TELE COMMUNICATIONS INC /CO/
S-3/A, 1998-07-16
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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<PAGE>
 
     
  As filed with the Securities and Exchange Commission on July 15, 1998     
                                                   
                                                Registration No. 333-56635     
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- -------------------------------------------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                
                             AMENDMENT NO. 1     
                                       
                                    TO     
                                   FORM S-3
                            REGISTRATION STATEMENT
                                     UNDER
                          THE SECURITIES ACT OF 1933
 
                           TELE-COMMUNICATIONS, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

          DELAWARE                                             84-1260157
(State or other jurisdiction                                  (IRS Employer
     of incorporation or                                   Identification No.)
        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: Elizabeth
  Tele-Communications, Inc.                                M. Markowski, Esq.
      Terrace Tower II                                       Baker & Botts,
      5619 DTC Parkway                                           L.L.P.
 Englewood, Colorado 80111-                               599 Lexington Avenue
            3000                                           New York, New York
       (303) 267-5500                                          10022-6030
  (Name, address, including
   zip code, and telephone
           number,
   including area code, of
     agent for service)
 
  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.
 
  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]
 
                        CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
                                           PROPOSED MAXIMUM
 TITLE OF EACH CLASS OF                       AGGREGATE      PROPOSED MAXIMUM    AMOUNT OF
    SECURITIES TO BE      AGGREGATE AMOUNT  OFFERING PRICE  AGGREGATE OFFERING  REGISTRATION
       REGISTERED         TO BE REGISTERED     PER UNIT        PRICE(1)(2)          FEE
- ---------------------------------------------------------------------------------------------
<S>                       <C>              <C>              <C>                <C>
Debt Securities........
Series Preferred Stock,
 par value $.01 per
 share.................
Depositary Shares(5)...                                     $1,500,000,000(3)  $442,500(3)(4)
Tele-Communications,
 Inc. Series A TCI Group
 Common Stock, par value
 $1.00 per share(6)....         (4)              (4)
Tele-Communications,
 Inc. Series A Liberty
 Media
 Group Common Stock, par
 value $1.00 per
 share(6)..............                                     $1,000,000,000(3)           $0(3)
Tele-Communications,
 Inc. Series A TCI
 Ventures
 Group Common Stock, par
 value $1.00 per
 share(6)..............
</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) 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 of shares of Series Preferred
    Stock, par value $.01 per share ("Series Preferred Stock"), and (iii) the
    initial offering price for shares of any of the following series of Common
    Stock, par value $1.00 per share, of Tele-Communications, Inc. ("Common
    Stock"): Tele-Communications, Inc. Series A TCI Group Common Stock, Tele-
    Communications, Inc. Series A Liberty Media Group Common Stock, and Tele-
    Communications, Inc. Series A TCI Ventures Group Common Stock. No separate
    consideration will be received for shares of Common Stock that are
    issuable upon conversion of Debt Securities or Series Preferred Stock that
    are convertible into Common Stock. In no event will the aggregate initial
    offering price of all securities registered hereby (the "Offered
    Securities") exceed $2.5 billion. Such Offered Securities may be sold from
    time to time separately or in any combination of units.
(3) Offered Securities having a maximum aggregate initial offering price of
    $2.5 billion are registered hereby. On February 7, 1996, the registrant
    paid a filing fee of $344,827.59 in connection with the filing of
    Registration No. 333-00765, which filing registered $1 billion in maximum
    aggregate initial offering price of Debt Securities, Series Preferred
    Stock, Depositary Shares and Series A TCI Group Common Stock
    (collectively, the "Previously Registered Securities") to which the
    prospectus included herein relates in part. As of the date of the filing
    of this registration statement, none of the Previously Registered
    Securities were sold. Pursuant to Rule 429 of the Securities Act, the
    registrant (i) is applying the $344,827.59 paid in connection with the
    prior registration of $1 billion in maximum aggregate initial offering
    price of Previously Registered Securities to the registration of $1
    billion in maximum aggregate initial offering price of Offered Securities
    and (ii) is paying the $442,500 registration fee associated with $1.5
    billion in maximum aggregate initial offering price of Offered Securities,
    calculated pursuant to Rule 457(o) of the Securities Act.
(4) The aggregate amount to be registered and the aggregate offering price per
    unit have been omitted pursuant to General Instruction II.D. of 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 the registrant elects to offer
    fractional interests in shares of any Series Preferred Stock.
(6) 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 Common Stock.
 
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
 
  Pursuant to Rule 429 of the Securities Act, the prospectus included herein
also relates to the registrant's registration statement on Form S-3,
Registration No. 333-00765.
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<PAGE>
 
       
PROSPECTUS
                           TELE-COMMUNICATIONS, INC.
                                DEBT SECURITIES
                            SERIES PREFERRED STOCK
                               DEPOSITARY SHARES
                        SERIES A TCI GROUP COMMON STOCK
                   SERIES A LIBERTY MEDIA GROUP COMMON STOCK
                   SERIES A TCI VENTURES GROUP COMMON STOCK
 
  Tele-Communications, Inc. (the "Company" or "TCI") from time to time may
offer (i) debentures, notes, bonds or other evidences of indebtedness of the
Company ("Debt Securities"), (ii) shares of the Company's Series Preferred
Stock, par value $.01 per share ("Series Preferred Stock"), which may be
issued in the form of depositary shares ("Depositary Shares") evidencing
depositary receipts, and (iii) shares of Tele-Communications, Inc. Common
Stock, par value $1.00 per share ("Common Stock") in any of the following
series: Tele-Communications, Inc. Series A TCI Group Common Stock, Tele-
Communications, Inc. Series A Liberty Media Group Common Stock or Tele-
Communications, Inc. Series A TCI Ventures Group Common Stock. (Debt
Securities, Series Preferred Stock, Depositary Shares and 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 $2.5 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 or prior
to the time of sale and to be set forth in supplements to this Prospectus.
 
  Debt Securities may be offered as convertible or exchangeable Debt
Securities which will be convertible as specified in an accompanying
supplement to this Prospectus (a "Prospectus Supplement") into shares of
Common Stock or exchangeable as specified in a Prospectus Supplement into
other securities (whether or not issued by, or the obligation of, the Company)
or a combination of cash, other securities and/or property. 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 Prospectus Supplement. 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." 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 Prospectus Supplement. 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 Prospectus Supplement into
shares of 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 Prospectus Supplement. See "Description of Series Preferred
Stock." If the Company elects to issue fractional interests in shares of a
series of Series Preferred Stock, such fractional interests will be
represented by depositary receipts evidencing Depositary Shares, each
equivalent to a fractional interest in a share of such series of Series
Preferred Stock. See "Description of Depositary Shares." Shares of 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 Prospectus Supplement. See "Description of Capital
Stock--Common Stock."
 
  Certain terms of the Offered Securities in respect of which this Prospectus
is being delivered will be set forth in 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 or exchangeable), 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, any terms relating to the
conversion or exchange of convertible or exchangeable Debt Securities
(including the conversion or exchange rate or the conversion or exchange price
(together with any adjustments thereto) and the period during which such
Offered Securities may be converted or exchanged), 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), any
covenants or events of default that are in addition to or different from those
described herein, the designation and qualification of any trustee with
respect to the Debt Securities, other specific terms of the Debt Securities
and the terms of the offer and sale thereof. In the case of a series 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 or exchange 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 of 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 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 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, if any, to be purchased by such persons, the purchase price of
the Offered Securities sold, the proceeds to the Company 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 reserves the sole right to accept and, together with
its 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 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 July 15, 1998.     
<PAGE>
 
                             AVAILABLE INFORMATION
   
  The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., a registration statement on Form S-3
(Registration No. 333-56635) (together with all amendments and exhibits
thereto, referred to as the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the Debt
Securities, Series Preferred Stock, Depositary Shares and Common Stock that
may be offered hereby. 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 and the Debt Securities, Series
Preferred Stock, Depositary Shares and Common Stock that may be 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.     
 
  The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, 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 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 Regional Offices of the
Commission located at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661 and 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) that file electronically with the
Commission. The address of the Commission's Web site is http://www.sec.gov.
 
                                       2
<PAGE>
 
                    INCORPORATION OF DOCUMENTS BY REFERENCE
 
  The following documents have been filed with the Commission by the Company
(File No. 0-20421) and are hereby incorporated into this Prospectus by
reference and made a part hereof:
 
  1.The Annual Report on Form 10-K of the Company for the year ended December
  31, 1997.
 
  2.The Quarterly Report on Form 10-Q of the Company for the fiscal quarter
  ended March 31, 1998.
     
  3.The Current Reports on Form 8-K of the Company dated February 25, 1998,
  March 6, 1998 (as amended on Form 8-K/A (Amendment No. 2)) and July 1,
  1998.     
 
  All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior
to the termination of the offering of the 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 will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the documents incorporated
by reference herein, other than certain exhibits to such documents (unless
such exhibits are specifically incorporated by reference into the documents
which this Prospectus incorporates). Such requests should be addressed to
Stephen M. Brett, Esq., Executive Vice President, Secretary and General
Counsel, Tele-Communications, Inc., Terrace Tower II, 5619 DTC Parkway,
Englewood, Colorado 80111-3000; telephone (303) 267-5500.
 
                                       3
<PAGE>
 
                                  THE COMPANY
 
  The Company, through its subsidiaries and affiliates, is principally engaged
in the construction, acquisition, ownership and operation of cable television
systems and in the provision of satellite-delivered programming services to
various distribution media, principally cable television systems. Based on the
number of subscribers at March 31, 1998, the Company is one of the largest
providers of basic cable television services in the United States. The Company
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 Company is a
Delaware corporation and was incorporated in 1994. TCI Communications, Inc., a
wholly owned subsidiary of the Company, and its predecessors have been engaged
in the cable television business since the early 1950's.
 
