senior to the Series C-Liberty Media Group Preferred Stock in respect of
the right to participate in any distribution upon liquidation, dissolution or
winding up of the affairs of this Corporation.
"Series A Liberty Media Group Common Stock": The Tele-Communications,
Inc. Series A Liberty Media Group Common Stock, par value $1.00 per share, as
such exists on the date of this Certificate of Designations, and Capital Stock
of any other class or series into which such Series A Liberty Media Group Common
Stock may thereafter have been changed.
"Series A TCI Group Common Stock": The Tele-Communications, Inc.
Series A TCI Group Common Stock, par value $1.00 per share, as such exists on
the date of this Certificate of Designations, and Capital Stock of any other
class or series into which such Series A TCI Group Common Stock may thereafter
have been changed.
"Series A TCI Ventures Group Common Stock": The Tele-Communications,
Inc. Series A TCI Ventures Group Common Stock, par value $1.00 per share, as
such exists on the
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date of this Certificate of Designations, and Capital Stock of any other class
or series into which such Series A TCI Ventures Group Common Stock may
thereafter have been changed.
"Series B Liberty Media Group Common Stock": The Tele-Communications,
Inc. Series B Liberty Media Group Common Stock, par value $1.00 per share, as
such exists on the date of this Certificate of Designations, and Capital Stock
of any other class or series into which such Series B Liberty Media Group Common
Stock may thereafter have been changed.
"Series B TCI Group Common Stock": The Tele-Communications, Inc.
Series B TCI Group Common Stock, par value $1.00 per share, as such exists on
the date of this Certificate of Designations, and Capital Stock of any other
class or series into which such Series B TCI Group Common Stock may thereafter
have been changed.
"Series B TCI Ventures Group Common Stock": The Tele-Communications,
Inc. Series B TCI Ventures Group Common Stock, par value $1.00 per share, as
such exists on the date of this Certificate of Designations, and Capital Stock
of any other class or series into which such Series B TCI Ventures Group Common
Stock may thereafter have been changed.
"Series C-TCI Group Preferred Stock": The Convertible Preferred Stock,
Series C-TCI Group, par value $.01 per share, of this Corporation.
"Series D Preferred Stock": The Convertible Preferred Stock, Series D,
par value $.01 per share, of this Corporation.
"Series F Preferred Stock": The Convertible Redeemable Participating
Preferred Stock, Series F, par value $.01 per share, of this Corporation.
"Series G Preferred Stock": The Redeemable Convertible TCI Group
Preferred Stock, Series G, par value $.01 per share, of this Corporation.
"Series H Preferred Stock": The Redeemable Convertible Liberty Media
Group Preferred Stock, Series H, par value $.01 per share, of this Corporation.
"Share": A share of Series C-Liberty Media Group Preferred Stock.
"Spin Off": The distribution of stock of a Subsidiary of this
Corporation as a dividend to all holders of Series A Liberty Media Group Common
Stock.
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"Spin Off Securities": Stock of a Subsidiary of this Corporation that
is distributed to holders of Series A Liberty Media Group Common Stock in a Spin
Off.
"Subsidiary": With respect to any person, any corporation, limited
liability company, partnership or other legal entity more than 50% of whose
outstanding voting securities or membership, partnership or other ownership
interests, as the case may be, are directly or indirectly owned by such person.
3. Liquidation. Upon any liquidation, dissolution or winding
-----------
up of this Corporation, whether voluntary or involuntary, the holders of Series
C-Liberty Media Group Preferred Stock shall be entitled to be paid an amount in
cash equal to the aggregate Liquidation Value at the date fixed for liquidation
of all Shares outstanding before any distribution or payment is made upon any
Junior Securities, which payment shall be made pari passu with any such payment
---- -----
made to the holders of any Parity Securities. The holders of Series C-Liberty
Media Group Preferred Stock shall be entitled to no other or further
distribution of or participation in any remaining assets of this Corporation
after receiving the Liquidation Value per Share. If upon such liquidation,
dissolution or winding up, the assets of this Corporation to be distributed
among the holders of Series C-Liberty Media Group Preferred Stock and to all
holders of Parity Securities are insufficient to permit payment in full to such
holders of the aggregate preferential amounts which they are entitled to be
paid, then the entire assets of this Corporation to be distributed to such
holders shall be distributed ratably among them based upon the full preferential
amounts to which the shares of Series C-Liberty Media Group Preferred Stock and
such Parity Securities would otherwise respectively be entitled. Upon any such
liquidation, dissolution or winding up, after the holders of Series C-Liberty
Media Group Preferred Stock and Parity Securities have been paid in full the
amounts to which they are entitled, the remaining assets of this Corporation may
be distributed to the holders of Junior Securities. This Corporation shall mail
written notice of such liquidation, dissolution or winding up to each record
holder of Series C-Liberty Media Group Preferred Stock not less than 30 days
prior to the payment date stated in such written notice. Neither the
consolidation or merger of this Corporation into or with any other corporation
or corporations, nor the sale, transfer or lease by this Corporation of all or
any part of its assets, shall be deemed to be a liquidation, dissolution or
winding up of this Corporation within the meaning of this paragraph 3.
4. Conversion.
----------
(a) Unless previously called for redemption as provided in
paragraph 6 hereof, the Series C-Liberty Media Group Preferred Stock may be
converted at any time or from time to time, in such manner and upon such terms
and conditions as hereinafter provided in this paragraph 4 into fully paid and
non-assessable full shares of Series A Liberty Media Group Common Stock. In the
case of Shares called for redemption by this Corporation pursuant to paragraph
6(a) hereof, the conversion right provided by this paragraph 4 shall terminate
at the close
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of business on the fifteenth day preceding the date fixed for redemption. In the
case of Shares required to be redeemed pursuant to paragraph 6(b), the
conversion right provided by this paragraph 4 shall terminate immediately upon
receipt by this Corporation of a notice given pursuant to said paragraph. In
case cash, securities or property other than Series A Liberty Media Group Common
Stock shall be payable, deliverable or issuable upon conversion as provided
herein, then all references to Series A Liberty Media Group Common Stock in this
paragraph 4 shall be deemed to apply, so far as appropriate and as nearly as may
be, to such cash, property or other securities.
(b) Subject to the provisions for adjustment hereinafter set
forth in this paragraph 4, the Series C-Liberty Media Group Preferred Stock may
be converted into Series A Liberty Media Group Common Stock at the initial
conversion rate of 37.5 fully paid and non-assessable shares of Series A Liberty
Media Group Common Stock for one share of the Series C-Liberty Media Group
Preferred Stock.
(c) In case this Corporation shall, on or after the Issue
Date, (i) pay a dividend or make a distribution on its then outstanding shares
of Series A Liberty Media Group Common Stock in shares of Series A Liberty Media
Group Common Stock, (ii) subdivide the then outstanding shares of Series A
Liberty Media Group Common Stock into a greater number of shares of Series A
Liberty Media Group Common Stock, (iii) combine the then outstanding shares of
Series A Liberty Media Group Common Stock into a smaller number of shares of
Series A Liberty Media Group Common Stock, (iv) pay a dividend or make a
distribution on its then outstanding shares of Series A Liberty Media Group
Common Stock in shares of its Capital Stock (other than Series A Liberty Media
Group Common Stock or rights, warrants or options for its Capital Stock), or (v)
issue by reclassification of its then outstanding shares of Series A Liberty
Media Group Common Stock (other than a reclassification by way of merger or
binding share exchange that is subject to paragraph 4(g)) any shares of any
other class or series of Capital Stock of this Corporation (other than rights,
warrants or options for its Capital Stock), then, subject to the following
sentence and to paragraph 4(k), the conversion privilege and the Conversion Rate
in effect immediately prior to the opening of business on the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be adjusted so that the holder of each
share of the Series C-Liberty Media Group Preferred Stock thereafter surrendered
for conversion shall be entitled to receive the number and kind of shares of
Capital Stock of this Corporation that such holder would have owned or been
entitled to receive immediately following such action had such shares of Series
C-Liberty Media Group Preferred Stock been converted immediately prior to such
time.
An adjustment made pursuant to this paragraph 4(c) for a dividend or
distribution shall become effective immediately after the record date for the
dividend or distribution and an adjustment made pursuant to this paragraph 4(c)
for a subdivision, combination or reclassification shall become effective
immediately after the effective date of the subdivision, combination or
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<PAGE>
reclassification. Such adjustment shall be made successively whenever any
action listed above shall be taken.
Any shares of Series A Liberty Media Group Common Stock issuable in
payment of a dividend shall be deemed to have been issued immediately prior to
the time of the record date for such dividend for purposes of calculating the
number of outstanding shares of Series A Liberty Media Group Common Stock under
paragraph 4(d) below.
(d) In case this Corporation shall, on or after the Issue
Date, distribute any rights or warrants to all holders of shares of Series A
Liberty Media Group Common Stock entitling them (for a period expiring within 45
days after the record date for the determination of stockholders entitled to
receive such rights or warrants) to subscribe for or purchase shares of Series A
Liberty Media Group Common Stock (or Convertible Securities) at a price per
share of Series A Liberty Media Group Common Stock (or having an initial
exercise price or conversion price per share of Series A Liberty Media Group
Common Stock, after adding thereto an allocable portion of the exercise price of
the right or warrant to purchase such Convertible Securities, computed on the
basis of the maximum number of shares of Series A Liberty Media Group Common
Stock issuable upon conversion of such Convertible Securities) less than the
current market price per share of Series A Liberty Media Group Common Stock (as
determined in accordance with the provisions of paragraph 4(f) below) on the
Determination Date, the number of shares of Series A Liberty Media Group Common
Stock into which each Share shall thereafter be convertible shall be determined
by multiplying the number of shares of Series A Liberty Media Group Common Stock
into which such Share was theretofore convertible immediately prior to the
opening of business on such record date by a fraction of which the numerator
shall be the number of shares of Series A Liberty Media Group Common Stock
outstanding on such record date plus the number of additional shares of Series A
Liberty Media Group Common Stock offered for subscription or purchase (or into
which the Convertible Securities so offered are initially convertible) and of
which the denominator shall be the number of shares of Series A Liberty Media
Group Common Stock outstanding on such record date plus the number of shares of
Series A Liberty Media Group Common Stock which the aggregate offering price of
the total number of shares of Series A Liberty Media Group Common Stock so
offered (or the aggregate initial conversion or exercise price of the
Convertible Securities so offered, after adding thereto the aggregate exercise
price of the rights or warrants to purchase such Convertible Securities) would
purchase at the current market price per share of Series A Liberty Media Group
Common Stock (as determined in accordance with the provisions of paragraph 4(f)
below) on the Determination Date. Such adjustment shall be made successively
whenever any such rights or warrants are issued and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such rights or warrants. In the event that all of the shares of
Series A Liberty Media Group Common Stock (or all of the Convertible Securities)
subject to such rights or warrants have not been issued when such rights or
warrants expire (or, in the case of rights or warrants to purchase Convertible
Securities which have been exercised, all of the shares
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<PAGE>
of Series A Liberty Media Group Common Stock issuable upon conversion of such
Convertible Securities have not been issued prior to the expiration of the
conversion right thereof), then the Conversion Rate shall be readjusted
retroactively to be the Conversion Rate which would then be in effect had the
adjustment upon the issuance of such rights or warrants been made on the basis
of the actual number of shares of Series A Liberty Media Group Common Stock (or
Convertible Securities) issued upon the exercise of such rights or warrants (or
the conversion of such Convertible Securities); but such subsequent adjustment
shall not affect the number of shares of Series A Liberty Media Group Common
Stock issued upon the conversion of any Share prior to the date such subsequent
adjustment is made.
(e) In case this Corporation, on or after the Issue Date, shall
distribute to all holders of shares of Series A Liberty Media Group Common Stock
any evidences of its indebtedness or assets or rights or warrants to purchase
shares of Series A Liberty Media Group Common Stock or Series B Liberty Media
Group Common Stock or securities convertible into shares of Series A Liberty
Media Group Common Stock or Series B Liberty Media Group Common Stock (excluding
(x) dividends or distributions referred to in paragraph 4(c), distributions of
rights or warrants referred to in paragraph 4(d), distributions of Spin Off
Securities referred to in paragraph 4(i) and distributions of rights or warrants
exercisable for Exchange Securities (which shall be governed by paragraph 5) and
(y) cash dividends or distributions unless such cash dividends or cash
distributions are Extraordinary Cash Dividends), then in each such case the
number of shares of Series A Liberty Media Group Common Stock into which each
Share shall thereafter be convertible shall be determined by multiplying the
number of shares of Series A Liberty Media Group Common Stock into which such
Share was theretofore convertible immediately prior to the opening of business
on (A) the record date for the determination of stockholders entitled to receive
the distribution or (B) in the case of a reclassification, the effective date of
such reclassification, by a fraction of which the numerator shall be the current
market price per share of the Series A Liberty Media Group Common Stock (as
determined in accordance with the provisions of paragraph 4(f) below) on the
Determination Date and of which the denominator shall be such current market
price per share of Series A Liberty Media Group Common Stock less the fair
market value (as determined by the Board of Directors of this Corporation, whose
determination shall be conclusive) on such record date or effective date of the
portion of the assets or evidences of indebtedness or rights or warrants so to
be distributed applicable to one share of Series A Liberty Media Common Stock;
provided, however, that in the event the denominator of the foregoing fraction
- -------- -------
is zero or negative, in lieu of the foregoing adjustment, adequate provision
shall be made so that each holder of a Share shall have the right to receive
upon conversion of such Share, in addition to the shares of Series A Liberty
Media Group Common Stock to which the holder is entitled, the assets or
evidences of indebtedness or rights or warrants such holder would have received
had such holder converted such Share immediately prior to the record date for
such distribution. Such adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
distribution.
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For purposes of this paragraph 4(e), the term "Extraordinary Cash
Dividend" shall mean any cash dividend with respect to the Series A Liberty
Media Group Common Stock the amount of which, together with the aggregate amount
of cash dividends on the Series A Liberty Media Group Common Stock to be
aggregated with such cash dividend in accordance with the following provisions
of this paragraph, equals or exceeds the threshold percentage set forth below in
the following sentence. If, upon the date prior to the Ex-Dividend Date with
respect to a cash dividend on Series A Liberty Media Group Common Stock, the
aggregate of the amount of such cash dividend together with the amounts of all
cash dividends on the Series A Liberty Media Group Common Stock with Ex-Dividend
Dates occurring in the 365 consecutive day period ending on the date prior to
the Ex-Dividend Date with respect to the cash dividend to which this provision
is being applied (other than any such other cash dividends with Ex-Dividend
Dates occurring in such period for which a prior adjustment in the Conversion
Rate was previously made under this paragraph 4(e)) equals or exceeds on a per
share basis 10% of the average of the Closing Prices during the period beginning
on the date after the first such Ex-Dividend Date in such period and ending on
the date prior to the Ex-Dividend Date with respect to the cash dividend to
which this provision is being applied (except that if no other cash dividend has
had an Ex-Dividend Date occurring in such period, the period for calculating the
average of the Closing Prices shall be the period commencing 365 days prior to
the date immediately prior to the Ex-Dividend Date with respect to the cash
dividend to which this provision is being applied), such cash dividend together
with each other cash dividend with an Ex-Dividend Date occurring in such 365-day
period that is aggregated with such cash dividend in accordance with this
paragraph shall be deemed to be an Extraordinary Cash Dividend.
(f) For the purpose of any computation under paragraph 4(d),
4(e) or 4(m), the current market price per share of Series A Liberty Media Group
Common Stock on any Determination Date or date of issuance, as the case may be,
shall be deemed to be the average of the daily Closing Prices for a share of
Series A Liberty Media Group Common Stock for the ten (10) consecutive trading
days before the Determination Date or date of issuance, as applicable, in
question.
(g) If this Corporation consolidates with any other entity or
merges into another entity, or in case of any sale or transfer to another entity
(other than by mortgage or pledge) of all or substantially all of the properties
and assets of this Corporation, or if the Corporation is a party to a merger or
binding share exchange which reclassifies or changes its outstanding Series A
Liberty Media Group Common Stock, this Corporation (or its successor in such
transaction) or the purchaser of such properties and assets shall make
appropriate provision so that the holder of a Share shall have the right
thereafter to convert such Share into the kind and amount of shares of stock and
other securities and property that such holder would have owned immediately
after such consolidation, merger, sale or transfer if such holder had converted
such Share into Series A Liberty Media Group Common Stock immediately prior to
the effective date of such
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<PAGE>
consolidation, merger, sale or transfer (taking into account for this purpose
(to the extent applicable) the valid exercise by such holder of any rights of
election made available to holders of Series A Liberty Media Group Common Stock,
which rights of election shall simultaneously be made available to holders of
Shares on the same basis as if such Shares had theretofore been converted into
shares of Series A Liberty Media Group Common Stock), and the holders of the
Series C-Liberty Media Group Preferred Stock shall have no other conversion
rights under these provisions; provided, that effective provision shall be made,
in the Articles or Certificate of Incorporation of the resulting or surviving
corporation or otherwise or in any contracts of sale or transfer, so that the
provisions set forth herein for the protection of the conversion rights of the
Series C-Liberty Media Group Preferred Stock shall thereafter be made
applicable, as nearly as reasonably may be, to any such other shares of stock
and other securities and property deliverable upon conversion of the Series C-
Liberty Media Group Preferred Stock remaining outstanding or other convertible
preferred stock or other Convertible Securities received by the holders of
Series C-Liberty Media Group Preferred Stock in place thereof; and provided,
further, that any such resulting or surviving corporation or purchaser shall
expressly assume the obligation to deliver, upon the exercise of the conversion
privilege, such shares, securities or property as the holders of the Series C-
Liberty Media Group Preferred Stock remaining outstanding, or other convertible
preferred stock or other convertible securities received by the holders in place
thereof, shall be entitled to receive pursuant to the provisions hereof, and to
make provision for the protection of the conversion rights as above provided.
(h) Subject to paragraph 4(k) and to the remaining provisions of this
paragraph 4(h), in the event that (i) this Corporation redeems all, and not less
than all, of the outstanding shares of Series A Liberty Media Group Common Stock
in accordance with the terms thereof or (ii) a holder of Series C-Liberty Media
Group Preferred Stock would be entitled to receive upon conversion thereof
pursuant to this paragraph 4 any Redeemable Capital Stock and this Corporation
redeems, exchanges or otherwise acquires all of the outstanding shares or other
units of such Redeemable Capital Stock (each event referred to in clause (i) and
(ii) being a "Redemption Event"), then, from and after the effective date of
such Redemption Event, the holders of shares of Series C-Liberty Media Group
Preferred Stock then outstanding shall be entitled to receive upon conversion of
such shares, in lieu of shares or units of Series A Liberty Media Group Common
Stock or of such Redeemable Capital Stock, as the case may be, the kind and
amount of shares of stock and other securities and property receivable upon the
Redemption Event by a holder of the number of shares or units of Series A
Liberty Media Group Common Stock or such Redeemable Capital Stock, as the case
may be, into which such shares of Series C-Liberty Media Group Preferred Stock
could have been converted immediately prior to the effective date of such
Redemption Event (assuming, to the extent applicable, that such holder failed to
exercise any rights of election with respect thereto and received per share or
unit of Series A Liberty Media Group Common Stock or such Redeemable Capital
Stock the kind and amount of stock and other securities and property received
per share or unit by a plurality of the non-electing shares or units of Series A
Liberty Media Group Common
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Stock or such Redeemable Capital Stock, as the case may be), and (from and after
the effective date of such Redemption Event) the holders of the Series C-Liberty
Media Group Preferred Stock shall have no other conversion rights under these
provisions with respect to the Series A Liberty Media Group Common Stock or such
Redeemable Capital Stock, as the case may be.
Notwithstanding the foregoing, if the redemption price for the shares
of Series A Liberty Media Group Common Stock or such Redeemable Capital Stock is
paid in whole or in part in Redemption Securities, and the Mirror Preferred
Stock Condition is met, the Series C-Liberty Media Group Preferred Stock shall
not be convertible into such Redemption Securities and, from and after the
applicable redemption date, the holders of any shares of Series C-Liberty Media
Group Preferred Stock that have not been exchanged for Mirror Preferred Stock
shall have no conversion rights under these provisions except for any conversion
right that may have existed immediately prior to the effective date of the
Redemption Event with respect to any shares of stock or other securities or
property other than the Series A Liberty Media Group Common Stock or Redeemable
Capital Stock so redeemed. This Corporation shall use all commercially
reasonable efforts to ensure that the Mirror Preferred Stock Condition is
satisfied. The Mirror Preferred Stock Condition will be satisfied in connection
with a redemption of the Series A Liberty Media Group Common Stock or the
Redeemable Capital Stock into which the Series C-Liberty Media Group Preferred
Stock is then convertible, assuming that the Series C-Liberty Media Group
Preferred Stock is not then convertible into any other shares of stock or other
securities or property, if appropriate provision is made so that the holders of
the Series C-Liberty Media Group Preferred Stock have the right to exchange
their shares of Series C-Liberty Media Group Preferred Stock on the effective
date of the Redemption Event for shares of Mirror Preferred Stock of the issuer
of the Redemption Securities, which Mirror Preferred Stock shall have an
aggregate liquidation preference equal to the aggregate Liquidation Value of the
shares of Series C-Liberty Media Group Preferred Stock to be exchanged therefor.
If, before giving effect to a Redemption Event, a holder of Series C-
Liberty Media Group Preferred Stock would be entitled to receive upon conversion
of such Series C-Liberty Media Group Preferred Stock any shares of stock or
other securities or property (other than cash in lieu of fractional securities)
in addition to the Series A Liberty Media Group Common Stock or Redeemable
Capital Stock being redeemed, and the redemption price payable upon such
Redemption Event will include Redemption Securities, then the Mirror Preferred
Stock Condition will be satisfied if appropriate provision is made so that the
holders of the Series C-Liberty Media Group Preferred Stock have the right to
exchange their shares of Series C-Liberty Media Group Preferred Stock on the
effective date of the Redemption Event for Exchange Preferred Stock of this
Corporation and Mirror Preferred Stock of the issuer of the Redemption
Securities. The sum of the initial liquidation preferences of the shares of
Exchange Preferred Stock and Mirror Preferred Stock delivered in exchange for a
share of Series C-Liberty Media Group Preferred Stock will equal the Liquidation
Value of a share of Series C-Liberty Media Group Preferred Stock on the
effective date of the
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Redemption Event. The Mirror Preferred Stock will have an aggregate initial
liquidation preference equal to the product of the aggregate Liquidation Value
of the shares of Series C-Liberty Media Group Preferred Stock exchanged therefor
and the quotient of (x) the product of the Conversion Rate for the Series A
Liberty Media Group Common Stock or Redeemable Capital Stock to be redeemed
(determined immediately prior to the effective date of the Redemption Event) and
the average of the daily Closing Prices of the Series A Liberty Media Group
Common Stock or Redeemable Capital Stock, as the case may be, for the period of
ten consecutive trading days ending on the third trading day prior to the
effective date of the Redemption Event, divided by (y) the sum of the amount
determined pursuant to clause (x), plus the fair value of the shares of stock or
other securities or property (other than those being redeemed) that would have
been receivable by a holder of Series C-Liberty Media Group Preferred Stock upon
conversion thereof immediately prior to the effective date of the Redemption
Event (such fair value to be determined in the case of stock or other securities
with a Closing Price in the same manner as provided in clause (x) and otherwise
by the Board of Directors in the exercise of its judgment). The shares of
Exchange Preferred Stock will have an aggregate initial liquidation preference
equal to the difference between the aggregate Liquidation Value of the shares of
Series C-Liberty Media Group Preferred Stock exchanged therefor and the
aggregate initial liquidation preference of the Mirror Preferred Stock.
(i) If this Corporation effects a Spin Off, this Corporation shall
make appropriate provision so that the holders of the Series C-Liberty Media
Group Preferred Stock have the right to exchange their shares of Series C-
Liberty Media Group Preferred Stock on the effective date of the Spin Off for
Exchange Preferred Stock of this Corporation and Mirror Preferred Stock of the
issuer of the Spin Off Securities. The sum of the initial liquidation
preferences of the shares of Exchange Preferred Stock and Mirror Preferred Stock
delivered in exchange for a share of Series C-Liberty Media Group Preferred
Stock will equal the Liquidation Value of a share of Series C-Liberty Media
Group Preferred Stock on the effective date of the Spin Off. The Mirror
Preferred Stock will have an aggregate liquidation preference equal to the
product of the aggregate Liquidation Value of the shares of Series C-Liberty
Media Group Preferred Stock exchanged therefor and the quotient of (x) the
product of the number (or fraction) of Spin Off Securities that would have been
receivable upon such Spin Off by a holder of the number of shares of Series A
Liberty Media Group Common Stock issuable upon conversion of a share of Series
C-Liberty Media Group Preferred Stock immediately prior to the effective date of
the Spin Off and the average of the daily Closing Prices of the Spin Off
Securities for the period of ten consecutive trading days commencing on the
tenth trading day following the effective date of the Spin Off, divided by (y)
the sum of the amount determined pursuant to clause (x), plus the fair value of
the shares of Series A Liberty Media Group Common Stock and other securities or
property (other than Spin Off Securities) that would have been receivable by a
holder of a share of Series C-Liberty Media Group Preferred Stock upon
conversion thereof immediately prior to the effective date of the Spin Off (such
fair value to be determined in the case of Series A Liberty Media Group Common
Stock or other securities with a Closing Price in the same manner as provided in
clause (x) and otherwise by the
15
<PAGE>
Board of Directors in the exercise of its judgment). The shares of Exchange
Preferred Stock will have an aggregate initial liquidation preference equal to
the difference between the aggregate Liquidation Value of the shares of Series
C-Liberty Media Group Preferred Stock exchanged therefor and the aggregate
initial liquidation preference of the Mirror Preferred Stock. From and after the
effective date of such Spin Off, the holders of any shares of Series C-Liberty
Media Group Preferred Stock that have not been exchanged for Mirror Preferred
Stock and Exchange Preferred Stock as provided above shall have no conversion
rights under these provisions with respect to such Spin Off Securities.
(j) Whenever the Conversion Rate or the conversion privilege shall be
adjusted as provided in this paragraph 4, this Corporation shall promptly cause
a notice to be mailed to the holders of record of the Series C-Liberty Media
Group Preferred Stock describing the nature of the event requiring such
adjustment, the Conversion Rate in effect immediately thereafter and the kind
and amount of stock or other securities or property into which the Series C-
Liberty Media Group Preferred Stock shall be convertible after such event.
Where appropriate, such notice may be given in advance and included as a part of
a notice required to be mailed under the provisions of paragraph 4(l).
(k) This Corporation may, but shall not be required to, make any
adjustment of the Conversion Rate if such adjustment would require an increase
or decrease of less than 1% in such Conversion Rate; provided, however, that any
adjustments which by reason of this paragraph 4(k) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this paragraph 4 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. In any case in which this
paragraph 4(k) shall require that an adjustment shall become effective
immediately after a record date for such event, the Corporation may defer until
the occurrence of such event (x) issuing to the holder of any shares of Series
C-Liberty Media Group Preferred Stock converted after such record date and
before the occurrence of such event the additional shares of Series A Liberty
Media Group Common Stock or other Capital Stock issuable upon such conversion by
reason of the adjustment required by such event over and above the shares of
Series A Liberty Media Group Common Stock, or other Capital Stock issuable upon
such conversion before giving effect to such adjustment and (y) paying to such
holder cash in lieu of any fractional interest to which such holder is entitled
pursuant to paragraph 4(p); provided, however, that, if requested by such
holder, this Corporation shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares of Series A Liberty Media Group Common Stock or other Capital Stock, and
such cash, upon the occurrence of the event requiring such adjustment.
To the extent the shares of Series C-Liberty Media Group Preferred
Stock become convertible into cash, no adjustment need be made thereafter as to
the cash. Interest will not accrue on the cash.
16
<PAGE>
(l) In case at any time:
(i) this Corporation shall take any action which would
require an adjustment in the Conversion Rate pursuant to this paragraph;
(ii) there shall be any capital reorganization or
reclassification of the Series A Liberty Media Group Common Stock (other
than a change in par value), or any consolidation or merger to which the
Corporation is a party and for which approval of any stockholders of this
Corporation is required, or any sale, transfer or lease of all or
substantially all of the properties and assets of the Corporation, or a
tender offer for shares of Series A Liberty Media Group Common Stock
representing at least a majority of the total voting power represented by
the outstanding shares of Series A Liberty Media Group Common Stock which
has been recommended by the Board of Directors as being in the best
interests of the holders of Series A Liberty Media Group Common Stock; or
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of this Corporation;
then, in any such event, this Corporation shall give written notice, in the
manner provided in the first sentence of paragraph 6(c) hereof, to the holders
of the Series C-Liberty Media Group Preferred Stock at their respective
addresses as the same appear on the books of the Corporation, at least twenty
days (or ten days in the case of a recommended tender offer as specified in
clause (ii) above) prior to any record date for such action, dividend or
distribution or the date as of which it is expected that holders of Series A
Liberty Media Group Common Stock of record shall be entitled to exchange their
shares of Series A Liberty Media Group Common Stock for securities or other
property, if any, deliverable upon such reorganization, reclassification,
consolidation, merger, sale, transfer, lease, tender offer, dissolution,
liquidation or winding up; provided, however, that any notice required by any
event described in clause (ii) of this paragraph 4(l) shall be given in the
manner and at the time that such notice is given to the holders of Series A
Liberty Media Group Common Stock. Without limiting the obligations of this
Corporation to provide notice of corporate actions hereunder, the failure to
give the notice required by this paragraph 4(l) or any defect therein shall not
affect the legality or validity of any such corporate action of the Corporation
or the vote upon such action.