  The executive offices of the Company are located at Terrace Tower II, 5619
DTC Parkway, Englewood, Colorado 80111-3000; telephone (303) 267-5500. Unless
the context indicates otherwise, as used in this Prospectus the "Company"
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, (ii) for general operations of the
Company, including acquisitions, capital expenditures and working capital
requirements or (iii) for such other purposes as may be specified in the
related Prospectus Supplement. All or a portion of such proceeds may be
advanced to affiliates of the Company in the form of loans or as a
contribution to capital.
 
   RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
 
  The ratio of earnings to combined fixed charges and preferred stock
dividends of the Company was 1.46, 1.19 and 1.23 for the years ended December
31, 1996, 1994 and 1993, respectively, and 2.83 for the three months ended
March 31, 1998. 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, 1997 and 1995, and for the three months ended March 31, 1997; thus,
earnings available for combined fixed charges were inadequate to cover
combined fixed charges and preferred stock dividends for such periods. The
amounts of the coverage deficiencies were $158 million and $217 million for
the years ended December 31, 1997 and 1995, respectively, and $73 million for
the three months ended March 31, 1997. For the ratio calculations, earnings
available for 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)
and minority interests in earnings (losses) of consolidated subsidiaries.
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
Company's proportionate share of interest of 50%-owned affiliates, (iii) that
portion of rental expense the Company believes to be representative of
interest (one-third of rental expense), (iv) amortization of debt expense, (v)
that portion of minority interests in earnings (losses) of consolidated
subsidiaries that represents the amount of pretax earnings that would be
required to cover preferred stock dividend requirements of consolidated
subsidiaries, (vi) 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, and (vii) the
amount of pretax earnings that would be required to cover preferred stock
dividend requirements of 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 $19 million, $8 million, $8
million, $6 million and $14 million relating to such guarantees for the years
ended December 31, 1997, 1996, 1995, 1994 and 1993, respectively, and fixed
charges of $6 million and $5 million relating to such guarantees for the three
months ended March 31, 1998 and 1997, respectively, have not been included in
fixed charges because the investment in such entities does not result in the
recognition of a loss and it is not probable that the Company will be required
to honor the guarantee.
 
                                       4
<PAGE>
 
                           HOLDING COMPANY STRUCTURE
 
  The Company is a holding company and its assets consist almost entirely of
investments in its subsidiaries. As a holding company, the Company's ability
to meet its financial obligations, including any obligation to pay dividend,
interest, principal or other payments with respect to Offered Securities, is
dependent on the earnings of, or other funds available to, such subsidiaries
and the distribution or other payment of such earnings or other funds to the
Company in the form of dividends, loans or other advances, payment or
reimbursement of management fees and expenses and repayment of loans and
advances from the Company. The Company's subsidiaries are separate and
distinct legal entities and will have no obligation, contingent or otherwise,
to pay any amounts due pursuant to any Offered 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.
 
  Moreover, almost all 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 any Offered 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 March 31, 1998, the Company's subsidiaries had total Debt (as
defined in "Description of Debt Securities--General") of approximately $15.4
billion (including guarantees of indebtedness of others and the unaccreted
portion of indebtedness issued at a discount, but excluding indebtedness owed
to the Company).
 
                                       5
<PAGE>
 
                        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 or exchangeable 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 March 31, 1998, the Company
had no Debt (as defined in "Description of Debt Securities--General")
(excluding indebtedness to subsidiaries). The Company is a holding company and
substantially all of the consolidated liabilities of the Company have been
incurred by its subsidiaries. At March 31, 1998, the Company's subsidiaries
had total Debt of approximately $15.4 billion (including guarantees of
indebtedness of others and the unaccreted portion of indebtedness issued at a
discount, but excluding indebtedness owed to the Company). At that date, the
Company's subsidiaries also had an aggregate of approximately $2.8 billion in
undrawn lines of credit (excluding amounts related to lines of credit which
provide availability to support commercial paper). The Debt Securities will be
effectively subordinated to all existing and future liabilities, including
trade payables, of the Company's subsidiaries, except to the extent that the
Company may itself be a creditor with recognized claims against such
subsidiary. See "Holding Company Structure."
 
  The Senior 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 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 (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. 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 Indentures. 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 Tele-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.
Whenever particular sections or defined terms of each Indenture are referred
to, such sections or defined terms are incorporated by reference as part of
the statements made, and such statements are qualified in their entirety by
such reference.
 
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)
 
                                       6
<PAGE>
 
  Reference is made to the Prospectus Supplement for the following terms of
the Offered Securities consisting of Debt Securities: (i) the designation
(including whether they are Senior Debt Securities, Senior Subordinated Debt
Securities or 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) any terms relating
to the conversion of convertible Debt Securities, including the conversion
rate or the conversion price (together with any adjustments thereto) and the
period during which such Offered Securities may be so converted; (xii) any
terms relating to the exchange of exchangeable Debt Securities, including the
exchange rate or the exchange price (together with any adjustments thereto)
and the period during which such Offered Securities may be so exchanged;
(xiii) if any covenants or Events of Default that are in addition to or
different from those described herein; and (xiv) any other specific terms.
Reference is made to the Prospectus Supplement with respect to the designation
and qualification of the Trustee under each Indenture. The Prospectus
Supplement relating to any Offered Securities consisting of Debt Securities
will also set forth the aggregate amount of Debt of the Company as of the most
recent practicable date and (i), in the case of Offered Securities consisting
of Senior Subordinated Debt Securities, the amount of such Debt that would be
senior to or pari passu with such Senior Subordinated Debt Securities and
(ii), in the case of Offered Securities consisting of Subordinated Debt
Securities, the amount of such Debt that would be senior to or pari passu with
such Subordinated Debt Securities.
 
  If the purchase price of any Offered Securities consisting of Debt
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 such 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.
 
  As used in the Indentures, "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, extension,
renewal or refunding of any such indebtedness or guarantee.
 
                                       7
<PAGE>
 
  Nothing in any of the Indentures affords holders of 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.
 
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 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 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 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 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)
 
  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 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
 
                                       8
<PAGE>
 
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 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 4.05 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
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) any Subordinated Debt Securities issued under the
Subordinated Indenture, and (iii) Debt which by its terms is not superior in
right of payment to the Senior Subordinated Debt Securities.
 
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 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 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 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 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 Indenture, to the prior payment in full of all
 
                                       9
<PAGE>
 
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 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 Subordinated Debt
Securities and (ii) Debt which by its terms is not superior in right of
payment to the Subordinated Debt Securities. (Section 10.01 of the
Subordinated Indenture)
 
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. (Section 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, EXCHANGE 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"), an office or agency
where Debt Securities of each series that is convertible may be presented for
conversion ("Conversion Agent") and an office or agency where Debt Securities
of each series that is exchangeable may be presented for exchange ("Exchange
Agent"). The Company may have one or more co-Registrars, one or more
additional Paying Agents, one or more additional Conversion Agents and one or
more additional Exchange 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, Conversion Agent or Exchange 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 issued
under its respective Indenture, as Conversion Agent for any series that is
convertible and as Exchange Agent for any series that is exchangeable. The
Company may change any Paying Agent, Registrar or co-Registrar, Conversion
Agent or Exchange 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
 
                                      10
<PAGE>
 
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
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 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 Indentures) 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 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
 
                                      11
<PAGE>
 
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 to
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 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
 
                                      12
<PAGE>
 
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 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 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
 
                                      13
<PAGE>
 
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 the 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)
before January 1, 1999 and in Treasury Regulation Section 1.165-12(c)(1)(iv)
on and after such date) 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 in the United States is able to exercise primary supervision over
the administration of the trust, and (ii) one or more United States
fiduciaries have 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,
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.
 
                                      14
<PAGE>
 
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 that remains
unclaimed for two years will be repaid to the Company and the holders of Debt
Securities 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 entity unless
(i) the successor entity which shall be an entity organized 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
 
                                      15
<PAGE>
 
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 60 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; and (iv) 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) 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)
 
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 10.11 of the
Senior Indenture and Section 11.11 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
and 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) have been delivered to the Trustee for cancellation or (ii) the
Company irrevocable 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
 
                                      16
<PAGE>
 
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 8.01 of the Indentures)
 
THE TRUSTEES
 
  Information with respect to the Trustees under the Senior Indenture, the
Senior Subordinated Indenture and the Subordinated Indenture shall 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." 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.
 
                                      17
<PAGE>
 
                     DESCRIPTION OF SERIES PREFERRED STOCK
 
GENERAL
 
  The Company 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 five series of Series Preferred Stock
outstanding. See "Description of Capital Stock--Preferred Stock."
 
  As described under "Description of Depositary Shares," the Company 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 rates; (g) whether the
Company has elected to offer Depositary Shares as described below under
"Description of Depositary Shares;" (h) any voting rights; 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 Company's general
creditors, but superior to the rights of holders of any capital stock of the
Company ranking junior to such series of Series Preferred Stock as to the
payment of dividends, rights of redemption and rights on liquidation,
including the TCI Group Common Stock (as defined below) and the Liberty Group
Common Stock (as defined below).
 
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 Company 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 Company (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
 
                                      18
<PAGE>
 
receive a dividend in respect of the dividend period ending on such dividend
payment date will be lost, and the Company 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 Series Preferred Stock for which dividends are cumulative
will accrue from the date on which the Company initially issues shares of such
series.
 
  Unless otherwise specified in the applicable Prospectus Supplement, if at
any time the Company 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 Company 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 Company 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 Company
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 Company 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 Company,
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 Company available for distribution to stockholders,
before any distribution of assets is made to the holders of any capital stock
of the Company 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 Company, the assets of the
Company available for distribution to the holders of shares of such series of
Series Preferred Stock and any other shares of capital stock of the Company
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 Company.
 
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
Company 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
 
                                      19
<PAGE>
 
Prospectus Supplement, shares of a series of Series Preferred Stock redeemed
by the Company 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
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 Company in its sole discretion to be equitable. From and after the
redemption date (unless default is made by the Company 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
Company 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 Company 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 Company 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 Company to so redeem
shares of such series of Series Preferred stock shall not prevent the Company
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).
 