(m) Before any holder of Series C-Liberty Media Group Preferred
Stock shall be entitled to convert the same into Series A Liberty Media Group
Common Stock, such holder shall surrender the certificate or certificates for
such Series C-Liberty Media Group Preferred Stock at the office of this
Corporation or at the office of the transfer agent for the Series C-Liberty
Media Group Preferred Stock, which certificate or certificates, if this
Corporation shall so request, shall be duly endorsed to this Corporation or in
blank or accompanied by proper instruments of
17
<PAGE>
transfer to this Corporation or in blank (such endorsements or instruments of
transfer to be in form satisfactory to this Corporation), and shall given
written notice to this Corporation at said office that it elects to convert all
or a part of the Shares represented by said certificate or certificates in
accordance with the terms of this paragraph 4, and shall state in writing
therein the name or names in which such holder wishes the certificates for
Series A Liberty Media Group Common Stock to be issued. Every such notice of
election to convert shall constitute a contract between the holder of such
Series C-Liberty Media Group Preferred Stock and the Corporation, whereby the
holder of such Series C-Liberty Media Group Preferred Stock shall be deemed to
subscribe for the amount of Series A Liberty Media Group Common Stock which such
holder shall be entitled to receive upon conversion of the number of shares of
Series C-Liberty Media Group Preferred Stock to be converted, and, in
satisfaction of such subscription, to deposit the shares of Series C-Liberty
Media Group Preferred Stock to be converted, and thereby this Corporation shall
be deemed to agree that the surrender of the shares of Series C-Liberty Media
Group Preferred Stock to be converted shall constitute full payment of such
subscription for Series A Liberty Media Group Common Stock to be issued upon
such conversion. This Corporation will as soon as practicable after such deposit
of a certificate or certificates for Series C-Liberty Media Group Preferred
Stock, accompanied by the written notice and the statement above prescribed,
issue and deliver at the office of this Corporation or of said transfer agent to
the person for whose account such Series C-Liberty Media Group Preferred Stock
was so surrendered, or to his nominee(s) or, subject to compliance with
applicable law, transferee(s), a certificate or certificates for the number of
full shares of Series A Liberty Media Group Common Stock to which such holder
shall be entitled, together with cash in lieu of any fraction of a share as
hereinafter provided. If surrendered certificates for Series C-Liberty Media
Group Preferred Stock are converted only in part, this Corporation will issue
and deliver to the holder, or to his nominee(s), without charge therefor, a new
certificate or certificates representing the aggregate of the unconverted
Shares. Such conversion shall be deemed to have been made as of the date of such
surrender of the Series C-Liberty Media Group Preferred Stock to be converted;
and the person or persons entitled to receive the Series A Liberty Media Group
Common Stock issuable upon conversion of such Series C-Liberty Media Group
Preferred Stock shall be treated for all purposes as the record holder or
holders of such Series A Liberty Media Group Common Stock on such date.
The issuance of certificates for shares of Series A Liberty Media
Group Common Stock upon conversion of shares of Series C-Liberty Media Group
Preferred Stock shall be made without charge for any issue, stamp or other
similar tax in respect of such issuance, provided, however, if any such
certificate is to be issued in a name other than that of the registered holder
of the share or shares of Series C-Liberty Media Group Preferred Stock
converted, the person or persons requesting the issuance thereof shall pay to
this Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of
this Corporation that such tax has been paid.
18
<PAGE>
This Corporation shall not be required to convert any shares of Series
C-Liberty Media Group Preferred Stock, and no surrender of Series C-Liberty
Media Group Preferred Stock shall be effective for that purpose, while the stock
transfer books of this Corporation are closed for any purpose; but the surrender
of Series C-Liberty Media Group Preferred Stock for conversion during any period
while such books are so closed shall become effective for conversion immediately
upon the reopening of such books, as if the conversion had been made on the date
such Series C-Liberty Media Group Preferred Stock was surrendered.
(n) This Corporation shall at all times reserve and keep available,
solely for the purpose of issuance upon conversion of the outstanding shares of
Series C-Liberty Media Group Preferred Stock, such number of shares of Series A
Liberty Media Group Common Stock (or other Capital Stock) as shall be issuable
upon the conversion of all outstanding Shares, provided that nothing contained
herein shall be construed to preclude this Corporation from satisfying its
obligations in respect of the conversion of the outstanding shares of Series C-
Liberty Media Group Preferred Stock by delivery of shares of Series A Liberty
Media Group Common Stock (or such other Capital Stock) which are held in the
treasury of this Corporation. This Corporation shall take all such corporate
and other actions as from time to time may be necessary to insure that all
shares of Series A Liberty Media Group Common Stock (or other Capital Stock)
issuable upon conversion of shares of Series C-Liberty Media Group Preferred
Stock at the Conversion Rate in effect from time to time will, upon issue, be
duly and validly authorized and issued, fully paid and nonassessable and free of
any preemptive or similar rights.
(o) All shares of Series C-Liberty Media Group Preferred Stock
received by this Corporation upon conversion thereof into Series A Liberty Media
Group Common Stock shall be retired and shall be restored to the status of
authorized and unissued shares of preferred stock (and may be reissued as part
of another series of the preferred stock of this Corporation, but such shares
shall not be reissued as Series C-Liberty Media Group Preferred Stock).
(p) This Corporation shall not be required to issue fractional shares
of Series A Liberty Media Group Common Stock or scrip upon conversion of the
Series C-Liberty Media Group Preferred Stock. As to any final fraction of a
share of Series A Liberty Media Group Common Stock which a holder of one or more
Shares would otherwise be entitled to receive upon conversion of such Shares in
the same transaction, this Corporation shall pay a cash adjustment in respect of
such final fraction in an amount equal to the same fraction of the market value
of a full share of Series A Liberty Media Group Common Stock. For purposes of
this paragraph 4(p), the market value of a share of Series A Liberty Media Group
Common Stock shall be the Closing Price thereof on the trading day immediately
preceding the date of conversion.
19
<PAGE>
5. Exchange Option.
---------------
(a) In the event an Exchange Offer is made by this
Corporation or a Subsidiary thereof (the applicable of the foregoing being the
"Offeror"), the Offeror shall concurrently therewith make an equivalent offer to
the holders of Series C-Liberty Media Group Preferred Stock pursuant to which
such holders may tender Shares, based upon the number of shares of Series A
Liberty Media Group Common Stock into which such tendered Shares are then
convertible (and in lieu of tendering outstanding shares of Series A Liberty
Media Group Common Stock), together with such other consideration as may be
required to be tendered pursuant to such Exchange Offer, and receive in exchange
therefor, in lieu of Exchange Securities (and other property, if applicable),
Mirror Preferred Stock with an aggregate liquidation preference equal to the
aggregate Liquidation Value of the shares of Series C-Liberty Media Group
Preferred Stock exchanged therefor. Whether or not a holder of Shares elects to
accept such offer and tender Shares, no adjustment to the Conversion Rate of the
Shares will be made pursuant to paragraph 4 in connection with the Exchange
Offer.
(b) If an Exchange Offer is made as discussed above, the
Offeror shall, concurrently with the distribution of the offering circular or
prospectus and related documents to holders of Series A Liberty Media Group
Common Stock, provide each holder of Series C-Liberty Media Group Preferred
Stock with a notice setting forth the offer described in paragraph 5(a) above
and describing the Exchange Offer, the Exchange Securities and the Mirror
Preferred Stock. Such notice shall be accompanied by the offering circular,
prospectus or similar document provided to holders of Series A Liberty Media
Group Common Stock in respect of the Exchange Offer and a copy of the
certificate of designations (or similar document) proposed to be filed by the
Offeror in order to establish the Mirror Preferred Stock. No failure to mail the
notice contemplated by this paragraph 5(b) or any defect therein or in the
mailing thereof shall affect the validity of the applicable Exchange Offer.
6. Redemption.
----------
(a) Subject to the provisions of paragraph 6(f), the shares
of Series C-Liberty Media Group Preferred Stock may be redeemed out of funds
legally available therefor, at the option of this Corporation by action of the
Board of Directors, in whole or from time to time in part, at any time after
August 8, 2001 at the Redemption Price per Share as of the applicable Redemption
Date. If less than all outstanding Shares are to be redeemed, Shares shall be
redeemed ratably among the holders thereof.
(b) Subject to the rights of any Parity Securities and the
provisions of paragraph 6(f) and subject to any prohibitions or restrictions
contained in any Debt Instrument, at any time on or after August 8, 2001, any
holder shall have the right, at such holder's option, to
20
<PAGE>
require redemption by this Corporation at the Redemption Price per Share as of
the applicable Redemption Date of all or any portion of his Shares having an
aggregate Liquidation Value in excess of $1,000,000, by written notice to this
Corporation stating the number of Shares to be redeemed. This Corporation shall
redeem, out of funds legally available therefor and not restricted in accordance
with the first sentence of this paragraph 6(b) or, at this Corporation's
election, through the issuance of fully paid and nonassessable shares of Series
A Liberty Media Group Common Stock (the value of which for this purpose shall be
deemed to be equal to, on a per share basis, the average of the daily Closing
Prices of the Series A Liberty Media Group Common Stock for the 20 consecutive
trading days ending on and including the fifth trading day preceding the date
fixed for redemption pursuant to this sentence), the Shares so requested to be
redeemed on such date within 60 days following this Corporation's receipt of
such notice as this Corporation shall state in its notice given pursuant to
paragraph 6(c). If the funds of this Corporation legally available for
redemption of Shares and not restricted in accordance with the first sentence of
this paragraph 6(b) are insufficient to redeem the total number of Shares
required to be redeemed pursuant to this paragraph 6(b) and the Corporation has
not elected to pay the Redemption Price or the applicable portion thereof in
shares of Series A Liberty Media Group Common Stock, then, those funds which are
legally available for redemption of such Shares and not so restricted will be
used to redeem the maximum possible number of such Shares ratably among the
holders who have required Shares to be redeemed under this paragraph 6(b). At
any time thereafter when additional funds of this Corporation are legally
available and not so restricted for such purpose, such funds will immediately be
used to redeem the Shares this Corporation failed to redeem on such Redemption
Date until the balance of such Shares are redeemed. Further, if the funds of
this Corporation legally available for redemption of Shares are sufficient to
pay the Redemption Price of the Shares requested to be redeemed in full, then
any portion of such Redemption Price not paid when due as provided in this
paragraph 6(b) shall thereupon become immediately due and payable by this
Corporation in cash only, notwithstanding that payment thereof is restricted
pursuant to any Debt Instrument in accordance with the first sentence of this
paragraph 6(b), and shall constitute indebtedness of this Corporation for
borrowed money, the payment of which indebtedness the holders requesting such
redemption shall be entitled to enforce by the exercise of any and all rights at
law or in equity.
(c) Notice of any redemption pursuant to this paragraph 6 shall be
mailed, first class, postage prepaid, not less than 30 days nor more than 60
days prior to the Redemption Date, to the holders of record of the shares of
Series C-Liberty Media Group Preferred Stock to be redeemed, at their respective
addresses as the same appear upon the books of this Corporation or are supplied
by them in writing to this Corporation for the purpose of such notice (with
telephonic or facsimile confirmation of notice to Bill Daniels so long as he is
a holder of record); but no failure to mail such notice or any defect therein or
in the mailing thereof shall affect the validity of the proceedings for the
redemption of any shares of the Series C-Liberty Media Group Preferred Stock.
Such notice shall set forth the Redemption Price, the Redemption Date, the
number of Shares to be redeemed and the place at which the Shares called for
redemption will, upon
21
<PAGE>
presentation and surrender of the stock certificates evidencing such Shares, be
redeemed. In case fewer than the total number of shares of Series C-Liberty
Media Group Preferred Stock represented by any certificate are redeemed, a new
certificate representing the number of unredeemed Shares will be issued to the
holder thereof without cost to such holder.
(d) If notice of any redemption by this Corporation pursuant to this
paragraph 6 shall have been mailed as provided in paragraph 6(c) and if on or
before the Redemption Date specified in such notice the consideration necessary
for such redemption shall have been set apart so as to be available therefor and
only therefor, then on and after the close of business on the Redemption Date,
the Shares called for redemption, notwithstanding that any certificate therefor
shall not have been surrendered for cancellation, shall no longer be deemed
outstanding, and all rights with respect to such Shares shall forthwith cease
and terminate, except the right of the holders thereof to receive upon surrender
of their certificates the consideration payable upon redemption thereof.
(e) All shares of Series C-Liberty Media Group Preferred Stock
redeemed, retired, purchased or otherwise acquired by this Corporation shall be
retired and shall be restored to the status of authorized and unissued shares of
preferred stock (and may be reissued as part of another series of the preferred
stock of this Corporation, but such shares shall not be reissued as Series C-
Liberty Media Group Preferred Stock).
(f) If and so long as this Corporation shall fail to redeem on a
Redemption Date pursuant to this paragraph 6 all shares of Series C-Liberty
Media Group Preferred Stock required to be redeemed on such date, this
Corporation shall not redeem, or discharge any sinking fund obligation with
respect to, any Junior Securities, unless all then outstanding shares of Series
C-Liberty Media Group Preferred Stock are redeemed, and shall not purchase or
otherwise acquire any shares of Series C-Liberty Media Group Preferred Stock or
Junior Securities. Nothing contained in this paragraph 6(f) shall prevent the
purchase or acquisition of shares of Series C-Liberty Media Group Preferred
Stock pursuant to a purchase or exchange offer or offers made to holders of all
outstanding shares of Series C-Liberty Media Group Preferred Stock, provided
that as to holders of all outstanding shares of Series C-Liberty Media Group
Preferred Stock, the terms of the purchase or exchange offer for all such shares
are identical. The provisions of this paragraph 6(f) are for the benefit of
holders of Series C-Liberty Media Group Preferred Stock and accordingly the
provisions of this paragraph 6(f) shall not restrict any redemption by this
Corporation of Shares held by any holder, provided that all other holders of
Shares shall have waived in writing the benefits of this provision with respect
to such redemption.
(g) If this Corporation has elected to issue shares of Series A
Liberty Media Group Common Stock in payment, in whole or in part, of the
Redemption Price of all or any of the Shares pursuant to paragraph 6(b) and if,
as of the Redemption Date, Bill Daniels
22
<PAGE>
is deceased and the Shares redeemed are held by or for the benefit of an inter
vivos or testamentary trust or public or private foundation established by Bill
Daniels, then the provisions of this paragraph 6(g) shall apply. If the net
proceeds to the holder of sales in the open market of the shares of Series A
Liberty Media Group Common Stock issued in payment of the Redemption Price
during the 30-day period following the later of the Redemption Date and, if this
Corporation is required to effect the registration of the sale of such shares
pursuant to a Registration Rights Agreement, the effective date of such
registration (or if the holder has provided written notice to this Corporation
of its intention to sell such shares prior to the expiration of such 30-day
period, then during the 90-day period following the later of such dates), are in
the aggregate (x) less than the dollar amount of the portion of the Redemption
Price paid by this Corporation in the shares so sold, then this Corporation
shall pay to the holder the amount of the shortfall in cash or (y) greater than
the dollar amount of the portion of the Redemption Price paid by this
Corporation in the shares so sold, then the holder shall pay to this Corporation
the amount of the excess in cash. For purposes of the foregoing, "net proceeds"
shall mean the gross sale price for each sale, less the amount of all customary
and reasonable selling expenses incurred by the holder in making such sale
(e.g., customary broker discounts). The holder shall notify this Corporation
----
promptly in writing of each sale of shares of Series A Liberty Media Group
Common Stock made by the holder during the 30-day or 90-day, as applicable,
period referred to above, the method of sale, the gross proceeds of such sale,
and the kind and amount of expenses deducted in determining the net proceeds of
the applicable sale. If, during such applicable period, the holder has sold a
greater number of shares of Series A Liberty Media Group Common Stock than the
number issued by this Corporation in payment of the Redemption Price, then those
sales that yielded the highest net proceeds shall be deemed to be sales of the
shares issued in payment of the Redemption Price. Within five days after the
expiration of the 30-day or 90-day, as applicable, period, this Corporation or
the holder, as applicable, shall make the payment to the other required by this
paragraph 6(g).
7. Voting Rights. The holders of the Series C-Liberty Media Group
-------------
Preferred Stock shall be entitled to vote on all matters submitted to a vote of
the holders of the Capital Stock of this Corporation which is entitled to vote
generally on the election of directors. Each Share shall entitle the registered
holder thereof to such number of votes as is equal to the number of shares of
Series A Liberty Media Group Common Stock or other voting securities of this
Corporation into which such Share is then convertible. Holders of Series C-
Liberty Media Group Preferred Stock shall vote together with holders of Common
Stock and shall not be entitled to vote as a class except as otherwise required
by law or this Corporation's Restated Certificate of Incorporation.
8. Amendment. No amendment or modification of the designation,
---------
rights, preferences, and limitations of the Shares set forth herein shall be
binding or effective without the prior consent of the holders of record of
Shares representing 66 2/3% of the Liquidation Value of all Shares outstanding
at the time such action is taken.
23
<PAGE>
9. Preemptive Rights. The holders of the Series C-Liberty Media
-----------------
Group Preferred Stock will not have any preemptive right to subscribe for or
purchase any shares of stock or any other securities which may be issued by this
Corporation.
10. Senior Securities. The Series C-Liberty Media Group Preferred
-----------------
Stock shall not rank junior to any other classes or series of stock of this
Corporation in respect of the right to receive dividends or the right to
participate in any distribution upon liquidation, dissolution or winding up of
this Corporation. Without the prior consent of the holders of record of Shares
representing 66 2/3% of the Liquidation Value of all Shares then outstanding,
this Corporation shall not issue any Senior Securities.
11. Exclusion of Other Rights. Except as may otherwise be required
-------------------------
by law and for the equitable rights and remedies that may otherwise be available
to holders of Series C-Liberty Media Group Preferred Stock, the shares of Series
C-Liberty Media Group Preferred Stock shall not have any designations,
preferences, limitations or relative rights, other than those specifically set
forth in these resolutions (as such resolutions may, subject to paragraph 8, be
amended from time to time) and in the Restated Certificate of Incorporation of
this Corporation.
12. Headings. The headings of the various paragraphs and
--------
subparagraphs hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
FURTHER RESOLVED, that the appropriate officers of this Corporation
are hereby authorized to execute and acknowledge a certificate setting forth
these resolutions and to cause such certificate to be filed and recorded, in
accordance with the requirements of Section 151(g) of the General Corporation
Law of the State of Delaware."
The undersigned has signed this Certificate of Designations on this
30th day of December, 1997.
/s/ Stephen M. Brett
-------------------------
Name: Stephen M. Brett
Title: Executive Vice President
24
<PAGE>
State of Delaware
PAGE 1
Office of the Secretary of State
----------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "TELE-COMMUNICATIONS, INC.", FILED IN THIS OFFICE ON THE THIRTY-
FIRST DAY OF DECEMBER, A.D. 1997, AT 9:01 O'CLOCK A.M.
[SEAL]
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8852765
2371729 8100 DATE: 01-07-98
981006506
<PAGE>
Series C-TCI Group
TELE-COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATIONS
---------------
SETTING FORTH A COPY OF A RESOLUTION
CREATING AND AUTHORIZING THE ISSUANCE
OF A SERIES OF PREFERRED STOCK DESIGNATED AS
"CONVERTIBLE PREFERRED STOCK, SERIES C-TCI GROUP"
ADOPTED BY THE BOARD OF DIRECTORS
OF TELE-COMMUNICATIONS, INC.
---------------
The undersigned, an Executive Vice President of TELE-COMMUNICATIONS,
INC., a Delaware corporation (this "Corporation"), HEREBY CERTIFIES that the
Board of Directors of this Corporation on December 16, 1997, duly adopted the
following resolutions creating a new series of this Corporation's Series
Preferred Stock:
"BE IT RESOLVED, that pursuant to authority expressly granted by the
provisions of Article IV, Section D of the Restated Certificate of Incorporation
of this Corporation, the Board of Directors hereby creates and authorizes the
issuance of a new series of this Corporation's Series Preferred Stock, par value
$.01 per share ("Series Preferred Stock"), and hereby fixes the powers,
designations, dividend rights, voting powers, rights on liquidation, conversion
rights, redemption rights and other preferences and relative, participating,
optional or other special rights and the qualifications, limitations or
restrictions of the shares of such series (in addition to the powers,
designations, preferences and relative, participating, optional or other special
rights and the qualifications, limitations or restrictions thereof set forth in
the Restated Certificate of Incorporation that are applicable to each class and
series of this Corporation's preferred stock, par value $.01 per share
("Preferred Stock")), as follows:
1. Designation and Number. The designation of the series of Series
----------------------
Preferred Stock, par value $.01 per share, of this Corporation authorized hereby
is "Convertible Preferred Stock, Series C-TCI Group" (the "Series C-TCI Group
Preferred Stock"). The number of shares constituting the Series C-TCI Group
Preferred Stock shall be 70,575.
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2. Certain Definitions. Unless the context otherwise requires, the
-------------------
terms defined in this paragraph 2 shall, for all purposes of this Certificate of
Designations, have the meanings herein specified:
"Board of Directors": The Board of Directors of this Corporation and,
to the extent permitted by law, unless the context indicates otherwise, any
committee thereof authorized with respect to any particular matter to exercise
the power of the Board of Directors of this Corporation with respect to such
matter.
"Capital Stock": Any and all shares, interests, participations or
other equivalents (however designated) of corporate stock of this Corporation.
"Class B Preferred Stock": The Class B 6% Cumulative Redeemable
Exchangeable Junior Preferred Stock, par value $.01 per share, of this
Corporation.
"Closing Price": Of any security for any day, the last reported sale
price of such security regular way or, in case no such reported sale takes place
on such day, the average of the reported closing bid and asked prices regular
way, in either case on the composite tape, or if such security is not quoted on
the composite tape, on the principal United States securities exchange
registered under the Exchange Act on which such security is listed or admitted
to trading, or if such security is not listed or admitted to trading on any such
exchange, the last reported sale price (or the average of the quoted closing bid
and asked prices if there were no reported sales) on The Nasdaq Stock Market or
any comparable quotation system, or if such security is not quoted on The Nasdaq
Stock Market or any comparable system, the average of the closing bid and asked
prices as furnished by any member of the National Association of Securities
Dealers, Inc. selected from time to time by this Corporation for that purpose
or, in the absence of such quotations, such other method of determining market
value as the Board of Directors shall from time to time deem to be fair.
"Common Stock": The Common Stock, $1.00 par value per share, of this
Corporation, and all series thereof now existing or hereafter created.
"Conversion Rate": The kind and amount of securities, assets or other
property that as of any date are issuable or deliverable upon conversion of a
share of Series C-TCI Group Preferred Stock. The Conversion Rate of Series C-
TCI Group Preferred Stock shall initially be as set forth in paragraph 4(b),
subject to adjustment as set forth in paragraph 4 of this Certificate of
Designations. In the event that pursuant to paragraph 4 the Series C-TCI Group
Preferred Stock becomes convertible into more than one class or series of
capital stock of this Corporation, the term Conversion Rate, when used with
respect to any such class or series, shall mean the number or fraction of shares
or other units of such capital stock that as of any date would be issued upon
conversion of a share of Series C-TCI Group Preferred Stock.
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"Convertible Securities": Securities, other than the Series B TCI
Group Common Stock, that are convertible at the option of the holder into Series
A TCI Group Common Stock.
"Debt Instrument": Any bond, debenture, note, indenture, guarantee or
other instrument or agreement evidencing any Indebtedness, whether existing at
the Issue Date or thereafter created, incurred, assumed or guaranteed.
"Determination Date": For any issuance of rights or warrants or any
distribution to which paragraph 4(d) or 4(e) applies, the earlier of (i) the
record date for the determination of stockholders entitled to receive the rights
or warrants or the distribution to which such paragraph applies and (ii) the Ex-
Dividend Date for such rights, warrants or distribution.
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Exchange Offer": An issuer tender offer (within the meaning of Rule
13e-4(a)(2) of the rules and regulations promulgated by the Securities and
Exchange Commission under the Exchange Act, as such Rule is in effect on the
date hereof), including, without limitation, one that is effected through the
distribution of rights or warrants, made to holders of Series A TCI Group Common
Stock (or to holders of other stock of this Corporation receivable by a holder
of Series C-TCI Group Preferred Stock upon conversion thereof), to issue stock
of this Corporation or of a Subsidiary of this Corporation and/or other property
to a tendering stockholder in exchange for shares of Series A TCI Group Common
Stock (or such other stock) validly tendered pursuant to such issuer tender
offer.
"Exchange Preferred Stock": A series of convertible preferred stock of
this Corporation, having terms, conditions, designations, dividend rights,
voting powers, rights on liquidation and other preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof that are identical, or as nearly so as is practicable in
the judgment of the Board of Directors, to those of the Series C-TCI Group
Preferred Stock for which such Exchange Preferred Stock is exchanged, except
that (i) the liquidation preference will be determined as provided in paragraph
4(h) or 4(i), as applicable, (ii) the running of any time periods pursuant to
the terms of the Series C-TCI Group Preferred Stock shall be tacked to the
corresponding time periods in the Exchange Preferred Stock and (iii) the
Exchange Preferred Stock will not be convertible into, and the holders will have
no conversion rights thereunder with respect to, (x) in the case of a redemption
of Redeemable Capital Stock, the Redeemable Capital Stock redeemed, or the
Redemption Securities issued, in the Redemption Event, and (y) in the case of a
Spin Off, the Spin Off Securities.
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"Exchange Securities": Stock of this Corporation or of a Subsidiary of
this Corporation that is issued in exchange for shares of Series A TCI Group
Common Stock (or other stock of this Corporation receivable by a holder of
Series C-TCI Group Preferred Stock upon conversion thereof) pursuant to an
Exchange Offer.
"Ex-Dividend Date": The date on which "ex-dividend" trading commences
for a dividend, an issuance of rights or warrants or a distribution to which
paragraph 4(c), 4(d) or 4(e) applies in the over-the-counter market or the
principal exchange on which the Series A TCI Group Common Stock is then quoted
or listed.
"Indebtedness": Any (i) liability, contingent or otherwise, of this
Corporation (x) for borrowed money whether or not the recourse of the lender is
to the whole of the assets of this Corporation or only to a portion thereof),
(y) evidenced by a note, debenture or similar instrument (including a purchase
money obligation) given other than in connection with the acquisition of
inventory or similar property in the ordinary course of business, or (z) for the
payment of money relating to an obligation under a lease that is required to be
capitalized for financial accounting purposes in accordance with generally
accepted accounting principles; (ii) liability of others described in the
preceding clause (i) which this Corporation has guaranteed or which is otherwise
its legal liability; (iii) obligations secured by a mortgage, pledge, lien,
charge or other encumbrance to which the property or assets of this Corporation
are subject whether or not the obligations secured thereby shall have been
assumed by or shall otherwise be this Corporation's legal liability; and (iv)
any amendment, renewal, extension or refunding of any liability of the types
referred to in clauses (i), (ii) and (iii) above.
"Issue Date": December 31, 1997, such date being the first date on
which any shares of the Series C-TCI Group Preferred Stock are first issued or
deemed to have been issued.
"Junior Securities": All shares of Class B Preferred Stock, Series A
TCI Group Common Stock, Series B TCI Group Common Stock, Series A Liberty Media
Group Common Stock, Series B Liberty Media Group Common Stock, Series A TCI
Ventures Group Common Stock, Series B TCI Ventures Group Common Stock, any other
series of Common Stock and, for purposes of paragraph 3 hereof, any class or
series of stock of this Corporation not entitled to receive any assets upon
liquidation, dissolution or winding up of the affairs of this Corporation until
the Series C-TCI Group Preferred Stock shall have received the entire amount to
which such stock is entitled upon such liquidation, dissolution or winding up.
"Liquidation Value": Measured per Share of the Series C-TCI Group
Preferred Stock as of any particular date, $2,208.35.
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"Mirror Preferred Stock": Convertible preferred stock issued by (a)
in the case of a redemption of Redeemable Capital Stock, the issuer of the
applicable Redemption Securities, (b) in the case of a Spin Off, the issuer of
the applicable Spin Off Securities, and (c) in the case of an Exchange Offer,
the issuer of the applicable Exchange Securities, and having terms, conditions,
designations, dividend rights, voting powers, rights on liquidation and other
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof that are identical, or as
nearly so as practicable in the judgment of the Board of Directors, to those of
the Series C-TCI Group Preferred Stock for which such Mirror Preferred Stock is
exchanged, except that (i) the liquidation preference will be determined as
provided in paragraph 4(h), 4(i) or 5, as applicable, (ii) the running of any
time periods pursuant to the terms of the Series C-TCI Group Preferred Stock
shall be tacked to the corresponding time periods in the Mirror Preferred Stock,
and (iii) the Mirror Preferred Stock shall be convertible into the kind and
amount of Redemption Securities, Spin Off Securities or Exchange Securities, as
applicable, and other securities and property that the holder of a share of
Series C-TCI Group Preferred Stock in respect of which such Mirror Preferred
Stock is issued pursuant to the terms hereof would have received (x) in the case
of the redemption of Redeemable Capital Stock, upon such redemption had such
share of Series C-TCI Group Preferred Stock been converted immediately prior to
the effective date of the Redemption Event, (y) in the case of a Spin Off, in
such Spin Off had such share of Series C-TCI Group Preferred Stock been
converted immediately prior to the record date for such Spin Off and (z) in the
case of an Exchange Offer, upon consummation thereof had such share of Series C-
TCI Group Preferred Stock that such holder elects to tender pursuant to Section
5 been converted and the shares of Series A TCI Group Common Stock received upon
such conversion been tendered in full pursuant to such Exchange Offer prior to
the expiration thereof and the same percentage of such tendered shares had been
accepted for exchange as the percentage of validly tendered shares of Series A
TCI Group Common Stock were accepted for exchange pursuant to such Exchange
Offer, as the case may be.
"Parity Securities": Any class or series of stock of this Corporation
entitled to receive assets upon liquidation, dissolution or winding up of the
affairs of this Corporation on a parity with the Series C-TCI Group Preferred
Stock. The Series C-Liberty Media Group Preferred Stock, the Series D Preferred
Stock, the Series F Preferred Stock, the Series G Preferred Stock and the Series
H Preferred Stock rank on a parity with the Series C-TCI Group Preferred Stock
as to rights to receive assets upon liquidation, dissolution or winding up of
the affairs of this Corporation and accordingly, constitute "Parity Securities"
for purposes of this Certificate of Designations.
"person": A natural person, corporation, limited liability
company, partnership or other legal entity.
5
<PAGE>
"Redeemable Capital Stock": A class or series of Capital Stock of this
Corporation that provides by its terms a right in favor of this Corporation to
call, redeem, exchange or otherwise acquire all of the outstanding shares or
units of such class or series.
"Redemption Date": As to any Share, the date fixed for redemption of
such Share as specified in the notice of redemption given in accordance with
paragraph 6(c), provided that no such date will be a Redemption Date unless the
applicable Redemption Price is actually paid on such date or the consideration
sufficient for the payment thereof, and for no other purpose, has been set
apart, and if the Redemption Price is not so paid in full or the consideration
sufficient therefor so set apart then the Redemption Date will be the date on
which such Redemption Price is fully paid or the consideration sufficient for
the payment thereof, and for no other purpose, has been set apart.
"Redemption Price": As to any Share that is to be redeemed on any
Redemption Date, the Liquidation Value as in effect on such Redemption Date.