                                      20
<PAGE>
 
                       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 Company 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 Company 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 Company and a bank or trust company selected by the
Company 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 Company, 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 Company'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
Company, adopt such method as it deems equitable and practicable for the
purpose of effecting such distribution, including sale (at public or private
sale) of such property and distribution of the net proceeds from such sale to
such holders.
 
  The amount distributed in any of the foregoing cases will be reduced by any
amount required to be withheld by the Company or the Depositary on account of
taxes.
 
                                      21
<PAGE>
 
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 Company 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 Company 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) who 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 Company has
agreed to take all reasonable action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so.
 
  The Depositary will abstain from voting shares of 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
 
                                      22
<PAGE>
 
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 Company and the
Depositary. However, any amendment that imposes any fees, taxes, or other
charges payable by holders of Depositary Shares (other than taxes and other
governmental charges, fees, and other expenses payable by such holders as
stated under "Charges of Depositary"), or that otherwise prejudices any
substantial existing right of holders of Depositary Shares, will not take
effect as to outstanding Depositary Shares until the expiration of 90 days
after notice of such 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 Company, the Depositary will terminate the
Deposit Agreement after mailing notice of such termination to the record
holders of all Depositary Shares then outstanding at least 30 days prior to
the date fixed in such notice for such termination. The Depositary may
likewise terminate the Depositary Agreement if at any time 45 days shall have
expired after the Depositary shall have delivered to the Company a written
notice of its election to resign and a successor depositary shall not have
been appointed and accepted its appointment. If any Depositary Shares remain
outstanding after the date of termination, the Depositary thereafter will
discontinue the transfer of Depositary Shares, will suspend the distribution
of dividends to the holders thereof, and will not give any further notices
(other than notice of such termination) or perform any further acts under the
Deposit Agreement except as provided below and except that the Depositary will
continue 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 hereon, for the pro rata benefit of the holders
of Depositary Shares. The Company 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 Company 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
Company 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 Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control from or in performing
its obligations under the Deposit Agreement.
 
                                      23
<PAGE>
 
                         DESCRIPTION OF CAPITAL STOCK
 
  The following description of certain terms of the Company's common stock,
par value $1.00 per share ("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 the
Company (including the Certificate of Designations with respect to each
outstanding series of Series Preferred Stock) (the "Charter"), each of which
is incorporated herein by reference.
 
GENERAL
   
  The Charter currently provides that the Company 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 (the "Series A TCI Group Common Stock"), 150,000,000 shares are
designated 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 Series A Liberty Media Group
Common Stock (the "Series A Liberty Media Group Common Stock"), 75,000,000
shares are designated 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 Series A TCI Ventures Group Common Stock (the "Series A
TCI Ventures Group Common Stock") and 75,000,000 shares are designated 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, 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"), 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. On April 1, 1998, all of
the outstanding shares of Convertible Preferred Stock, Series D (the "Series D
Preferred Stock") were redeemed to the extent not previously converted by the
holders thereof pursuant to the terms thereof, with the effect that all shares
so redeemed or converted 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 D
Preferred Stock. All shares of Series D Preferred Stock have been removed from
such designation. 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 March 31, 1998, (i) 472,051,958 shares of Series A TCI Group Common
Stock (net of treasury stock and shares held by subsidiaries of the Company),
50,136,615 shares of Series B TCI Group Common Stock (net of treasury stock
and shares held by subsidiaries of the Company), 326,167,303 shares of Series
A Liberty Media Group Common Stock (net of treasury stock and shares held by
subsidiaries of the Company), 31,592,574 shares of Series B Liberty Media
Group Common Stock (net of treasury stock and shares held by subsidiaries of
the Company), 377,021,252 shares of Series A TCI Ventures Group Common Stock
(net of treasury stock) and
 
                                      24
<PAGE>
 
45,460,536 shares of Series B TCI Ventures Group Common Stock (net of treasury
stock) had been issued and were outstanding, (ii) 22,902,820 shares of Series
A TCI Group Common Stock, 30,876,766 shares of Series B TCI Group Common
Stock, 25,126,455 shares of Series A Liberty Media Group Common Stock, 82,074
shares of Series B Liberty Media Group Common Stock, 13,259,792 shares of
Series A TCI Ventures Group Common Stock and 432,196 shares of Series B TCI
Ventures Group Common Stock were held by the Company as treasury stock, and
(iii) 125,645,656 shares of Series A TCI Group Common Stock, 9,112,500 shares
of Series B TCI Group Common Stock, 6,654,367 shares of Series A Liberty Media
Group Common Stock and 3,417,187 shares of Series B Liberty Media Group Common
Stock were held by subsidiaries of the Company. As of that date, 99,247,030
shares of Series A TCI Group Common Stock, 39,286,137 shares of Series A
Liberty Media Group Common Stock and 34,412,229 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 Company) and
options. In addition, the Company 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 Company 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 Company 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
 
                                      25
<PAGE>
 
Company 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 Company to issue shares of the
Company's Class A Common Stock, par value $1.00 per share (which has been
redesignated Series A TCI Group Common Stock), 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 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 Company (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 Company to exchange
(i) two shares 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) two shares 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 Company, 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 Company 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
 
                                      26
<PAGE>
 
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 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 Company
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 Company 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 Company 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 Company or any of its subsidiaries in the
  businesses, assets and liabilities acquired by the Company 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
Company 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 Company pays a dividend or makes any other distribution
with respect to shares of Liberty Media Group Common Stock payable in
securities of the Company 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
 
                                      27
<PAGE>
 
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 Company 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
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 Company 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 Company'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.
 
                                      28
<PAGE>
 
  "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
Company 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 Company 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 Company, 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 Company," "--Conversion and Redemption--Conversion of TCI Ventures Group
Common Stock at the Option of the Company," "--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 Company 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
 
                                      29
<PAGE>
 
Committed Acquisition Shares), the proceeds of which are attributed to the TCI
Group, (c) the aggregate number of shares of Series A Liberty Media Group
Common Stock issued or delivered by the Company 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
Company 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 Company 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 Company will prepare and file a
statement of such change with the Secretary of the Company.
 
  "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 Company 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 Company 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 Company 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 (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
 
                                      30
<PAGE>
 
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 Company shall prepare and file a statement of such change
with the Secretary of the Company.
 
  "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 Company'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 Company in which (i)
the Company'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 Company'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 Company'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 Company 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 Company 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.
 
  "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.
 
                                      31
<PAGE>
 
  "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 Company or any of its subsidiaries in all of the
  businesses in which the Company 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 Company 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 Company
  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 Company
  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 Liberty Media Group or the TCI
Ventures Group, as applicable, described in clause (ii) above). If the Company
pays a dividend or makes any other distribution with respect to shares of
Liberty Media Group Common Stock payable in other securities of the Company
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
 
                                      32
<PAGE>
 
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 Company pays a dividend or makes any other
distribution with respect to shares of TCI Ventures Group Common Stock payable
in other securities of the Company 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 Company 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 Company, 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 Company 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 Company 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,
 
    (iv) all assets and properties contributed or otherwise transferred to
  the TCI Ventures Group from the TCI Group, and
 
    (v) the interest of the Company or any of its subsidiaries in the
  businesses, assets and liabilities acquired by the Company or any of its
  subsidiaries for the TCI Ventures Group, as determined by the Board of
  Directors;
 
 
                                      33
<PAGE>
 
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 Company
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 Company pays a dividend or makes any other distribution
with respect to shares of TCI Ventures Group Common Stock payable in
securities of the Company 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 Company 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 Company 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 and other
obligations (without duplication of amounts allocated for the satisfaction of
the Company'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
 
                                      34
<PAGE>
 
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 Company.
 
  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 Company, 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 circumstances not applicable in the case of the Company'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
Company's outstanding capital stock entitled to vote on such matters
(including the TCI Group Common Stock, the Liberty Media Group Common Stock
and
 
                                      35
<PAGE>
 
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 Company
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 Company 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
Company legally available therefor under the DGCL. Under the DGCL, the amount
of the funds of the Company 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 Company are parties or are subject contain
restricted payment provisions that limit the amount of dividends, other than
stock dividends, that those companies may pay. Future loan agreements may 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 presented in
the combined financial statements of the Liberty Media Group, including income
and expenses of the Company 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
 
                                      36
<PAGE>
 
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
Company 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 Liberty Media Group
Inter-Group Interest Fraction and the denominator of which is the Liberty
Media Group Outstanding Interest Fraction.
 
                                      37

<PAGE>
 
  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 Company 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 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
 
                                      38
<PAGE>
 
  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 Company 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 Company, 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 Company 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 Company 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 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
 
                                      39
<PAGE>
 
  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 Company 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 Company, 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 Company 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 Company 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 shares of Series B TCI Ventures Group Common Stock) to
  holders of Series B TCI Ventures Group Common Stock; and
 
                                      40
<PAGE>
 
    (ii) a share distribution consisting of any class or series of securities
  of the Company 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 Company, 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 Company 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 Company 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
Company. 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 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
 
                                      41
<PAGE>
 
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 Company determines to establish the Liberty Media Group
Private Market Value, the Company 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 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,
 
                                      42
<PAGE>
 
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 Company 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 Company determines not to undertake such conversion, the Company 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
Company. 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 Company determines to establish the TCI Ventures Group
Private Market Value, the Company 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
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
 
                                      43
<PAGE>
 
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 Company 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 will occur on a
conversion date on or prior to the 120th day following the Appraisal Date. If
the Company determines not to undertake such conversion, the Company may at
any time thereafter undertake to reestablish the TCI Ventures Group Common
Stock Per Share Value as of a subsequent date.
 
                                      44
<PAGE>
 
  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 Company 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 Company 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 Company of all of
the Company's properties and assets in one transaction or a series of related
transactions in connection with the liquidation, dissolution or winding up of
the Company, (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 Company, 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 Company 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 Company 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
 
      (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
 
                                      45
<PAGE>
 
    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 Company 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 Company, 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 Company, 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 Company 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.
 
  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
 
                                      46
<PAGE>
 
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 Company 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 Company'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 Company'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 Company with
additional flexibility by allowing the Company 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 Company 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 Company 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 Company in one transaction, the Company
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 Company, 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 Company, the 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.
 
                                      47
<PAGE>
 
  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 Company 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 Company 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 Company of all of
the Company's properties and assets in one transaction or a series of related
transactions in connection with the liquidation, dissolution or winding up of
the Company, (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 Company, 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 Company 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 Company 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
    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
 
                                      48
<PAGE>
 
    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 Company 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 Company, 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 Company, 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 Company 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 Company upon any post-Disposition 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 Company's
obligations in
 
                                      49
<PAGE>
 
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 Company with
additional flexibility by allowing the Company 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 Company 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 Company 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 Company in one transaction, the Company
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 Company, 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 Company, 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 Company legally available therefor,
redeem, on a pro rata basis, all of the outstanding shares of 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 that are owned by the Company.
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
 
                                      50
<PAGE>
 
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 Company 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 Company'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 Company
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 Company 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 Company. 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 Company 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 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.
 
                                      51
<PAGE>
 
  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 Company 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 Company 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 Company 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 Company 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 Company 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 Company are legally available therefor, the amount of $.01 per
share in cash.
 
  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 Company 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
 
                                      52
<PAGE>
 
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
Company 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 Company 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 Company
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 Company 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 Company 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 Company 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 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.
 
                                      53
<PAGE>
 
  If the Company 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 Company 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 Company 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 Company 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 Company 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 Company 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 Company" or "--Conversion and Redemption--Mandatory Dividend, Redemption
or Conversion of Liberty Media Group Common Stock," the Company 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
Media Group Common Stock at the Option of the Company"), (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 Company waives
such requirement), are to be surrendered, and (v) the number of outstanding
shares
 
                                      54
<PAGE>
 
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 Company 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 Company 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 Company 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 Company. 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 Company 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,
 
                                      55
<PAGE>
 
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 Company 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 Company 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 Company, 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 Company'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
Company will specify certificates for such shares, properly endorsed or
assigned for transfer (unless the Company waives such requirement). The
Company 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
Company will issue and deliver a new certificate for the shares of Liberty
Media Group Common Stock not redeemed. The Company 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, including, but
not limited to, any rights with respect to any cash, securities or other
property which are reserved or otherwise designated by the Company as being
held for the satisfaction of the Company'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
 
                                      56
<PAGE>
 
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 Company 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 Company 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 Company 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 Company
the amount of any such tax, or has established to the satisfaction of the
Company 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 Company 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 Company" 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 Company,
whether voluntary or involuntary, after payment or provision for payment of
the debts and other liabilities of the Company 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 Company 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
Company 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 shares of TCI Ventures
Group Common Stock will share equally, on a share for share basis, in a
percentage of the funds of the Company 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
 
                                      57
<PAGE>
 
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 Company.
 
  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 Company.
 
 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 Company, 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 Company 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
Company.
 
 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 Company.
 
PREFERRED STOCK
 
 General
   
  As of March 31, 1998, 1,620,026 shares of Class B Preferred Stock, 53,120
shares of Series C-TCI Group Preferred Stock, 70,575 shares of Series C-
Liberty Media Group Preferred Stock, 6,021 shares of Series D Preferred Stock,
278,307 shares of Series F Preferred Stock, 6,547,294 shares of Series G
Preferred Stock and 6,567,794 shares of Series H Preferred Stock were
outstanding. On April 1, 1998, all of the outstanding shares of Series D
Preferred Stock were redeemed to the extent not previously converted by the
holders thereof pursuant to the terms thereof. All shares of Series D
Preferred Stock have been removed from such designation. 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 Company.     
 
  The following description of certain terms of the outstanding Preferred
Stock does not purport to be complete and is qualified in its entirety by
reference to the Charter (including the Certificate of Designations with
respect to each outstanding series of Series Preferred Stock).
 
 Class B Preferred Stock
 
  The holders of Class B Preferred Stock are entitled to receive cumulative
dividends, when and as declared by the Company's 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 Company's 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
 
                                      58
<PAGE>
 
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 date, to holders of record of Class
B Preferred Stock as of a special record date fixed by the Company's 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 the Company, 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 the Company available for distribution to stockholders an amount in
cash or property or a combination thereof, per share, equal to the Stated
Liquidation Value thereof, plus all accumulated and accrued but unpaid
dividends thereon to the date of payment.
 
  The Class B Preferred Stock is redeemable at the option of the Company, 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 the Company in
whole but not in part at any time for junior subordinated debt securities of
the Company ("Junior Exchange Notes"). If the Company exercises its optional
exchange right, each holder of outstanding shares of Class B Preferred Stock
will be entitled to receive in exchange therefor newly issued Junior Exchange
Notes of a series authorized and established for the purpose of such exchange,
the aggregate principal amount of which will be equal to the aggregate Stated
Liquidation Value of the shares of Class B Preferred Stock so exchanged by
such holder, plus all accumulated and accrued but unpaid dividends thereon to
and including the exchange date. The Junior Exchange Notes will mature on the
15th anniversary of the date of issuance and will be subject to earlier
redemption at the option of the Company, in whole or in part, for a redemption
price equal to the principal amount thereof plus accrued but unpaid interest.
Interest will accrue, and be payable annually, on the principal amount of the
Junior Exchange Notes at a rate per annum to be determined prior to issuance
by adding a spread of 215 basis points to the "Fifteen Year Treasury Rate" (as
defined in the Indenture pursuant to which the Junior Exchange Notes will be
issued). Interest will accrue on overdue principal at the same rate, but will
not accrue on overdue interest.
 
  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 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 the Company entitled to vote thereon, in any general
election of directors of the Company. 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
 
                                      59
<PAGE>
 
Preferred Stock, the holders of shares of such series will have no voting
rights except as may be required by Delaware law.
 
 Series C-TCI Group Preferred Stock and Series C-Liberty Media Group Preferred
Stock
 
  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 the Company, holders of
the Series C-TCI Group Preferred Stock will be entitled to receive from the
assets of the Company available for distribution to stockholders an amount in
cash, per share, equal to the liquidation value of the Series C-TCI Group
Preferred Stock. The Series C-TCI Group Preferred Stock shall not rank junior
to any other classes or series of stock of the Company in respect of the right
to participate in any distribution upon liquidation, dissolution or winding up
of the Company.
 
  The Series C-TCI Group Preferred Stock is subject to optional redemption by
the Company 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 the Company 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. In
the case of a redemption of shares of Series C-TCI Group Preferred Stock at
the option of the holder, the Company may elect to pay the redemption price in
cash or through the issuance of shares of Series A TCI Group Common Stock. In
the event that the Company elects to issue shares of Series A TCI Group Common
Stock in payment of the redemption price and, as of the redemption date, Bill
Daniels, the original holder of all outstanding shares of Series C-TCI Group
Preferred Stock, is deceased and the shares required to be redeemed are held
by or for the benefit of a trust, regardless of whether such trust became
effective during Mr. Daniel's lifetime or is a testamentary trust, or a public
or private foundation established by Mr. Daniels, the, net proceeds from any
open-market sale (within a period of time set forth in the certificate of
designations for the Series C-TCI Group Preferred Stock) of the shares of
Series A TCI Group Common Stock acquired by such holder in the redemption (and
in certain circumstances, other shares of Series A TCI Group Common Stock)
shall be adjusted, such that any net proceeds in excess of the redemption
price shall be paid by the holder to the Company and any deficit between the
net proceeds and the redemption price shall be paid by the Company to the
holder.
 
  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 the
Company.
 
  As of March 31, 1998, 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 of the Company's capital stock that is redeemable
or exchangeable at the election of the Company ("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
 
                                      60
<PAGE>
 
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, the provisions described in the immediately
preceding paragraph shall not apply, and the holders of Series C-TCI Group
Preferred Stock that are not exchanged as described in the third sentence of
this paragraph shall not have conversion rights with respect to Series C-TCI
Group Redeemable Capital Stock so redeemed, exchanged or otherwise acquired
after the Series C-TCI Group Redemption Event relating thereto, 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 stock ("Series C-TCI Group Redemption
Securities") of a subsidiary of the Company and (ii) in connection with such
Series C-TCI Group Redemption Event, the "Mirror Preferred Stock Condition" is
met, as such term is defined in the certificate of designations for the Series
C-TCI Group Preferred Stock. The Company 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
if the Company 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 convertible preferred stock of the Company and
convertible preferred stock of the issuer of the Series C-TCI Group Redemption
Securities that together have an aggregate liquidation preference equal to the
aggregate 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) and that otherwise each have terms, conditions,
designations, 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 judgment of the
Company's Board of Directors, to those of the Series C-TCI Group Preferred
Stock for which such convertible preferred  stock is to be exchanged, except
that applicable time periods under the Series C-TCI Group Preferred Stock will
be tacked to corresponding time periods under such convertible preferred
stock, and except that (x) the convertible preferred stock of the issuer of
the Series C-TCI Group Redemption Securities will be convertible into the kind
and amount of Series C-TCI Group Redemption Securities, cash and other assets
that the holder of a share of Series C-TCI Group Preferred Stock in respect of
which such convertible preferred stock is issued would have received in the
Series C-TCI Group Redemption Event, had such shares of Series C-TCI Group
Preferred Stock been converted prior to the Series C-TCI Group Redemption
Event, and (y) the convertible preferred stock of the Company will not be
convertible into, and the holders thereof will have no conversion rights
thereunder with respect to, 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.
 