"Redemption Securities": With respect to the redemption of any
Redeemable Capital Stock, stock of a Subsidiary of this Corporation that is
distributed by this Corporation in payment, in whole or in part, of the
redemption price of such Redeemable Capital Stock.
"Senior Securities": Any class or series of stock of this Corporation
ranking senior to the Series C-TCI Group Preferred Stock in respect of the right
to participate in any distribution upon liquidation, dissolution or winding up
of the affairs of this Corporation.
"Series A Liberty Media Group Common Stock": The Tele-Communications,
Inc. Series A Liberty Media Group Common Stock, par value $1.00 per share, as
such exists on the date of this Certificate of Designations, and Capital Stock
of any other class or series into which such Series A Liberty Media Group Common
Stock may thereafter have been changed.
"Series A TCI Group Common Stock": The Tele-Communications, Inc.
Series A TCI Group Common Stock, par value $1.00 per share, as such exists on
the date of this Certificate of Designations, and Capital Stock of any other
class or series into which such Series A TCI Group Common Stock may thereafter
have been changed.
"Series A TCI Ventures Group Common Stock": The Tele-Communications,
Inc. Series A TCI Ventures Group Common Stock, par value $1.00 per share, as
such exists on the date of this Certificate of Designations, and Capital Stock
of any other class or series into which such Series A TCI Ventures Group Common
Stock may thereafter have been changed.
"Series B Liberty Media Group Common Stock": The Tele-Communications,
Inc. Series B Liberty Media Group Common Stock, par value $1.00 per share, as
such exists on the
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date of this Certificate of Designations, and Capital Stock of any other class
or series into which such Series B Liberty Media Group Common Stock may
thereafter have been changed.
"Series B TCI Group Common Stock": The Tele-Communications, Inc.
Series B TCI Group Common Stock, par value $1.00 per share, as such exists on
the date of this Certificate of Designations, and Capital Stock of any other
class or series into which such Series B TCI Group Common Stock may thereafter
have been changed.
"Series B TCI Ventures Group Common Stock": The Tele-Communications,
Inc. Series B TCI Ventures Group Common Stock, par value $1.00 per share, as
such exists on the date of this Certificate of Designations, and Capital Stock
of any other class or series into which such Series B TCI Ventures Group Common
Stock may thereafter have been changed.
"Series C - Liberty Media Group Preferred Stock": The Convertible
Preferred Stock, Series C-Liberty Media Group, par value $.01 per share, of this
Corporation.
"Series D Preferred Stock": The Convertible Preferred Stock, Series D,
par value $.01 per share, of this Corporation.
"Series F Preferred Stock": The Convertible Redeemable Participating
Preferred Stock, Series F, par value $.01 per share, of this Corporation.
"Series G Preferred Stock": The Redeemable Convertible TCI Group
Preferred Stock, Series G, par value $.01 per share, of this Corporation.
"Series H Preferred Stock": The Redeemable Convertible Liberty Media
Group Preferred Stock, Series H, par value $.01 per share, of this Corporation.
"Share": A share of Series C-TCI Group Preferred Stock.
"Spin Off": The distribution of stock of a Subsidiary of this
Corporation as a dividend to all holders of Series A TCI Group Common Stock.
"Spin Off Securities": Stock of a Subsidiary of this Corporation that
is distributed to holders of Series A TCI Group Common Stock in a Spin Off.
7
<PAGE>
"Subsidiary": With respect to any person, any corporation, limited
liability company, partnership or other legal entity more than 50% of whose
outstanding voting securities or membership, partnership or other ownership
interests, as the case may be, are directly or indirectly owned by such person.
3. Liquidation. Upon any liquidation, dissolution or winding up of
-----------
this Corporation, whether voluntary or involuntary, the holders of Series C-TCI
Group Preferred Stock shall be entitled to be paid an amount in cash equal to
the aggregate Liquidation Value at the date fixed for liquidation of all Shares
outstanding before any distribution or payment is made upon any Junior
Securities, which payment shall be made pari passu with any such payment made to
---- -----
the holders of any Parity Securities. The holders of Series C-TCI Group
Preferred Stock shall be entitled to no other or further distribution of or
participation in any remaining assets of this Corporation after receiving the
Liquidation Value per Share. If upon such liquidation, dissolution or winding
up, the assets of this Corporation to be distributed among the holders of Series
C-TCI Group Preferred Stock and to all holders of Parity Securities are
insufficient to permit payment in full to such holders of the aggregate
preferential amounts which they are entitled to be paid, then the entire assets
of this Corporation to be distributed to such holders shall be distributed
ratably among them based upon the full preferential amounts to which the shares
of Series C-TCI Group Preferred Stock and such Parity Securities would otherwise
respectively be entitled. Upon any such liquidation, dissolution or winding up,
after the holders of Series C-TCI Group Preferred Stock and Parity Securities
have been paid in full the amounts to which they are entitled, the remaining
assets of this Corporation may be distributed to the holders of Junior
Securities. This Corporation shall mail written notice of such liquidation,
dissolution or winding up to each record holder of Series C-TCI Group Preferred
Stock not less than 30 days prior to the payment date stated in such written
notice. Neither the consolidation or merger of this Corporation into or with
any other corporation or corporations, nor the sale, transfer or lease by this
Corporation of all or any part of its assets, shall be deemed to be a
liquidation, dissolution or winding up of this Corporation within the meaning of
this paragraph 3.
4. Conversion.
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(a) Unless previously called for redemption as provided in
paragraph 6 hereof, the Series C-TCI Group Preferred Stock may be converted at
any time or from time to time, in such manner and upon such terms and conditions
as hereinafter provided in this paragraph 4 into fully paid and non-assessable
full shares of Series A TCI Group Common Stock. In the case of Shares called for
redemption by this Corporation pursuant to paragraph 6(a) hereof, the conversion
right provided by this paragraph 4 shall terminate at the close of business on
the fifteenth day preceding the date fixed for redemption. In the case of Shares
required to be redeemed pursuant to paragraph 6(b), the conversion right
provided by this paragraph 4 shall terminate immediately upon receipt by this
Corporation of a notice given pursuant to said paragraph. In case
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cash, securities or property other than Series A TCI Group Common Stock shall be
payable, deliverable or issuable upon conversion as provided herein, then all
references to Series A TCI Group Common Stock in this paragraph 4 shall be
deemed to apply, so far as appropriate and as nearly as may be, to such cash,
property or other securities.
(b) Subject to the provisions for adjustment hereinafter set forth in
this paragraph 4, the Series C-TCI Group Preferred Stock may be converted into
Series A TCI Group Common Stock at the initial conversion rate of 132.86 fully
paid and non-assessable shares of Series A TCI Group Common Stock for one share
of the Series C-TCI Group Preferred Stock.
(c) In case this Corporation shall, on or after the Issue Date, (i)
pay a dividend or make a distribution on its then outstanding shares of Series A
TCI Group Common Stock in shares of Series A TCI Group Common Stock, (ii)
subdivide the then outstanding shares of Series A TCI Group Common Stock into a
greater number of shares of Series A TCI Group Common Stock, (iii) combine the
then outstanding shares of Series A TCI Group Common Stock into a smaller
number of shares of Series A TCI Group Common Stock, (iv) pay a dividend or make
a distribution on its then outstanding shares of Series A TCI Group Common Stock
in shares of its Capital Stock (other than Series A TCI Group Common Stock or
rights, warrants or options for its Capital Stock), or (v) issue by
reclassification of its then outstanding shares of Series A TCI Group Common
Stock (other than a reclassification by way of merger or binding share exchange
that is subject to paragraph 4(g)) any shares of any other class or series of
Capital Stock of this Corporation (other than rights, warrants or options for
its Capital Stock), then, subject to the following sentence and to paragraph
4(k), the conversion privilege and the Conversion Rate in effect immediately
prior to the opening of business on the record date for such dividend or
distribution or the effective date of such subdivision, combination or
reclassification shall be adjusted so that the holder of each share of the
Series C-TCI Group Preferred Stock thereafter surrendered for conversion shall
be entitled to receive the number and kind of shares of Capital Stock of this
Corporation that such holder would have owned or been entitled to receive
immediately following such action had such shares of Series C-TCI Group
Preferred Stock been converted immediately prior to such time.
An adjustment made pursuant to this paragraph 4(c) for a dividend or
distribution shall become effective immediately after the record date for the
dividend or distribution and an adjustment made pursuant to this paragraph 4(c)
for a subdivision, combination or reclassification shall become effective
immediately after the effective date of the subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any
action listed above shall be taken.
Any shares of Series A TCI Group Common Stock issuable in payment of a
dividend shall be deemed to have been issued immediately prior to the time of
the record date for such
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<PAGE>
dividend for purposes of calculating the number of outstanding shares of Series
A TCI Group Common Stock under paragraph 4(d) below.
(d) In case this Corporation shall, on or after the Issue Date,
distribute any rights or warrants to all holders of shares of Series A TCI Group
Common Stock entitling them (for a period expiring within 45 days after the
record date for the determination of stockholders entitled to receive such
rights or warrants) to subscribe for or purchase shares of Series A TCI Group
Common Stock (or Convertible Securities) at a price per share of Series A TCI
Group Common Stock (or having an initial exercise price or conversion price per
share of Series A TCI Group Common Stock, after adding thereto an allocable
portion of the exercise price of the right or warrant to purchase such
Convertible Securities, computed on the basis of the maximum number of shares of
Series A TCI Group Common Stock issuable upon conversion of such Convertible
Securities) less than the current market price per share of Series A TCI Group
Common Stock (as determined in accordance with the provisions of paragraph 4(f)
below) on the Determination Date, the number of shares of Series A TCI Group
Common Stock into which each Share shall thereafter be convertible shall be
determined by multiplying the number of shares of Series A TCI Group Common
Stock into which such Share was theretofore convertible immediately prior to the
opening of business on such record date by a fraction of which the numerator
shall be the number of shares of Series A TCI Group Common Stock outstanding on
such record date plus the number of additional shares of Series A TCI Group
Common Stock offered for subscription or purchase (or into which the Convertible
Securities so offered are initially convertible) and of which the denominator
shall be the number of shares of Series A TCI Group Common Stock outstanding on
such record date plus the number of shares of Series A TCI Group Common Stock
which the aggregate offering price of the total number of shares of Series A TCI
Group Common Stock so offered (or the aggregate initial conversion or exercise
price of the Convertible Securities so offered, after adding thereto the
aggregate exercise price of the rights or warrants to purchase such Convertible
Securities) would purchase at the current market price per share of Series A TCI
Group Common Stock (as determined in accordance with the provisions of
paragraph 4(f) below) on the Determination Date. Such adjustment shall be made
successively whenever any such rights or warrants are issued and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. In the event that all
of the shares of Series A TCI Group Common Stock (or all of the Convertible
Securities) subject to such rights or warrants have not been issued when such
rights or warrants expire (or, in the case of rights or warrants to purchase
Convertible Securities which have been exercised, all of the shares of Series A
TCI Group Common Stock issuable upon conversion of such Convertible Securities
have not been issued prior to the expiration of the conversion right thereof),
then the Conversion Rate shall be readjusted retroactively to be the Conversion
Rate which would then be in effect had the adjustment upon the issuance of such
rights or warrants been made on the basis of the actual number of shares of
Series A TCI Group Common Stock (or Convertible Securities) issued upon the
exercise of such rights or warrants (or the conversion of such Convertible
Securities); but such subsequent adjustment shall not affect the
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number of shares of Series A TCI Group Common Stock issued upon the conversion
of any Share prior to the date such subsequent adjustment is made.
(e) In case this Corporation, on or after the Issue Date, shall
distribute to all holders of shares of Series A TCI Group Common Stock any
evidences of its indebtedness or assets or rights or warrants to purchase shares
of Series A TCI Group Common Stock or Series B TCI Group Common Stock or
securities convertible into shares of Series A TCI Group Common Stock or Series
B TCI Group Common Stock (excluding (x) dividends or distributions referred to
in paragraph 4(c), distributions of rights or warrants referred to in paragraph
4(d), distributions of Spin Off Securities referred to in paragraph 4(i) and
distributions of rights or warrants exercisable for Exchange Securities (which
shall be governed by paragraph 5) and (y) cash dividends or distributions unless
such cash dividends or cash distributions are Extraordinary Cash Dividends),
then in each such case the number of shares of Series A TCI Group Common Stock
into which each Share shall thereafter be convertible shall be determined by
multiplying the number of shares of Series A TCI Group Common Stock into which
such Share was theretofore convertible immediately prior to the opening of
business on (A) the record date for the determination of stockholders entitled
to receive the distribution or (B) in the case of a reclassification, the
effective date of such reclassification, by a fraction of which the numerator
shall be the current market price per share of the Series A TCI Group Common
Stock (as determined in accordance with the provisions of paragraph 4(f) below)
on the Determination Date and of which the denominator shall be such current
market price per share of Series A TCI Group Common Stock less the fair market
value (as determined by the Board of Directors of this Corporation, whose
determination shall be conclusive) on such record date or effective date of the
portion of the assets or evidences of indebtedness or rights or warrants so to
be distributed applicable to one share of Series A TCI Group Common Stock;
provided, however, that in the event the denominator of the foregoing fraction
- -------- -------
is zero or negative, in lieu of the foregoing adjustment, adequate provision
shall be made so that each holder of a Share shall have the right to receive
upon conversion of such Share, in addition to the shares of Series A TCI Group
Common Stock to which the holder is entitled, the assets or evidences of
indebtedness or rights or warrants such holder would have received had such
holder converted such Share immediately prior to the record date for such
distribution. Such adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
distribution.
For purposes of this paragraph 4(e), the term "Extraordinary Cash
Dividend" shall mean any cash dividend with respect to the Series A TCI Group
Common Stock the amount of which, together with the aggregate amount of cash
dividends on the Series A TCI Group Common Stock to be aggregated with such cash
dividend in accordance with the following provisions of this paragraph, equals
or exceeds the threshold percentage set forth below in the following sentence.
If, upon the date prior to the Ex-Dividend Date with respect to a cash dividend
on Series A TCI Group Common Stock, the aggregate of the amount of such cash
dividend together with the amounts of all
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cash dividends on the Series A TCI Group Common Stock with Ex-Dividend Dates
occurring in the 365 consecutive day period ending on the date prior to the Ex-
Dividend Date with respect to the cash dividend to which this provision is being
applied (other than any such other cash dividends with Ex-Dividend Dates
occurring in such period for which a prior adjustment in the Conversion Rate was
previously made under this paragraph 4(e)) equals or exceeds on a per share
basis 10% of the average of the Closing Prices during the period beginning on
the date after the first such Ex-Dividend Date in such period and ending on the
date prior to the Ex-Dividend Date with respect to the cash dividend to which
this provision is being applied (except that if no other cash dividend has had
an Ex-Dividend Date occurring in such period, the period for calculating the
average of the Closing Prices shall be the period commencing 365 days prior to
the date immediately prior to the Ex-Dividend Date with respect to the cash
dividend to which this provision is being applied), such cash dividend together
with each other cash dividend with an Ex-Dividend Date occurring in such 365-day
period that is aggregated with such cash dividend in accordance with this
paragraph shall be deemed to be an Extraordinary Cash Dividend.
(f) For the purpose of any computation under paragraph 4(d), 4(e) or
4(m), the current market price per share of Series A TCI Group Common Stock on
any Determination Date or date of issuance, as the case may be, shall be deemed
to be the average of the daily Closing Prices for a share of Series A TCI Group
Common Stock for the ten (10) consecutive trading days before the Determination
Date or date of issuance, as applicable, in question.
(g) If this Corporation consolidates with any other entity or merges
into another entity, or in case of any sale or transfer to another entity (other
than by mortgage or pledge) of all or substantially all of the properties and
assets of this Corporation, or if the Corporation is a party to a merger or
binding share exchange which reclassifies or changes its outstanding Series A
TCI Group Common Stock, this Corporation (or its successor in such transaction)
or the purchaser of such properties and assets shall make appropriate provision
so that the holder of a Share shall have the right thereafter to convert such
Share into the kind and amount of shares of stock and other securities and
property that such holder would have owned immediately after such consolidation,
merger, sale or transfer if such holder had converted such Share into Series A
TCI Group Common Stock immediately prior to the effective date of such
consolidation, merger, sale or transfer (taking into account for this purpose
(to the extent applicable) the valid exercise by such holder of any rights of
election made available to holders of Series A TCI Group Common Stock, which
rights of election shall simultaneously be made available to holders of Shares
on the same basis as if such Shares had theretofore been converted into shares
of Series A TCI Group Common Stock), and the holders of the Series C-TCI Group
Preferred Stock shall have no other conversion rights under these provisions;
provided, that effective provision shall be made, in the Articles or Certificate
of Incorporation of the resulting or surviving corporation or otherwise or in
any contracts of sale or transfer, so that the provisions set forth herein for
the protection of the conversion rights of the Series C-TCI Group Preferred
Stock shall thereafter be made applicable, as
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nearly as reasonably may be, to any such other shares of stock and other
securities and property deliverable upon conversion of the Series C-TCI Group
Preferred Stock remaining outstanding or other convertible preferred stock or
other Convertible Securities received by the holders of Series C-TCI Group
Preferred Stock in place thereof; and provided, further, that any such resulting
or surviving corporation or purchaser shall expressly assume the obligation to
deliver, upon the exercise of the conversion privilege, such shares, securities
or property as the holders of the Series C-TCI Group Preferred Stock remaining
outstanding, or other convertible preferred stock or other convertible
securities received by the holders in place thereof, shall be entitled to
receive pursuant to the provisions hereof, and to make provision for the
protection of the conversion rights as above provided.
(h) Subject to paragraph 4(k) and to the remaining
provisions of this paragraph 4(h), in the event that a holder of Series C-TCI
Group Preferred Stock would be entitled to receive upon conversion thereof
pursuant to this paragraph 4 any Redeemable Capital Stock and this Corporation
redeems, exchanges or otherwise acquires all of the outstanding shares or other
units of such Redeemable Capital Stock (such event being a "Redemption Event"),
then, from and after the effective date of such Redemption Event, the holders of
shares of Series C-TCI Group Preferred Stock then outstanding shall be entitled
to receive upon conversion of such shares, in lieu of shares or units of such
Redeemable Capital Stock, the kind and amount of shares of stock and other
securities and property receivable upon the Redemption Event by a holder of the
number of shares or units of such Redeemable Capital Stock into which such
shares of Series C-TCI Group Preferred Stock could have been converted
immediately prior to the effective date of such Redemption Event (assuming, to
the extent applicable, that such holder failed to exercise any rights of
election with respect thereto and received per share or unit of such Redeemable
Capital Stock the kind and amount of stock and other securities and property
received per share or unit by a plurality of the non-electing shares or units of
such Redeemable Capital Stock), and (from and after the effective date of such
Redemption Event) the holders of the Series C-TCI Group Preferred Stock shall
have no other conversion rights under these provisions with respect to such
Redeemable Capital Stock.
Notwithstanding the foregoing, if the redemption price for the shares
of such Redeemable Capital Stock is paid in whole or in part in Redemption
Securities, and the Mirror Preferred Stock Condition is met, the Series C- TCI
Group Preferred Stock shall not be convertible into such Redemption Securities
and, from and after the applicable redemption date, the holders of any shares of
Series C-TCI Group Preferred Stock that have not been exchanged for Mirror
Preferred Stock and Exchange Preferred Stock shall have no conversion rights
under these provisions except for any conversion right that may have existed
immediately prior to the effective date of the Redemption Event with respect to
any shares of stock (including the Series A TCI Group Common Stock) or other
securities or property other than the Redeemable Capital Stock so redeemed.
This Corporation shall use all commercially reasonable efforts to ensure that
the Mirror Preferred Stock
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<PAGE>
Condition is satisfied. The Mirror Preferred Stock Condition will be satisfied
in connection with a redemption of any Redeemable Capital Stock into which the
Series C-TCI Group Preferred Stock is then convertible if appropriate provision
is made so that the holders of the Series C-TCI Group Preferred Stock have the
right to exchange their shares of Series C-TCI Group Preferred Stock on the
effective date of the Redemption Event for Exchange Preferred Stock of this
Corporation and Mirror Preferred Stock of the issuer of the Redemption
Securities. The sum of the initial liquidation preferences of the shares of
Exchange Preferred Stock and Mirror Preferred Stock delivered in exchange for a
share of Series C-TCI Group Preferred Stock will equal the Liquidation Value of
a share of Series C-TCI Group Preferred Stock on the effective date of the
Redemption Event. The Mirror Preferred Stock will have an aggregate initial
liquidation preference equal to the product of the aggregate Liquidation Value
of the shares of Series C-TCI Group Preferred Stock exchanged therefor and the
quotient of (x) the product of the Conversion Rate for the Redeemable Capital
Stock to be redeemed (determined immediately prior to the effective date of the
Redemption Event) and the average of the daily Closing Prices of the Redeemable
Capital Stock for the period of ten consecutive trading days ending on the third
trading day prior to the effective date of the Redemption Event, divided by (y)
the sum of the amount determined pursuant to clause (x), plus the fair value of
the shares of stock or other securities or property (other than the Redeemable
Capital Stock being redeemed) that would have been receivable by a holder of
Series C-TCI Group Preferred Stock upon conversion thereof immediately prior to
the effective date of the Redemption Event (such fair value to be determined in
the case of stock or other securities with a Closing Price in the same manner as
provided in clause (x) and otherwise by the Board of Directors in the exercise
of its judgment). The shares of Exchange Preferred Stock will have an aggregate
initial liquidation preference equal to the difference between the aggregate
Liquidation Value of the shares of Series C-TCI Group Preferred Stock exchanged
therefor and the aggregate initial liquidation preference of the Mirror
Preferred Stock.
(i) If this Corporation effects a Spin Off, this
Corporation shall make appropriate provision so that the holders of the Series
C-TCI Group Preferred Stock have the right to exchange their shares of Series
C-TCI Group Preferred Stock on the effective date of the Spin Off for Exchange
Preferred Stock of this Corporation and Mirror Preferred Stock of the issuer of
the Spin Off Securities. The sum of the initial liquidation preferences of the
shares of Exchange Preferred Stock and Mirror Preferred Stock delivered in
exchange for a share of Series C-TCI Group Preferred Stock will equal the
Liquidation Value of a share of Series C-TCI Group Preferred Stock on the
effective date of the Spin Off. The Mirror Preferred Stock will have an
aggregate liquidation preference equal to the product of the aggregate
Liquidation Value of the shares of Series C-TCI Group Preferred Stock exchanged
therefor and the quotient of (x) the product of the number (or fraction) of Spin
Off Securities that would have been receivable upon such Spin Off by a holder of
the number of shares of Series A TCI Group Common Stock issuable upon conversion
of a share of Series C-TCI Group Preferred Stock immediately prior to the
effective date of the Spin Off and the average of the daily Closing Prices of
the Spin Off Securities for the period of ten consecutive
14
<PAGE>
trading days commencing on the tenth trading day following the effective date of
the Spin Off, divided by (y) the sum of the amount determined pursuant to clause
(x), plus the fair value of the shares of Series A TCI Group Common Stock and
other securities or property (other than Spin Off Securities) that would have
been receivable by a holder of a share of Series C-TCI Group Preferred Stock
upon conversion thereof immediately prior to the effective date of the Spin Off
(such fair value to be determined in the case of Series A TCI Group Common Stock
or other securities with a Closing Price in the same manner as provided in
clause (x) and otherwise by the Board of Directors in the exercise of its
judgment). The shares of Exchange Preferred Stock will have an aggregate initial
liquidation preference equal to the difference between the aggregate Liquidation
Value of the shares of Series C-TCI Group Preferred Stock exchanged therefor and
the aggregate initial liquidation preference of the Mirror Preferred Stock. From
and after the effective date of such Spin Off, the holders of any shares of
Series C-TCI Group Preferred Stock that have not been exchanged for Mirror
Preferred Stock and Exchange Preferred Stock as provided above shall have no
conversion rights under these provisions with respect to such Spin Off
Securities.
(j) Whenever the Conversion Rate or the conversion
privilege shall be adjusted as provided in this paragraph 4, this Corporation
shall promptly cause a notice to be mailed to the holders of record of the
Series C-TCI Group Preferred Stock describing the nature of the event requiring
such adjustment, the Conversion Rate in effect immediately thereafter and the
kind and amount of stock or other securities or property into which the
Series C-TCI Group Preferred Stock shall be convertible after such event. Where
appropriate, such notice may be given in advance and included as a part of a
notice required to be mailed under the provisions of paragraph 4(l).
(k) This Corporation may, but shall not be required to,
make any adjustment of the Conversion Rate if such adjustment would require an
increase or decrease of less than 1% in such Conversion Rate; provided, however,
that any adjustments which by reason of this paragraph 4(k) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this paragraph 4 shall be made to the nearest
cent or the nearest 1/100th of a share, as the case may be. In any case in which
this paragraph 4(k) shall require that an adjustment shall become effective
immediately after a record date for such event, the Corporation may defer until
the occurrence of such event (x) issuing to the holder of any shares of
Series C-TCI Group Preferred Stock converted after such record date and before
the occurrence of such event the additional shares of Series A TCI Group Common
Stock or other Capital Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the shares of Series A TCI
Group Common Stock, or other Capital Stock issuable upon such conversion before
giving effect to such adjustment and (y) paying to such holder cash in lieu of
any fractional interest to which such holder is entitled pursuant to paragraph
4(p); provided, however, that, if requested by such holder, this Corporation
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares of Series A
15
<PAGE>
TCI Group Common Stock or other Capital Stock, and such cash, upon the
occurrence of the event requiring such adjustment.
To the extent the shares of Series C-TCI Group Preferred Stock become
convertible into cash, no adjustment need be made thereafter as to the cash.
Interest will not accrue on the cash.
(l) In case at any time:
(i) this Corporation shall take any action which
would require an adjustment in the Conversion Rate pursuant to this
paragraph;
(ii) there shall be any capital reorganization or
reclassification of the Series A TCI Group Common Stock (other than a
change in par value), or any consolidation or merger to which the
Corporation is a party and for which approval of any stockholders of
this Corporation is required, or any sale, transfer or lease of all
or substantially all of the properties and assets of the Corporation,
or a tender offer for shares of Series A TCI Group Common Stock
representing at least a majority of the total voting power
represented by the outstanding shares of Series A TCI Group Common
Stock which has been recommended by the Board of Directors as being
in the best interests of the holders of Series A TCI Group Common
Stock; or
(iii) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of this Corporation;
then, in any such event, this Corporation shall give written notice, in the
manner provided in the first sentence of paragraph 6(c) hereof, to the holders
of the Series C-TCI Group Preferred Stock at their respective addresses as the
same appear on the books of the Corporation, at least twenty days (or ten days
in the case of a recommended tender offer as specified in clause (ii) above)
prior to any record date for such action, dividend or distribution or the date
as of which it is expected that holders of Series A TCI Group Common Stock of
record shall be entitled to exchange their shares of Series A TCI Group Common
Stock for securities or other property, if any, deliverable upon such
reorganization, reclassification, consolidation, merger, sale, transfer, lease,
tender offer, dissolution, liquidation or winding up; provided, however, that
any notice required by any event described in clause (ii) of this paragraph 4(l)
shall be given in the manner and at the time that such notice is given to the
holders of Series A TCI Group Common Stock. Without limiting the obligations of
this Corporation to provide notice of corporate actions hereunder, the failure
to give the notice required by this paragraph 4(l) or any defect therein shall
not affect the legality or validity of any such corporate action of the
Corporation or the vote upon such action.
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<PAGE>
(m) Before any holder of Series C-TCI Group Preferred
Stock shall be entitled to convert the same into Series A TCI Group Common
Stock, such holder shall surrender the certificate or certificates for such
Series C-TCI Group Preferred Stock at the office of this Corporation or at the
office of the transfer agent for the Series C-TCI Group Preferred Stock, which
certificate or certificates, if this Corporation shall so request, shall be duly
endorsed to this Corporation or in blank or accompanied by proper instruments of
transfer to this Corporation or in blank (such endorsements or instruments of
transfer to be in form satisfactory to this Corporation), and shall given
written notice to this Corporation at said office that it elects to convert all
or a part of the Shares represented by said certificate or certificates in
accordance with the terms of this paragraph 4, and shall state in writing
therein the name or names in which such holder wishes the certificates for
Series A TCI Group Common Stock to be issued. Every such notice of election to
convert shall constitute a contract between the holder of such Series C-TCI
Group Preferred Stock and the Corporation, whereby the holder of such Series C-
TCI Group Preferred Stock shall be deemed to subscribe for the amount of Series
A TCI Group Common Stock which such holder shall be entitled to receive upon
conversion of the number of shares of Series C-TCI Group Preferred Stock to be
converted, and, in satisfaction of such subscription, to deposit the shares of
Series C-TCI Group Preferred Stock to be converted, and thereby this Corporation
shall be deemed to agree that the surrender of the shares of Series C-TCI Group
Preferred Stock to be converted shall constitute full payment of such
subscription for Series A TCI Group Common Stock to be issued upon such
conversion. This Corporation will as soon as practicable after such deposit of a
certificate or certificates for Series C-TCI Group Preferred Stock, accompanied
by the written notice and the statement above prescribed, issue and deliver at
the office of this Corporation or of said transfer agent to the person for whose
account such Series C-TCI Group Preferred Stock was so surrendered, or to his
nominee(s) or, subject to compliance with applicable law, transferee(s), a
certificate or certificates for the number of full shares of Series A TCI Group
Common Stock to which such holder shall be entitled, together with cash in lieu
of any fraction of a share as hereinafter provided. If surrendered certificates
for Series C-TCI Group Preferred Stock are converted only in part, this
Corporation will issue and deliver to the holder, or to his nominee(s), without
charge therefor, a new certificate or certificates representing the aggregate of
the unconverted Shares. Such conversion shall be deemed to have been made as of
the date of such surrender of the Series C-TCI Group Preferred Stock to be
converted; and the person or persons entitled to receive the Series A TCI Group
Common Stock issuable upon conversion of such Series C-TCI Group Preferred Stock
shall be treated for all purposes as the record holder or holders of such Series
A TCI Group Common Stock on such date.
The issuance of certificates for shares of Series A TCI Group Common
Stock upon conversion of shares of Series C-TCI Group Preferred Stock shall be
made without charge for any issue, stamp or other similar tax in respect of such
issuance, provided, however, if any such certificate is to be issued in a name
other than that of the registered holder of the share or shares of Series C-TCI
Group Preferred Stock converted, the person or persons requesting the issuance
thereof
17
<PAGE>
shall pay to this Corporation the amount of any tax which may be payable in
respect of any transfer involved in such issuance or shall establish to the
satisfaction of this Corporation that such tax has been paid.