  If the Company distributes the stock of a subsidiary of the Company as a
dividend to all holders of Series A TCI Group Common Stock (a "TCI Group Spin
Off"), the Company 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 convertible preferred stock of the Company and convertible preferred
stock of such subsidiary that together have an aggregate liquidation
preference equal to the liquidation preference of a share of Series C-TCI
Group Preferred Stock on the effective date of the TCI Group Spin Off and that
otherwise each have terms, conditions, designations, 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 judgment of the Company's Board of
Directors, to those of the Series C-TCI Group Preferred Stock for which such
convertible preferred stock is to be exchanged, except that applicable time
periods under the Series C-TCI Group Preferred Stock will be tacked to
corresponding time periods under such convertible preferred stock, and except
that (x) the convertible preferred stock of the subsidiary whose stock is
distributed in such TCI Group Spin Off will be convertible into the kind and
amount of stock of such subsidiary, and other securities and property that the
holder of a share of Series C-TCI Group Preferred Stock in respect of which
such convertible
 
                                      61
<PAGE>
 
preferred stock is issued would have received in the TCI Group Spin Off, had
such shares of Series C-TCI Group Preferred Stock been converted prior to the
record date for such TCI Group Spin Off, and (y) the convertible preferred
stock of the Company will not be convertible into, and the holders thereof
will have no conversion rights thereunder with respect to, the stock of such
subsidiary. 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 convertible preferred stock of the Company and convertible
preferred stock of such subsidiary 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 the Company or a subsidiary of the
Company (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 of Series C-TCI Group Preferred Stock,
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 offered in such Exchange Offer ("Exchange
Securities") (and other property, if applicable), convertible preferred stock
of the issuer of the Exchange Securities with an aggregate liquidation
preference equal to the aggregate liquidation preference of the shares of
Series C-TCI Group Preferred Stock exchanged therefor and that otherwise has
terms, conditions, designations, 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 judgment of the Company's Board of Directors, to those of
the Series C-TCI Group Preferred Stock for which such convertible preferred
stock is to be exchanged, except that applicable time periods under the Series
C-TCI Group Preferred Stock will be tacked to corresponding time periods under
such convertible preferred stock, and except that such convertible preferred
stock will be convertible into the kind and amount of Exchange Securities aand
other property that the holder of a share of Series C-TCI Group Preferred
Stock in respect of which such convertible preferred stock is issued would
have received upon the consummation of the Exchange Offer, had such shares 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 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. 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 the Company
receivable by a holder of Series C-TCI Group Preferred Stock upon conversion
thereof), to issue stock of the Company or of a subsidiary of the Company
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 the Company 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.
 
 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.
 
 
                                      62
<PAGE>
 
  Upon the liquidation, dissolution or winding up of the Company, holders of
the Series C-Liberty Media Group Preferred Stock will be entitled to receive
from the assets of the Company available for distribution to stockholders an
amount in cash, per share, equal to the liquidation value of the Series C-
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 the Company in respect of the right to participate in any distribution upon
liquidation, dissolution or winding up of the Company.
 
  The Series C-Liberty Media Group Preferred Stock is subject to optional
redemption by the Company 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 is required to be redeemed by the Company
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. In the case of a redemption of shares
of Series C-Liberty Media Group Preferred Stock at the option of the holder,
the Company may elect to pay the redemption price in cash or through the
issuance of shares of Series A Liberty Media Group Common Stock. In the event
that the Company elects to issue shares of Series A Liberty Media Group Common
Stock in payment of the redemption price and, as of the redemption date, Bill
Daniels, the original holder of all outstanding shares of Series C-Liberty
Media Group Preferred Stock, is deceased and the shares required to be
redeemed are held by or for the benefit of a trust, regardless of whether such
trust became effective during Mr. Daniel's lifetime or is a testamentary
trust, or a public or private foundation established by Mr. Daniels, the net
proceeds from any open-market sale (within a period of time set forth in the
certificate of designations for the Series C-Liberty Media Group Preferred
Stock) of the shares of Series A Liberty Media Group Common Stock acquired by
such holder in the redemption (and in certain circumstances, other shares of
Series A Liberty Media Group Common Stock) shall be adjusted, such that any
net proceeds in excess of the redemption price shall be paid by the holder to
the Company and any deficit between the net proceeds and the redemption price
shall be paid by the Company to the holder.
 
  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 the
Company.
 
  As of March 31, 1998, 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 (i) 37.5 shares of Series A Liberty Media Group
Common Stock and (ii) upon conversion of shares of Series C-Liberty Media
Group Preferred Stock each holder of Series C-Liberty Media Group Preferred
Stock is entitled to receive one additional share of Series A Liberty Media
Group Common Stock for every two such shares issued upon such conversion.
Subject to the provisions described in the immediately following paragraph, if
(i) the Company 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 the Company capital stock that is redeemable or
exchangeable at the election of the Company ("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
 
                                      63
<PAGE>
 
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, the provisions described in the immediately
preceding paragraph shall not apply, and the holders of Series C-Liberty Media
Group Preferred Stock that are not exchanged as described in the third
sentence of this paragraph shall not have conversion rights with respect to
Series A Liberty Media Group Common Stock or Series C-Liberty Media Group
Redeemable Capital Stock so redeemed, exchanged or otherwise acquired, after
the Series C-Liberty Media Group Redemption Event relating thereto, 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 a subsidiary of the Company 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 Company
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, 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 convertible preferred stock of the issuer of the Series C-Liberty Media
Group Redemption Securities, which convertible preferred stock shall have an
aggregate liquidation preference equal to the aggregate liquidation preference
of the shares of Series C-Liberty Media Group Preferred Stock to be exchanged
therefor and that otherwise has terms, conditions, designations, 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 judgment of the
Company's Board of Directors, to those of the Series C-Liberty Media Group
Preferred Stock for which such convertible preferred stock is to be exchanged,
except that applicable time periods under the Series C-Liberty Media Group
Preferred Stock will be tacked to corresponding time periods under such
convertible preferred stock, and except that the convertible preferred stock
of the issuer of the Series C-Liberty Media Group Redemption Securities will
be convertible into the kind and amount of Series C-Liberty Media Group
Redemption Securities, cash and other assets that the holder of a share of
Series C-Liberty Media Group Preferred Stock in respect of which such
convertible preferred stock is issued would have received in the Series C-
Liberty Media Group Redemption Event, had such shares of Series C-Liberty
Media Group Preferred Stock been converted prior to the Series C-Liberty Media
Group Redemption Event.
 
  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 convertible preferred stock of the
Company and convertible preferred stock of the issuer of the Series C-Liberty
Media
 
                                      64
<PAGE>
 
Group Redemption Securities. The sum of the initial liquidation preferences of
the shares of convertible preferred stock of the Company and convertible
preferred stock of the issuer of the Series C-Liberty Media Group Redemption
Securities delivered in exchange for a share of Series C-Liberty Media Group
Preferred Stock will equal the liquidation preference of a share of Series C-
Liberty Media Group Preferred Stock on the effective date of the Series C-
Liberty Media Group Redemption Event and that otherwise each have terms,
conditions, designations, 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
judgment of the Company's Board of Directors, to those of the Series C-Liberty
Media Group Preferred Stock for which such convertible preferred stock is to
be exchanged, except that applicable time periods under the Series C-Liberty
Media Group Preferred Stock will be tacked to corresponding time periods under
such convertible preferred stock, and except that (x) the convertible
preferred stock of the issuer of the Series C-Liberty Media Group Redemption
Securities will be convertible into the kind and amount of Series C-Liberty
Media Group Redemption Securities, cash and other assets that the holder of a
share of Series C-Liberty Media Group Preferred Stock in respect of which such
convertible preferred stock is issued would have received in the Series C-
Liberty Media Group Redemption Event, had such shares of Series C-Liberty
Media Group Preferred Stock been converted prior to the Series C-Liberty Media
Group Redemption Event, and (y) the convertible preferred stock of the Company
will not be convertible into, and the holders thereof will have no conversion
rights thereunder with respect to the 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.
 
  If the Company distributes the stock of a subsidiary of the Company as a
dividend to all holders of Series A Liberty Media Group Common Stock (a
"Liberty Media Group Spin Off"), the Company 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 convertible
preferred stock of the Company and convertible preferred stock of such
subsidiary that together have an aggregate liquidation preference equal to the
liquidation preference of a share of Series C-Liberty Media Group Preferred
Stock on the effective date of the Liberty Media Group Spin Off and that
otherwise each have terms, conditions, designations, 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 judgment of the Company's Board of
Directors, to those of the Series C-Liberty Media Group Preferred Stock for
which such convertible preferred stock is to be exchanged, except that
applicable time periods under the Series C-Liberty Media Group Preferred Stock
will be tacked to corresponding time periods under such convertible preferred
stock, and except that (x) the convertible preferred stock of the subsidiary
whose stock is distributed in such Liberty Media Group Spin Off will be
convertible into the kind and amount of stock of such subsidiary, and other
securities and property that the holder of a share of Series C-Liberty Media
Group Preferred Stock in respect of which such convertible preferred stock is
issued would have received in the Liberty Media Group Spin Off, had such
shares of Series C-Liberty Media Group Preferred Stock been converted prior to
the record date for such Liberty Media Group Spin Off, and (y) the convertible
preferred stock of the Company will not be convertible into, and the holders
thereof will have no conversion rights thereunder with respect to the stock of
such subsidiary. 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 convertible preferred stock of the
Company and convertible preferred stock of such subsidiary 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 the Company or a subsidiary of
the Company (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 of
Series C-Liberty Media Group Preferred Stock, 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
 
                                      65
<PAGE>
 
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 offered in such
Exchange Offer ("Liberty Media Group Exchange Securities") (and other
property, if applicable), convertible preferred stock of the issuer of such
Liberty Media Group Exchange Securities with an aggregate liquidation
preference equal to the aggregate liquidation preference of the shares of
Series C-Liberty Media Group Preferred Stock exchanged therefor and that
otherwise has terms, conditions, designations, 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 judgment of the Company's Board of
Directors, to those of the Series C-Liberty Media Group Preferred Stock for
which such convertible preferred stock is to be exchanged, except that
applicable time periods under the Series C-Liberty Media Group Preferred Stock
will be tacked to corresponding time periods under such convertible preferred
stock, and except that such convertible preferred stock will be convertible
into the kind and amount of Exchange Securities and other property that the
holder of a share of Series C-Liberty Media Group Preferred Stock in respect
of which such convertible preferred stock is issued would have received upon
the consummation of the Exchange Offer, had such shares 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 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. 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 the Company receivable by a holder of Series C-
Liberty Media Group Preferred Stock upon conversion thereof), to issue stock
of the Company or of a subsidiary of the Company 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 the Company 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.
       