This Corporation shall not be required to convert any shares of
Series C-TCI Group Preferred Stock, and no surrender of Series C-TCI Group
Preferred Stock shall be effective for that purpose, while the stock transfer
books of this Corporation are closed for any purpose; but the surrender of
Series C-TCI Group Preferred Stock for conversion during any period while such
books are so closed shall become effective for conversion immediately upon the
reopening of such books, as if the conversion had been made on the date such
Series C-TCI Group Preferred Stock was surrendered.
(n) This Corporation shall at all times reserve and keep
available, solely for the purpose of issuance upon conversion of the outstanding
shares of Series C-TCI Group Preferred Stock, such number of shares of Series A
TCI Group Common Stock (or other Capital Stock) as shall be issuable upon the
conversion of all outstanding Shares, provided that nothing contained herein
shall be construed to preclude this Corporation from satisfying its obligations
in respect of the conversion of the outstanding shares of Series C-TCI Group
Preferred Stock by delivery of shares of Series A TCI Group Common Stock (or
such other Capital Stock) which are held in the treasury of this Corporation.
This Corporation shall take all such corporate and other actions as from time to
time may be necessary to insure that all shares of Series A TCI Group Common
Stock (or other Capital Stock) issuable upon conversion of shares of Series C-
TCI Group Preferred Stock at the Conversion Rate in effect from time to time
will, upon issue, be duly and validly authorized and issued, fully paid and
nonassessable and free of any preemptive or similar rights.
(o) All shares of Series C-TCI Group Preferred Stock
received by this Corporation upon conversion thereof into Series A TCI Group
Common Stock shall be retired and shall be restored to the status of authorized
and unissued shares of preferred stock (and may be reissued as part of another
series of the preferred stock of this Corporation, but such shares shall not be
reissued as Series C-TCI Group Preferred Stock).
(p) This Corporation shall not be required to issue
fractional shares of Series A TCI Group Common Stock or scrip upon conversion of
the Series C-TCI Group Preferred Stock. As to any final fraction of a share of
Series A TCI Group Common Stock which a holder of one or more Shares would
otherwise be entitled to receive upon conversion of such Shares in the same
transaction, this Corporation shall pay a cash adjustment in respect of such
final fraction in an amount equal to the same fraction of the market value of a
full share of Series A TCI Group Common Stock. For purposes of this paragraph
4(p), the market value of a share of Series
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<PAGE>
A TCI Group Common Stock shall be the Closing Price thereof on the trading day
immediately preceding the date of conversion.
5. Exchange Option.
---------------
(a) In the event an Exchange Offer is made by this
Corporation or a Subsidiary thereof (the applicable of the foregoing being the
"Offeror"), the Offeror shall concurrently therewith make an equivalent offer to
the holders of Series C-TCI Group Preferred Stock pursuant to which such holders
may tender Shares, based upon the number of shares of Series A TCI Group Common
Stock into which such tendered Shares are then convertible (and in lieu of
tendering outstanding shares of Series A TCI Group Common Stock), together with
such other consideration as may be required to be tendered pursuant to such
Exchange Offer, and receive in exchange therefor, in lieu of Exchange Securities
(and other property, if applicable), Mirror Preferred Stock with an aggregate
liquidation preference equal to the aggregate Liquidation Value of the shares of
Series C-TCI Group Preferred Stock exchanged therefor. Whether or not a holder
of Shares elects to accept such offer and tender Shares, no adjustment to the
Conversion Rate of the Shares will be made pursuant to paragraph 4 in connection
with the Exchange Offer.
(b) If an Exchange Offer is made as discussed above, the
Offeror shall, concurrently with the distribution of the offering circular or
prospectus and related documents to holders of Series A TCI Group Common Stock,
provide each holder of Series C-TCI Group Preferred Stock with a notice setting
forth the offer described in paragraph 5(a) above and describing the Exchange
Offer, the Exchange Securities and the Mirror Preferred Stock. Such notice shall
be accompanied by the offering circular, prospectus or similar document provided
to holders of Series A TCI Group Common Stock in respect of the Exchange Offer
and a copy of the certificate of designations (or similar document) proposed to
be filed by the Offeror in order to establish the Mirror Preferred Stock. No
failure to mail the notice contemplated by this paragraph 5(b) or any defect
therein or in the mailing thereof shall affect the validity of the applicable
Exchange Offer.
6. Redemption.
----------
(a) Subject to the provisions of paragraph 6(f), the
shares of Series C-TCI Group Preferred Stock may be redeemed out of funds
legally available therefor, at the option of this Corporation by action of the
Board of Directors, in whole or from time to time in part, at any time after
August 8, 2001 at the Redemption Price per Share as of the applicable Redemption
Date. If less than all outstanding Shares are to be redeemed, Shares shall be
redeemed ratably among the holders thereof.
(b) Subject to the rights of any Parity Securities and
the provisions of paragraph 6(f) and subject to any prohibitions or restrictions
contained in any Debt Instrument,
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<PAGE>
at any time on or after August 8, 2001, any holder shall have the right, at such
holder's option, to require redemption by this Corporation at the Redemption
Price per Share as of the applicable Redemption Date of all or any portion of
his Shares having an aggregate Liquidation Value in excess of $1,000,000, by
written notice to this Corporation stating the number of Shares to be redeemed.
This Corporation shall redeem, out of funds legally available therefor and not
restricted in accordance with the first sentence of this paragraph 6(b) or, at
this Corporation's election, through the issuance of fully paid and
nonassessable shares of Series A TCI Group Common Stock (the value of which for
this purpose shall be deemed to be equal to, on a per share basis, the average
of the daily Closing Prices of the Series A TCI Group Common Stock for the 20
consecutive trading days ending on and including the fifth trading day preceding
the date fixed for redemption pursuant to this sentence), the Shares so
requested to be redeemed on such date within 60 days following this
Corporation's receipt of such notice as this Corporation shall state in its
notice given pursuant to paragraph 6(c). If the funds of this Corporation
legally available for redemption of Shares and not restricted in accordance with
the first sentence of this paragraph 6(b) are insufficient to redeem the total
number of Shares required to be redeemed pursuant to this paragraph 6(b) and the
Corporation has not elected to pay the Redemption Price or the applicable
portion thereof in shares of Series A TCI Group Common Stock, then, those funds
which are legally available for redemption of such Shares and not so restricted
will be used to redeem the maximum possible number of such Shares ratably among
the holders who have required Shares to be redeemed under this paragraph 6(b).
At any time thereafter when additional funds of this Corporation are legally
available and not so restricted for such purpose, such funds will immediately be
used to redeem the Shares this Corporation failed to redeem on such Redemption
Date until the balance of such Shares are redeemed. Further, if the funds of
this Corporation legally available for redemption of Shares are sufficient to
pay the Redemption Price of the Shares requested to be redeemed in full, then
any portion of such Redemption Price not paid when due as provided in this
paragraph 6(b) shall thereupon become immediately due and payable by this
Corporation in cash only, notwithstanding that payment thereof is restricted
pursuant to any Debt Instrument in accordance with the first sentence of this
paragraph 6(b), and shall constitute indebtedness of this Corporation for
borrowed money, the payment of which indebtedness the holders requesting such
redemption shall be entitled to enforce by the exercise of any and all rights at
law or in equity
(c) Notice of any redemption pursuant to this paragraph 6 shall be
mailed, first class, postage prepaid, not less than 30 days nor more than 60
days prior to the Redemption Date, to the holders of record of the shares of
Series C-TCI Group Preferred Stock to be redeemed, at their respective addresses
as the same appear upon the books of this Corporation or are supplied by them in
writing to this Corporation for the purpose of such notice (with telephonic or
facsimile confirmation of notice to Bill Daniels so long as he is a holder of
record); but no failure to mail such notice or any defect therein or in the
mailing thereof shall affect the validity of the proceedings for the redemption
of any shares of the Series C-TCI Group Preferred Stock. Such notice shall set
forth the Redemption Price, the Redemption Date, the number of Shares to be
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<PAGE>
redeemed and the place at which the Shares called for redemption will, upon
presentation and surrender of the stock certificates evidencing such Shares, be
redeemed. In case fewer than the total number of shares of Series C-TCI Group
Preferred Stock represented by any certificate are redeemed, a new certificate
representing the number of unredeemed Shares will be issued to the holder
thereof without cost to such holder.
(d) If notice of any redemption by this Corporation
pursuant to this paragraph 6 shall have been mailed as provided in paragraph
6(c) and if on or before the Redemption Date specified in such notice the
consideration necessary for such redemption shall have been set apart so as to
be available therefor and only therefor, then on and after the close of business
on the Redemption Date, the Shares called for redemption, notwithstanding that
any certificate therefor shall not have been surrendered for cancellation, shall
no longer be deemed outstanding, and all rights with respect to such Shares
shall forthwith cease and terminate, except the right of the holders thereof to
receive upon surrender of their certificates the consideration payable upon
redemption thereof.
(e) All shares of Series C-TCI Group Preferred Stock
redeemed, retired, purchased or otherwise acquired by this Corporation shall be
retired and shall be restored to the status of authorized and unissued shares of
preferred stock (and may be reissued as part of another series of the preferred
stock of this Corporation, but such shares shall not be reissued as Series C-TCI
Group Preferred Stock).
(f) If and so long as this Corporation shall fail to
redeem on a Redemption Date pursuant to this paragraph 6 all shares of Series C-
TCI Group Preferred Stock required to be redeemed on such date, this Corporation
shall not redeem, or discharge any sinking fund obligation with respect to, any
Junior Securities, unless all then outstanding shares of Series C-TCI Group
Preferred Stock are redeemed, and shall not purchase or otherwise acquire any
shares of Series C-TCI Group Preferred Stock or Junior Securities. Nothing
contained in this paragraph 6(f) shall prevent the purchase or acquisition of
shares of Series C-TCI Group Preferred Stock pursuant to a purchase or exchange
offer or offers made to holders of all outstanding shares of Series C-TCI Group
Preferred Stock, provided that as to holders of all outstanding shares of Series
C-TCI Group Preferred Stock, the terms of the purchase or exchange offer for all
such shares are identical. The provisions of this paragraph 6(f) are for the
benefit of holders of Series C-TCI Group Preferred Stock and accordingly the
provisions of this paragraph 6(f) shall not restrict any redemption by this
Corporation of Shares held by any holder, provided that all other holders of
Shares shall have waived in writing the benefits of this provision with respect
to such redemption.
(g) If this Corporation has elected to issue shares of
Series A TCI Group Common Stock in payment, in whole or in part, of the
Redemption Price of all or any of the Shares pursuant to paragraph 6(b) and if,
as of the Redemption Date, Bill Daniels is deceased and
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<PAGE>
the Shares redeemed are held by or for the benefit of an inter vivos or
testamentary trust or public or private foundation established by Bill Daniels,
then the provisions of this paragraph 6(g) shall apply. If the net proceeds to
the holder of sales in the open market of the shares of Series A TCI Group
Common Stock issued in payment of the Redemption Price during the 30-day period
following the later of the Redemption Date and, if this Corporation is required
to effect the registration of the sale of such shares pursuant to a Registration
Rights Agreement, the effective date of such registration (or if the holder has
provided written notice to this Corporation of its intention to sell such shares
prior to the expiration of such 30-day period, then during the 90-day period
following the later of such dates), are in the aggregate (x) less than the
dollar amount of the portion of the Redemption Price paid by this Corporation in
the shares so sold, then this Corporation shall pay to the holder the amount of
the shortfall in cash or (y) greater than the dollar amount of the portion of
the Redemption Price paid by this Corporation in the shares so sold, then the
holder shall pay to this Corporation the amount of the excess in cash. For
purposes of the foregoing, "net proceeds" shall mean the gross sale price for
each sale, less the amount of all customary and reasonable selling expenses
incurred by the holder in making such sale (e.g., customary broker discounts).
----
The holder shall notify this Corporation promptly in writing of each sale of
shares of Series A TCI Group Common Stock made by the holder during the 30-day
or 90-day, as applicable, period referred to above, the method of sale, the
gross proceeds of such sale, and the kind and amount of expenses deducted in
determining the net proceeds of the applicable sale. If, during such applicable
period, the holder has sold a greater number of shares of Series A TCI Group
Common Stock than the number issued by this Corporation in payment of the
Redemption Price, then those sales that yielded the highest net proceeds shall
be deemed to be sales of the shares issued in payment of the Redemption Price.
Within five days after the expiration of the 30-day or 90-day, as applicable,
period, this Corporation or the holder, as applicable, shall make the payment to
the other required by this paragraph 6(g).
7. Voting Rights. The holders of the Series C-TCI Group
-------------
Preferred Stock shall be entitled to vote on all matters submitted to a vote of
the holders of the Capital Stock of this Corporation which is entitled to vote
generally on the election of directors. Each Share shall entitle the registered
holder thereof to such number of votes as is equal to the number of shares of
Series A TCI Group Common Stock or other voting securities of this Corporation
into which such Share is then convertible. Holders of Series C-TCI Group
Preferred Stock shall vote together with holders of Common Stock and shall not
be entitled to vote as a class except as otherwise required by law or this
Corporation's Restated Certificate of Incorporation.
8. Amendment. No amendment or modification of the
---------
designation, rights, preferences, and limitations of the Shares set forth herein
shall be binding or effective without the prior consent of the holders of record
of Shares representing 66 2/3% of the Liquidation Value of all Shares
outstanding at the time such action is taken.
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<PAGE>
9. Preemptive Rights. The holders of the Series C-TCI Group
-----------------
Preferred Stock will not have any preemptive right to subscribe for or purchase
any shares of stock or any other securities which may be issued by this
Corporation.
10. Senior Securities. The Series C-TCI Group Preferred
-----------------
Stock shall not rank junior to any other classes or series of stock of this
Corporation in respect of the right to receive dividends or the right to
participate in any distribution upon liquidation, dissolution or winding up of
this Corporation. Without the prior consent of the holders of record of Shares
representing 66 2/3% of the Liquidation Value of all Shares then outstanding,
this Corporation shall not issue any Senior Securities.
11. Exclusion of Other Rights. Except as may otherwise be
-------------------------
required by law and for the equitable rights and remedies that may otherwise be
available to holders of Series C-TCI Group Preferred Stock, the shares of Series
C-TCI Group Preferred Stock shall not have any designations, preferences,
limitations or relative rights, other than those specifically set forth in these
resolutions (as such resolutions may, subject to paragraph 8, be amended from
time to time) and in the Restated Certificate of Incorporation of this
Corporation.
12. Headings. The headings of the various paragraphs and
--------
subparagraphs hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
FURTHER RESOLVED, that the appropriate officers of this Corporation
are hereby authorized to execute and acknowledge a certificate setting forth
these resolutions and to cause such certificate to be filed and recorded, in
accordance with the requirements of Section 151(g) of the General Corporation
Law of the State of Delaware."
23
<PAGE>
The undersigned has signed this Certificate of Designations on this
30th day of December, 1997.
/s/ Stephen M. Brett
---------------------------------------------
Name: Stephen M. Brett
Title: Executive Vice President
24
<PAGE>
EXHIBIT 12.1
TCI COMMUNICATIONS, INC.