       
 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 the Company, holders of
Series F Preferred Stock will be entitled to receive from the assets of the
Company available for distribution to stockholders an amount in cash or
property or a combination thereof, per share, equal to $.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 the Company 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.
 
 
                                      66
<PAGE>
 
  The Series F Preferred Stock is subject to optional redemption by the
Company 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. The Company 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 all other currently
outstanding classes and series of Preferred Stock as to dividend rights,
rights to redemption and rights on liquidation.
 
  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 the Company or a subsidiary of the
Company 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 the Company. 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 Company's Board of Directors out of
unrestricted funds legally available therefor, in preference to dividends on
the 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
Company's 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
Company's Board of Directors.
 
 
                                      67
<PAGE>
 
  Upon the liquidation, dissolution or winding up of the Company, 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 the Company 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 the Company, 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. The Company 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.
 
  As of March 31, 1998, subject to anti-dilution 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 the Company's capital stock, which is
redeemable or exchangeable at the election of the Company ("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 the Company (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 the Company 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 the Company 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 Company's Board of Directors, 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
 
                                      68
<PAGE>
 
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 the Company 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 Company's Board of Directors determines (i) that
receipt of such convertible preferred stock of the Company 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.
 
  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 the Company. 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 Company's Board of Directors out of
unrestricted funds legally available therefor, in preference to dividends on
the 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
Company's 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
Company's Board of Directors.
 
 
                                      69
<PAGE>
 
  Upon the liquidation, dissolution or winding up of the Company, 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 the Company 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 the Company, 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. The Company 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 March 31, 1998, subject to antidilution adjustments, each share of
Series H Preferred Stock is convertible, at the option of the holder, into (i)
 .2625 of one share of Series A Liberty Media Group Common Stock, and (ii) upon
conversion of shares of the Series H Preferred Stock each holder of Series H
Preferred Stock is entitled to receive one additional share of Series A
Liberty Media Group Common Stock for every two such shares received upon such
conversion, and (iii) upon such conversion each such holder is entitled to
receive one additional share of Series A Liberty Media Group Common Stock for
every two shares of such stock held after calculating the number of such
shares issuable upon conversion of the Series H Preferred Stock as described
in clauses (i) and (ii) above. Subject to the provisions described in the
immediately following paragraph, if (i) the Company 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 the Company's capital stock, which is redeemable or exchangeable at the
election of the Company ("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 the Company (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 the Company makes appropriate provisions so
that holders of Series H Preferred
 
                                      70
<PAGE>
 
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 the Company
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 Company's Board of Directors, 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, and (y) any convertible preferred stock of the Company 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
Company's Board of Directors determines (i) that receipt of such convertible
preferred stock of the Company 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 the Company. 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
 
                                      71
<PAGE>
 
been paid or declared and set apart so as to be available for payment in full
thereof and for no other purpose, neither the Company nor any subsidiary
thereof may purchase or otherwise acquire any shares of 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, the Company 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 the Company fails to redeem shares of Class B Preferred Stock or Series F
Preferred Stock required to be redeemed on a redemption date, the Company 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 the Company 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 the Company fails to redeem shares of Series C-
TCI Group Preferred Stock or Series C-Liberty Media Group Preferred Stock
required to be redeemed on a redemption date, neither the Company nor any
subsidiary thereof may purchase or otherwise acquire any shares of 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 the Company fails to redeem shares
of Series G Preferred Stock or Series H Preferred Stock required to be
redeemed on a redemption date, the Company 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 purpose, and neither the Company 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 the Company 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 the Company, 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 the Company (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 the Company 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 the Company (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 the Company 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.
 
CERTAIN ANTI-TAKEOVER CONSIDERATIONS
 
  The DGCL, the Charter and the Company's Bylaws contain provisions which may
serve to discourage or make more difficult a change in control of the Company
without the support of the Board of Directors or without meeting various other
conditions. The principal provisions of the DGCL, the Charter and the
Company's Bylaws are outlined below.
 
                                      72
<PAGE>
 
  DGCL Section 203, in general, prohibits a "business combination" between a
corporation and an "interested stockholder" within three years of the date
such stockholder became an "interested stockholder," unless (i) prior to such
date 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) on or after such date, 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 that individually or with or through its 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 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 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 Company 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 Company and any of its
"interested stockholders."
 
  The Charter also contains certain provisions which could make a change in
control of the Company more difficult. For example, the Charter requires,
subject to the rights, if any, of any class or series of the Preferred Stock,
the affirmative vote of 66 2/3% of the total voting power of the outstanding
shares of Voting Stock (as defined herein), voting together as a single class,
to approve (i) a merger or consolidation of the Company 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 Stock 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 Company or (iii) the
dissolution of the Company. "Voting Stock" 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 the 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 common 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
 
                                      73
<PAGE>
 
directors, currently ten, is fixed by the Board of Directors. The holders of
Voting Stock 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 Company'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
Company.) Stockholders of the Company do not have cumulative voting rights.
 
  The Charter authorizes the issuance of 50,000,000 shares of Series Preferred
Stock, of which 34,061,783 remain available for issuance as of March 31, 1998.
On April 1, 1998, all of the outstanding shares of Series D Preferred Stock
were redeemed to the extent not previously converted by the holders thereof
pursuant to the terms thereof, with the effect that such retired or converted
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 D Preferred Stock.
Under the Charter, the Board of Directors is authorized, without further
action by the stockholders of the Company, 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 1,189,273,685 shares
of TCI Group Common Stock, 431,960,040 shares of Liberty Media Group Common
Stock and 388,826,224 shares of TCI Ventures Group Common Stock remain
available for issuance as of March 31, 1998 (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 Company,
and the terms of such shares of Series Preferred Stock could be designed in
part to impede the acquisition of such control.
 
  The Charter requires the affirmative vote of 66 2/3% of the total voting
power of the outstanding shares of Voting Stock, 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 Company'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
Company 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 Stock 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 the Preferred Stock, the
Company'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 Company, at the Company'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 Voting Stock 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 Company 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.
 
                                      74
<PAGE>
 
                             PLAN OF DISTRIBUTION
 
  The Company may sell the Offered Securities to or through underwriters or
dealers, 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 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 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
agents designated by the Company 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 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 or
commissions received by them from the Company 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 will be described in the Prospectus Supplement.
 
  If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters to solicit offers by certain specified institutions to
purchase Offered Securities from the Company 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. 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 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.
 
                                      75
<PAGE>
 
  Agents, underwriters and dealers may be entitled under agreements entered
into with the Company to indemnification by the Company 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 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 legality of the Offered Securities will be passed upon for the Company
by Baker & Botts, L.L.P., 599 Lexington Ave., New York, New York, 10022-6030.
Jerome H. Kern, special counsel to Baker & Botts, L.L.P., is the Vice Chairman
and a director of the Company. If agents or underwriters are utilized, the
legality of the Offered Securities 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, 1997 and 1996, 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, 1997, and all related
financial statement schedules, which appear in the Annual Report on Form 10-K
of Tele-Communications, Inc. for the year ended December 31, 1997, have been
incorporated by reference herein in reliance upon the reports, dated March 20,
1998, 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, 1997 and 1996,
and the related combined statements of operations, equity (deficit), and cash
flows for each of the years in the three-year period ended December 31, 1997,
which appear in the Annual Report on Form 10-K of Tele-Communications, Inc.
for the year ended December 31, 1997, have been incorporated by reference
herein in reliance upon the report, dated March 20, 1998, 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 and TCI Ventures Group for all periods that
TCI Group has an interest in Liberty Media Group and TCI Ventures Group.
 
  The combined balance sheets of Liberty Media Group as of December 31, 1997
and 1996, and the related combined statements of operations, equity, and cash
flows for each of the years in the three-year period ended December 31, 1997,
which appear in the Annual Report on Form 10-K of Tele-Communications, Inc.
for the year ended December 31, 1997, have been incorporated by reference
herein in reliance upon the report, dated March 20, 1998, 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 Ventures Group as of December 31, 1997
and 1996, and the related combined statements of operations, equity, and cash
flows for each of the years in the three-year period ended December 31, 1997,
which appear in the Annual Report on Form 10-K of Tele-Communications, Inc.
for the year ended December 31, 1997, have been incorporated by reference
herein in reliance upon the report, dated March 20, 1998, 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, 1997 and 1996, and the related consolidated
statements of operations and cash flows for each of the years in the
three-year period ended December 31, 1997, which appear in the Annual Report
on Form 10-K of
 
                                      76
<PAGE>
 
Tele-Communications, Inc. for the year ended December 31, 1997, have been
incorporated by reference herein in reliance upon the report, dated March 19,
1998, 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 as of December 31, 1997 and 1996 and the related consolidated
statements of operations, changes in partners' capital and cash flows for each
of the three years in the period ended December 31, 1997, incorporated herein
by reference, which appear in the Annual Report on Form 10-K of Tele-
Communications, Inc. for the year ended December 31, 1997 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 emergence from the development stage), which is incorporated
by reference herein, and has been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
   
  The consolidated balance sheets of Cablevision Systems Corporation and
subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' deficiency and cash flows for each of
the years in the three-year period ended December 31, 1996, and the related
financial statement schedule, which report appears in the Current Report on
Form 8-K, as amended on Form 8-K/A (Amendment No. 2) of Tele-Communications,
Inc., dated March 6, 1998, have been incorporated by reference herein in
reliance upon the report, dated April 1, 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.
    
                                      77
<PAGE>
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
 NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS AND ANY PROSPECTUS 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 OR
ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF.
 