AND CONSOLIDATED SUBSIDIARIES
CALCULATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS
(AMOUNTS IN MILLIONS, EXCEPT FOR RATIOS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------- -------------
1996 1995 1994(B) 1993(B) 1992(B) 1997 1996
------ ----- ------- ------- ------- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (losses) before
income taxes........... $ (591) (169) 226 164 47 5 (364)
Add:
Interest on debt....... 1,041 971 784 738 815 803 770
Interest portion of
rentals............... 47 35 25 23 22 45 34
Amortization of debt
expense............... 15 14 12 12 9 12 11
Distributions from and
losses of less than
50%-owned affiliates
with debt not
guaranteed by TCIC
(net of earnings not
distributed of less
than 50%-owned
affiliates)........... 244 33 (35) 23 (12) 47 39
Minority interests in
earnings (losses) of
consolidated
subsidiaries.......... 72 (11) 12 13 277 127 43
Elimination of
preferred stock
dividend requirements
of consolidated
subsidiaries to 50%-
owned affiliates...... -- -- -- -- (250) -- --
Preferred stock
dividend requirements
of 50%-owned
affiliates, other than
dividends payable to
TCIC.................. -- -- -- -- 175 -- --
------ ----- ----- ---- ----- ------- ------
Earnings available for
combined fixed charges
and preferred stock
dividends.............. $ 828 873 1,024 973 1,083 1,039 533
====== ===== ===== ==== ===== ======= ======
Fixed charges:
Interest on debt:
TCIC and consolidated
subsidiaries.......... 1,041 962 777 731 718 803 760
Less than 50%-owned
affiliates with debt
guaranteed by TCIC.... -- 9 7 -- -- -- 10
Elimination of interest
of consolidated
subsidiaries to 50%-
owned affiliates...... -- -- -- -- (36) -- --
TCIC's proportionate
share of interest of
50%-owned affiliates.. -- -- -- 7 133 -- --
------ ----- ----- ---- ----- ------- ------
1,041 971 784 738 815 803 770
Interest portion of
rentals................ 47 35 25 23 22 45 34
Amortization of debt
expense................ 15 14 12 12 9 12 11
Preferred stock dividend
requirements of
consolidated
subsidiaries(a)........ 24 10 10 14 281 56 16
Dividends on Company-
obligated mandatorily
redeemable preferred
securities of
subsidiary trusts
holding solely
subordinated debt
securities of a
subsidiary............. 70 -- -- -- -- 96 47
Preferred stock dividend
requirements of
TCIC(a)................ 12 -- -- 3 25 15 12
Elimination of preferred
stock dividend
requirements of
consolidated
subsidiaries to 50%-
owned affiliates....... -- -- -- -- (250) -- --
Preferred stock dividend
requirements of 50%-
owned
affiliates, other than
dividends payable to
TCIC................... -- -- -- -- 175 -- --
Capitalized interest.... 13 13 15 9 6 4 9
------ ----- ----- ---- ----- ------- ------
Total fixed charges..... $1,222 1,043 846 799 1,083 1,031 899
====== ===== ===== ==== ===== ======= ======
Ratio of earnings to
combined fixed charges
and preferred stock
dividends.............. -- -- 1.21 1.22 1.00 1.01 --
Deficiency.............. $ (394) (170) -- -- -- -- (366)
</TABLE>
- --------
(a) Preferred Stock dividend requirements have been increased to an amount
representing the pretax earnings which would be required to cover such
dividend requirements. The effective income tax rate utilized for purposes
of increasing preferred stock dividend requirements in 1993 has been
adjusted to exclude the effect of the federal income tax rate change in
the third quarter of 1993.
(b) Amounts have been restated for the effect of the change in ownership
percentages of and methods of accounting for certain investments.
Fixed charges related to interest on debt of less than 50%-owned affiliates
or unaffiliated persons guaranteed by TCIC have not been included in fixed
charges as follows:
<TABLE>
<S> <C>
Year ended December 31,
1996................................................................ 13
1995................................................................ 5
1994................................................................ 5
1993................................................................ 14
1992................................................................ 3
Nine months ended September 30,
1997................................................................ 10
1996................................................................ 3
</TABLE>
<PAGE>
EXHIBIT 12.2
TELE-COMMUNICATIONS, INC.
AND CONSOLIDATED SUBSIDIARIES
CALCULATION OF RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS
(AMOUNTS IN MILLIONS, EXCEPT FOR RATIOS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------- -------------
1996 1995 1994(B) 1993(B) 1992(B) 1997 1996
------ ----- ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings (losses) before
income taxes............ $ 540 (291) 182 164 47 (252) (609)
Add:
Interest on debt........ 1,164 1,064 811 738 815 929 852
Interest portion of
rentals................ 64 47 27 23 22 40 45
Amortization of debt
expense................ 16 15 13 12 9 13 12
Distributions from and
losses of less than
50%-owned affiliates
with debt not
guaranteed by TCI (net
of earnings not
distributed of less
than 50%-owned
affiliates)............ 257 163 27 23 (12) 558 203
Minority interests in
earnings (losses) of
consolidated
subsidiaries........... 56 23 -- 13 277 130 32
Elimination of preferred
stock dividend
requirements of
consolidated
subsidiaries to 50%-
owned affiliates....... -- -- -- -- (250) -- --
Preferred stock dividend
requirements of 50%-
owned affiliates, other
than dividends payable
to TCI................. -- -- -- -- 175 -- --
------ ----- ----- ---- ----- ------ ------
Earnings available for
combined fixed charges
and preferred stock
dividends............... $2,097 1,021 1,060 973 1,083 1,418 535
====== ===== ===== ==== ===== ====== ======
Fixed charges:
Interest on debt:
TCI and consolidated
subsidiaries........... 1,096 1,010 785 731 718 883 803
Less than 50%-owned
affiliates with debt
guaranteed by TCI...... 12 9 7 -- -- -- 10
Elimination of interest
of consolidated
subsidiaries to 50%-
owned affiliates....... -- -- -- -- (36) 10 --
TCI's proportionate
share of interest of
50%-owned affiliates... 56 45 19 7 133 36 39
------ ----- ----- ---- ----- ------ ------
1,164 1,064 811 738 815 929 852
Interest portion of
rentals................. 64 47 27 23 22 40 45
Amortization of debt
expense................. 16 15 13 12 9 13 12
Preferred stock dividend
requirements of
consolidated
subsidiaries(a)......... 56 70 20 14 281 50 28
Dividends on Company-
obligated mandatorily
redeemable preferred
securities of subsidiary
trusts holding solely
subordinated debt
securities of a
subsidiary.............. 70 -- -- -- -- 96 47
Preferred stock dividend
requirements of TCI(a).. 69 58 14 3 25 46 45
Elimination of preferred
stock dividend
requirements of
consolidated
subsidiaries to 50%-
owned affiliates........ -- -- -- -- (250) -- --
Preferred stock dividend
requirement of 50%-owned
affiliates, other than
dividends payable to
TCI..................... -- -- -- -- 175 -- --
Capitalized interest..... 13 13 16 9 6 4 9
------ ----- ----- ---- ----- ------ ------
Total fixed charges...... $1,452 1,267 901 799 1,083 1,168 1,038
====== ===== ===== ==== ===== ====== ======
Ratio of earnings to
combined fixed charges
and preferred stock
dividends............... 1.44 -- 1.17 1.22 1.00 1.21 --
Deficiency............... $ -- (246) -- -- -- -- (503)
</TABLE>
- --------
(a) Preferred Stock dividend requirements have been increased to an amount
representing the pretax earnings which would be required to cover such
dividend requirements. The effective income tax rate utilized for purposes
of increasing preferred stock dividend requirements in 1993 has been
adjusted to exclude the effect of the federal income tax rate change in
the third quarter of 1993.
(b) Amounts have been restated for the effect of the change in ownership
percentages of and methods of accounting for certain investments.
Fixed charges related to interest on debt of less than 50%-owned affiliates
or unaffiliated persons guaranteed by TCI have not been included in fixed
charges as follows:
<TABLE>
<S> <C>
Year ended December 31,
1996................................................................ 8
1995................................................................ 8
1994................................................................ 6
1993................................................................ 14
1992................................................................ 3
Nine months ended September 30,
1997................................................................ 24
1996................................................................ 9
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Tele-Communications, Inc.:
We consent to the incorporation by reference in the registration statement
on Form S-3 of TCI Communications, Inc. and Tele-Communications, Inc. of our
reports, dated March 24, 1997, relating to the consolidated balance sheets of
Tele-Communications, Inc. and subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of operations, stockholders' equity,
and cash flows for each of the years in the three-year period ended December
31, 1996, and all related financial statement schedules, which reports appear
in the December 31, 1996 Annual Report on Form 10-K of Tele-Communications,
Inc., as amended by Form 10-K/A (Amendment No. 1), and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
January 15, 1998
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
TCI Communications, Inc.:
We consent to the incorporation by reference in the registration statement
on Form S-3 of TCI Communications, Inc. and Tele-Communications, Inc. of our
reports, dated March 24, 1997, relating to the consolidated balance sheets of
TCI Communications, Inc. and subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of operations, stockholder's equity,
and cash flows for each of the years in the three-year period ended December
31, 1996, and all related financial statement schedules, which reports appear
in the December 31, 1996 Annual Report on Form 10-K of TCI Communications,
Inc., as amended by Form 10-K/A (Amendment No. 1), and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
January 15, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Tele-Communications, Inc.:
We consent to the incorporation by reference in the registration statement
on Form S-3 of TCI Communications, Inc. and Tele-Communications, Inc. of our
report, dated March 24, 1997, relating to the combined balance sheets of TCI
Group as of December 31, 1996 and 1995, and the related combined statements of
operations, equity, and cash flows for each of the years in the three-year
period ended December 31, 1996, which report appears in the December 31, 1996
Annual Report on Form 10-K of Tele-Communications, Inc., as amended by Form
10-K/A (Amendment No. 1), and to the reference to our firm under the heading
"Experts" in the prospectus. Our report covering the combined financial
statements refers to the effects of not consolidating TCI Group's interest in
Liberty Media Group for all periods that TCI Group has an interest in Liberty
Media Group.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
January 15, 1998
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Tele-Communications, Inc.:
We consent to the incorporation by reference in the registration statement
on Form S-3 of TCI Communications, Inc. and Tele-Communications, Inc. of our
report, dated March 24, 1997, relating to the combined balance sheets of
Liberty Media Group as of December 31, 1996 and 1995, and the related combined
statements of operations, equity, and cash flows for each of the years in the
three-year period ended December 31, 1996, which report appears in the
December 31, 1996 Annual Report on Form 10-K of Tele-Communications, Inc., as
amended by Form 10-K/A (Amendment No. 1), and to the reference to our firm
under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
January 15, 1998
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders of
Telewest Communications plc:
We consent to the incorporation by reference in the registration statement
on Form S-3 of TCI Communications, Inc. and Tele-Communications, Inc. of our
report, dated March 11, 1997, relating to the consolidated balance sheet of
Telewest Communications plc and subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of operations and cash flows for each
of the years in the three-year period ended December 31, 1996, which report
appears in the December 31, 1996 Annual Report on Form 10-K of Tele-
Communications, Inc., as amended by Form 10-K/A (Amendment No. 1), and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Audit Plc
KPMG Audit Plc
Chartered Accountants
Registered Auditors
London, England
January 15, 1998
<PAGE>
EXHIBIT 23.6
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the registration statement
on Form S-3 of TCI Communications, Inc. and Tele-Communications, Inc. of our
report dated March 14, 1997 on the consolidated financial statements of Sprint
Spectrum Holding Company, L.P. and subsidiaries (which expresses an
unqualified opinion and includes an explanatory paragraph referring to the
developmental stage of Sprint Spectrum Holding Company, L.P. and subsidiaries)
for each of the two years in the period ended December 31, 1996, for the
period from October 24, 1994 (date of inception) to December 31, 1994 and for
the cumulative period from October 24, 1994 (date of inception) to December
31, 1996 appearing in the Annual Report on Form 10-K of Tele-Communications,
Inc., as amended by Form 10-K/A (Amendment No. 1), for the year ended December
31, 1996 and to the reference to our firm under the heading "Experts" in the
prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 1998
<PAGE>
EXHIBIT 23.7
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of TCI
Communications, Inc. and Tele-Communications, Inc. of our report dated March
7, 1997 on the financial statements of American PCS, L.P. (A Delaware Limited
Partnership) as of and for the year ended December 31, 1996 referred to in the
consolidated financial statements of Sprint Spectrum Holding Company, L.P. and
subsidiaries, which appears in the Annual Report on Form 10-K of Tele-
Communications, Inc., as amended by Form 10-K/A (Amendment No. 1), for the
year ended December 31, 1996. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Washington, D.C.
January 16, 1998
<PAGE>
EXHIBIT 23.8
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of TCI
Communications, Inc. and Tele-Communications, Inc. of our report dated
February 14, 1996, relating to the combined financial statements of VII Cable
which appears in the report on Form 8-K of Tele-Communications, Inc. dated
June 19, 1996. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
January 15, 1998
<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, 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.)
----------------------
TELE-COMMUNICATIONS, INC.
(Exact name of obligor as specified in its charter)
Delaware 84-1260157
(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)
----------------------
Debt 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 10005
(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.
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 17 C.F.R.
229.10(D).
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.
-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 16th day of January, 1998.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
---------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
-4-
<PAGE>
- ----------------------------------------------------------
Consolidated Report of Condition of EXHIBIT 7
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 Septemeber 30, 1997, published in
accordance with a call made by the Federal
Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 5,004,638*
Interest-bearing balances............. 1,271,514
Securities:
Held-to-maturity securities........... 1,105,782
Available-for-sale securities......... 3,164,271
Federal funds sold and Securities pur-
chased under agreements to resell...... 5,723,829
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................34,916,196
LESS: Allowance for loan and
lease losses ..............581,177
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve.... 34,334,590
Assets held in trading accounts....... 2,035,284
Premises and fixed assets (including
capitalized leases).................. 671,664
Other real estate owned................ 13,306
Investments in unconsolidated
subsidiaries and associated
companies............................ 210,685
Customers' liability to this bank on
acceptances outstanding.............. 1,463,446
Intangible assets...................... 753,190
Other assets........................... 1,784,795
-----------
Total assets........................... $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices.................. $27,270,824
Noninterest-bearing ...... 12,160,977
Interest-bearing ......... 15,109,847
In foreign offices, Edge and
Agreement subsidiaries, and IBFs..... 14,687,806
Noninterest-bearing ......... 657,479
Interest-bearing ......... 14,030,327
Federal funds purchased and Securities
sold under agreements to repurchase.. 1,946,099
Demand notes issued to the U.S.
Treasury............................. 283,793
Trading liabilities.................... 1,553,539
Other borrowed money:
With remaining maturity of one year
or less............................ 2,245,014
With remaining maturity of more than
one year through three years........... 0
With remaining maturity of more than
three years........................ 45,664
Bank's liability on acceptances exe-
cuted and outstanding................ 1,473,588
Subordinated notes and debentures...... 1,018,940
Other liabilities...................... 2,193,031
-----------
Total liabilities...................... 52,718,298
-----------
EQUITY CAPITAL
Common stock........................... 1,135,284
Surplus................................ 731,319
Undivided profits and capital
reserves............................. 2,943,008
Net unrealized holding gains
(losses) on available-for-sale
securities........................... 25,428
Cumulative foreign currency transla-
tion adjustments..................... (16,342)
-----------
Total equity capital................... 4,818,697
-----------
Total liabilities and equity
capital ............................. $57,536,995
===========
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 }
- ----------------------------------------------------------