                                ---------------
 
<TABLE>   
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Available Information......................................................   2
Incorporation of Documents by Reference....................................   3
The Company................................................................   4
Use of Proceeds............................................................   4
Ratio of Earnings to Combined Fixed
 Charges and Preferred Stock Dividends.....................................   4
Holding Company Structure..................................................   5
Description of Debt Securities.............................................   6
Description of Series Preferred Stock......................................  18
Description of Depositary Shares...........................................  21
Description of Capital Stock...............................................  24
 Common Stock..............................................................  24
 Preferred Stock...........................................................  58
Plan of Distribution.......................................................  75
Legal Matters..............................................................  76
Experts....................................................................  76
</TABLE>    
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
                           TELE-COMMUNICATIONS, INC.
 
                                DEBT SECURITIES
                            SERIES PREFERRED STOCK
                               DEPOSITARY SHARES
                        SERIES A TCI GROUP COMMON STOCK
                   SERIES A LIBERTY MEDIA GROUP COMMON STOCK
                   SERIES A TCI VENTURES GROUP COMMON STOCK
 
                              -------------------
 
                                  PROSPECTUS
 
                              -------------------
                                 
                              July 15, 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.................................................. $442,500
    Blue Sky Fees and Expenses (including counsel fees)...............   20,000
    Printing and Engraving Expenses...................................  100,000
    Legal Fees and Expenses...........................................  100,000
    Accounting Fees and Expenses......................................   75,000
    Rating Agency Fees................................................   75,000
    Miscellaneous.....................................................   15,000
                                                                       --------
      Total........................................................... $827,500
                                                                       ========
</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.
 
  Article V, Section E of Tele-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 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."
 
  Article II, Section 2.9 of the Company's Bylaws also contains an indemnity
provision, requiring the Company to indemnify members of the Board of
Directors and officers of the Company and their respective heirs, personal
representatives and successors in interest for or on account of any action
performed on behalf of the Company, to the fullest extent provided by the laws
of the State of Delaware and the Company's Restated Certificate of
Incorporation, as then or thereafter in effect.
 
  The Company has also entered into indemnification agreements with each of
its directors (each director, an "indemnitee"). The indemnification agreements
provide (i) for the prompt indemnification to the fullest extent permitted by
law against any and all expenses, including attorneys' fees and all other
costs, expenses and obligations paid or incurred in connection with
investigating, defending, being a witness or participating in (including on
appeal), or in preparing for ("Expenses"), any threatened, pending or
completed action, suit or
 
                                     II-2
<PAGE>
 
proceeding, or any inquiry or investigation ("Claim"), related to the fact
that such indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company or is or was serving at the Company's request as a
director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by a director or officer
in any such capacity, and against any and all judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection therewith) of any Claim, unless the
Reviewing Party (one or more members of the Board of Directors or other person
appointed by the Board of Directors, who is not a party to the particular
claim, or independent legal counsel) determines that such indemnification is
not permitted under applicable law and (ii) for the prompt advancement of
Expenses, and for reimbursement to the Company if the Reviewing Party
determines that such indemnitee is not entitled to such indemnification under
applicable law. In addition, the indemnification agreements provide (i) a
mechanism through which an indemnitee may seek court relief in the event the
Reviewing Party determines that the indemnitee would not be permitted to be
indemnified under applicable law (and therefore is not entitled to
indemnification or expense advancement under the indemnification agreement)
and (ii) indemnification against all expenses (including attorneys' fees), and
advancement thereof if requested, incurred by the indemnitee in seeking to
collect an indemnity claim or advancement of expenses from the Company or
incurred in seeking to recover under a directors' and officers' liability
insurance policy, regardless of whether successful or not. Furthermore, the
indemnification agreements provide that after there has been a "change in
control" in the Company (as defined in the indemnification agreements), other
than a change in control approved by a majority of directors who were
directors prior to such change, then, with respect to all determinations
regarding a right to indemnity and the right to advancement of Expenses, the
Company will seek legal advice only from independent legal counsel selected by
the indemnitee and approved by the Company.
 
  The indemnification agreements impose upon the Company the burden of proving
that an indemnitee is not entitled to indemnification in any particular case
and negate certain presumptions that may otherwise be drawn against an
indemnitee seeking indemnification in connection with the termination of
actions in certain circumstances. Indemnitees' rights under the
indemnification agreements are not exclusive of any other rights they may have
under Delaware law, the Company's Bylaws or otherwise. Although not requiring
the maintenance of directors' and officers' liability insurance, the
indemnification agreements require that an indemnitee be provided with the
maximum coverage available for any director or officer of the Company if there
is such a policy.
 
  The Company may purchase liability insurance policies covering its directors
and officers.
 
  In addition, pursuant to Section 6 of the form of Equity Underwriting
Agreement and 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-3
<PAGE>
 
ITEM 16. EXHIBITS.
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                                DESCRIPTION
 -------                               -----------
 <C>     <S>
   1.1   Form of Underwriting Agreement for Equity Securities.*
   1.2   Form of Underwriting Agreement for Debt Securities.*
   4.1   Form of Senior Indenture.
   4.2   Form of Senior Subordinated Indenture.
   4.3   Form of Subordinated Indenture.
   4.4   Form of Deposit Agreement.
   4.5   Restated Certificate of Incorporation of the Company, 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 (incorporated herein by
         reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K
         for the year ended December 31, 1997 (Commission File No. 0-20421)).
   4.6   Bylaws of the Company as adopted June 16, 1994 (incorporated herein by
         reference to Exhibit 3.2 of the Company's Annual Report on Form 10-K
         for the year ended December 31, 1994, as amended by Form 10-K/A
         (Amendment No. 1) (Commission File No. 0-20421)).
   4.7   Form of Depositary Receipt for Depositary Shares (included in Exhibit
         4.4).
   4.8   Specimen Stock Certificate for Tele-Communications, Inc. Series A TCI
         Group Common Stock, par value $1.00 per share (incorporated herein by
         reference to Exhibit 4.3 of Amendment No. 1 to the Company's
         registration statement on Form 8-A which was subsequently amended by
         Form 8-A/A (Amendment Nos. 1, 2 and 3) (Commission File No. 0-20421)).
   4.9   Specimen Stock Certificate for Tele-Communications, Inc. Series A
         Liberty Media Group Common Stock, par value $1.00 per share
         (incorporated herein by reference to Exhibit 4.5 of Amendment No. 1 to
         the Company's registration statement on Form 8-A, which was
         subsequently amended by Form 8-A/A (Amendment Nos. 1, 2 and 3)
         (Commission File No. 0-20421)).
   4.10  Specimen Stock Certificate for Tele-Communications, Inc. Series A TCI
         Ventures Group Common Stock, par value $1.00 per share, of the Company
         (incorporated herein by reference to Exhibit 4.3 of the Company's
         registration statement on Form S-8, filed with the Commission on
         November 13, 1997 (No. 333-40141)).
   5     Opinion of Baker & Botts, L.L.P.
  12     Calculation of Ratios of Earnings to Combined Fixed Charges and
         Preferred Stock Dividends of the Company.*
  23.1   Consent of KPMG Peat Marwick LLP.
</TABLE>    
 
 
                                      II-4
<PAGE>
 
ITEM 16. EXHIBITS.
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                                DESCRIPTION
 -------                               -----------
 <C>     <S>
  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 KPMG Peat Marwick LLP.
  23.8   Consent of Baker & Botts, L.L.P. (included in Exhibit 5).
  24.1   Power of Attorney.*
  25.1   Statement of Eligibility of the 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>    
- --------
   
* Previously filed.     
+ 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.
 
ITEM 17. UNDERTAKINGS
 
  The undersigned Registrant hereby undertakes:
 
  (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
 
    (i) To include any prospectus required by section 10(a)(3) of the
  Securities Act of 1933;
 
    (ii) To reflect in the prospectus any facts or events arising after the
  effective date of the registration statement (or the most recent post-
  effective amendment thereof) which, individually or in the aggregate,
  represent a fundamental change in the information set forth in the
  registration statement. 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 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 percent change in the maximum aggregate
  offering price set forth in the "Calculation of Registration Fee" table in
  the effective registration statement;
 
    (iii) To include any material information with respect to the plan of
  distribution not previously disclosed in the registration statement or any
  material change to such information in the registration statement;
 
  Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
  information required to be included in a post-effective amendment by those
  paragraphs is contained in periodic reports filed by the Registrants
  pursuant to section 13 or section 15(d) of the Securities Exchange Act of
  1934 that are incorporated by reference in the registration statement.
 
  (2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
 
                                     II-5
<PAGE>
 
  (3) To remove from registration by means of post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
 
  (4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrants' annual report pursuant to section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
 
  (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
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions described under Item 15 above, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrants of expenses incurred or
paid by a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrants will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
 
                                     II-6
<PAGE>
 
                                   SIGNATURES
   
  Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Greenwood Village, State
of Colorado, on July 15, 1998.     
 
                                          Tele-Communications, Inc.
                                                  
                                               /s/ Bernard W. Schotters     
                                          By:__________________________________
                                               
                                            NAME: BERNARD W. SCHOTTERS     
                                               
                                            TITLE:  SENIOR VICE PRESIDENT AND
                                                    TREASURER     
 
                                      II-7
<PAGE>
 
       
          
  Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to Registration Statement has been signed 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, Chief          
           *                   Executive Officer and                    
_____________________________   Director of TCI (Principal
       JOHN C. MALONE           Executive Officer)
 
                               President, Chief Operating           
           *                   Officer and Director                     
_____________________________
     LEO J. HINDERY, JR.
 
                               Director                             
           *                                                            
_____________________________
      JOHN W. GALLIVAN
 
                               Director
_____________________________
        PAUL A. GOULD
 
                               Director                             
           *                                                            
_____________________________
       JEROME H. KERN
 
                               Director
_____________________________
       ROBERT A. NAIFY
 
                               Director                              
           *                                                            
_____________________________
       DONNE F. FISHER
 
                               Director
_____________________________
         KIM MAGNESS
 
                               Director                             
           *                                                            
_____________________________
        J.C. SPARKMAN
 
                               Senior Vice President and            
           *                   Treasurer (Principal                     
_____________________________   Financial Officer)
    BERNARD W. SCHOTTERS
 
                               Executive Vice President and         
           *                   Controller of TCI                        
_____________________________   Communications, Inc.
       GARY K. BRACKEN          (Principal Accounting
                                Officer)
       
   /s/  Stephen M. Brett                                          July 15,
                                                                 1998     
*By:____________________ 
       
    STEPHEN M. BRETT     
       
    ATTORNEY-IN-FACT     
</TABLE> 
 
                                     II-8
                                                                                
<PAGE>
 
                               INDEX TO EXHIBITS
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                               EXHIBIT
 -------                              -------
 <C>     <S>                                                                
   1.1   Form of Underwriting Agreement for Equity Securities.*
   1.2   Form of Underwriting Agreement for Debt Securities.*
   4.1   Form of Senior Indenture.
   4.2   Form of Senior Subordinated Indenture.
   4.3   Form of Subordinated Indenture.
   4.4   Form of Deposit Agreement.
   4.5   Restated Certificate of Incorporation of the Company, 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 (Incorporated herein by reference to Exhibit 3.1 of the
         Company's Annual Report on Form 10-K for the year ended December
         31, 1997 (Commission File No. 0-20421)).
   4.6   Bylaws of the Company as adopted June 16, 1994 (incorporated
         herein by reference to Exhibit 3.2 of the Company's Annual
         Report on Form 10-K for the year ended December 31, 1994, as
         amended by Form 10-K/A (Amendment No. 1) (Commission File No.
         0-20421)).
   4.7   Form of Depositary Receipt for Depositary Shares (included in
         Exhibit 4.4).*
   4.8   Specimen Stock Certificate for Tele-Communications, Inc. Series
         A TCI Group Common Stock, par value $1.00 per share
         (incorporated herein by reference to Exhibit 4.3 of Amendment
         No. 1 to the Company's registration statement on Form 8-A which
         was subsequently amended by Form 8-A/A (Amendment Nos. 1, 2 and
         3) (Commission File No. 0-20421)).
   4.9   Specimen Stock Certificate for Tele-Communications, Inc. Series
         A Liberty Media Group Common Stock, par value $1.00 per share
         (incorporated herein by reference to Exhibit 4.5 of Amendment
         No. 1 to the Company's registration statement on Form 8-A, which
         was subsequently amended by Form 8-A/A (Amendment Nos. 1, 2 and
         3) (Commission File No.
         0-20421)).
   4.10  Specimen Stock Certificate for Tele-Communications, Inc. Series
         A TCI Ventures Group Common Stock, par value $1.00 per share, of
         the Company (incorporated herein by reference to Exhibit 4.3 of
         the Company's registration statement on Form S-8, filed with the
         Commission on November 13, 1997 (No. 333-40141)).
   5     Opinion of Baker & Botts, L.L.P.
  12     Calculation of Ratios of Earnings to Combined Fixed Charges and
         Preferred Stock Dividends of the Company.*
  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.
</TABLE>    
<PAGE>
 
                               INDEX TO EXHIBITS
 
<TABLE>   
<CAPTION>
 EXHIBIT
 NUMBER                              EXHIBIT
 -------                             -------
 
 
 <C>     <S>                                                              
  23.5   Consent of KPMG Audit Plc.
  23.6   Consent of Deloitte & Touche LLP.
  23.7   Consent of KPMG Peat Marwick LLP.
  23.8   Consent of Baker & Botts, L.L.P. (included in Exhibit 5).
  24.1   Power of Attorney.*
  25.1   Statement of Eligibility of the 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>    
- --------
   
* Previously filed.     
+ 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.

<PAGE>
 
                                                                     EXHIBIT 4.1

================================================================================


                           TELE-COMMUNICATIONS, INC.

                                      and


                                    Trustee


                                ______________

                                   Indenture

                                  Dated as of


                                ______________


                                Debt Securities

================================================================================
<PAGE>
 
                             CROSS-REFERENCE TABLE

<TABLE>
<CAPTION>
      TIA                                                 INDENTURE
   SECTION                                                SECTION(S)
<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; 10.02
      (c)................................................   N.A.
  311 (a)................................................   7.11
      (b)................................................   7.11
      (c)................................................   N.A.
  312 (a)................................................   2.07
      (b)................................................   10.03
      (c)................................................   10.03
  313 (a)................................................   7.06
      (b)(1).............................................   N.A.
      (b)(2).............................................   7.06
      (c)................................................   10.02
      (d)................................................   7.06
  314 (a)................................................   4.05; 4.06; 10.02
      (b)................................................   N.A.
      (c)(1).............................................   10.04
      (c)(2).............................................   10.04
      (c)(3).............................................   N.A.
      (d)................................................   N.A.
      (e)................................................   10.05
      (f)................................................   N.A.
  315 (a)................................................   7.01(b)
      (b)................................................   7.05; 10.02
      (c)................................................   7.01(a)
      (d)................................................   7.01(c)
      (e)................................................   6.11
  316 (a)(last sentence).................................   10.06
      (a)(1)(A)..........................................   6.05
      (a)(1)(B)..........................................   6.04
      (a)(2).............................................   N.A.
      (b)................................................   6.07
</TABLE> 

                                       i
<PAGE>
 
<TABLE> 
<S>                                                         <C> 
  317 (a)(1)............................................    6.08
      (a)(2)............................................    6.09
      (b)...............................................    2.06
  318 (a)...............................................    10.01
</TABLE> 

___________
N.A. means not applicable.

                                      ii
<PAGE>
 
                               TABLE OF CONTENTS

<TABLE>     
<CAPTION> 
                                                                                     Page
                                                                                     ----
<S>                                                                                  <C> 
                                   ARTICLE I

                  DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01.    Definitions..........................................................  1
Section 1.02.    Other Definitions....................................................  6
Section 1.03.    Incorporation by Reference of Trust Indenture Act....................  6
Section 1.04.    Rules of Construction................................................  7

                                  ARTICLE II

                                THE SECURITIES

Section 2.01.    Forms Generally......................................................  7
Section 2.02.    Amount Unlimited; Issuable in Series.................................  8
Section 2.03.    Denominations........................................................ 12
Section 2.04.    Execution, Authentication, Delivery and Dating....................... 13
Section 2.05.    Registrar, Paying Agent, Conversion Agent, Exchange Agent and 
                   Authenticating Agent............................................... 16
Section 2.06.    Paying Agent to Hold Money and Securities in Trust................... 18
Section 2.07.    Securityholder Lists................................................. 18
Section 2.08.    Transfer and Exchange................................................ 18
Section 2.09.    Replacement Securities............................................... 23
Section 2.10.    Securities in Global Form............................................ 24
Section 2.11.    Temporary Securities................................................. 25
Section 2.12.    Cancellation......................................................... 25
Section 2.13.    Payment of Interest; Defaulted Interest.............................. 26
Section 2.14.    Persons Deemed Owners................................................ 27
Section 2.15.    CUSIP Numbers........................................................ 28

                                  ARTICLE III

                                  REDEMPTION

Section 3.01.    Applicability of Article............................................. 28
Section 3.02.    Notices to Trustee................................................... 28
Section 3.03.    Selection of Securities to be Redeemed............................... 29
Section 3.04.    Notice of Redemption................................................. 30
Section 3.05.    Effect of Notice of Redemption....................................... 31
Section 3.06.    Deposit of Redemption Price.......................................... 32
Section 3.07.    Securities Redeemed in Part.......................................... 32
Section 3.08.    Conversion or Exchange Arrangement on Call for Redemption............ 32
</TABLE>      

                                      iii
<PAGE>
 
<TABLE> 
<S>                                                                                       <C> 
                                  ARTICLE IV

                                   COVENANTS

Section 4.01.    Payment of Securities; Maintenance of Office or Agency.................  33
Section 4.02.    SEC Reports............................................................  35
Section 4.03.    Compliance Certificate.................................................  35
Section 4.04.    Corporate Existence....................................................  36
Section 4.05.    Waiver of Certain Covenants............................................  36
Section 4.06.    No Lien Created........................................................  36
Section 4.07.    Calculation of Original Issue Discount.................................  36

                                   ARTICLE V

                             SUCCESSOR CORPORATION

Section 5.01.    When Company May Merge, etc............................................  37

                                  ARTICLE VI

                             DEFAULTS AND REMEDIES

Section 6.02.    Acceleration...........................................................  38
Section 6.03.    Other Remedies.........................................................  39
Section 6.04.    Waiver of Existing Defaults............................................  39
Section 6.05.    Control by Majority....................................................  40
Section 6.06.    Limitation on Suits....................................................  40
Section 6.07.    Rights of Holders to Receive Payment and to Convert or Exchange........  40
Section 6.08.    Collection Suit by Trustee.............................................  41
Section 6.09.    Trustee May File Proofs of Claim.......................................  41
Section 6.10.    Priorities.............................................................  41
Section 6.11.    Undertaking for Costs..................................................  41

                                  ARTICLE VII

                                    TRUSTEE

Section 7.01.    Duties of Trustee......................................................  42
Section 7.02.    Rights of Trustee......................................................  43
Section 7.03.    Individual Rights of Trustee...........................................  43
Section 7.04.    Trustee's and Authenticating Agent's Disclaimer........................  44
Section 7.05.    Notice of Defaults.....................................................  44
Section 7.06.    Reports by Trustee to Holders..........................................  44
Section 7.07.    Compensation and Indemnity.............................................  44
</TABLE> 

                                      iv
<PAGE>
 
<TABLE> 
<S>                                                                   <C> 
Section 7.08.    Replacement of Trustee.............................. 45
Section 7.09.    Successor Trustee by Merger, etc.................... 46
Section 7.10.    Eligibility; Disqualification....................... 46
Section 7.11.    Preferential Collection of Claims Against Company... 46

                                 ARTICLE VIII

                            DISCHARGE OF INDENTURE

Section 8.02.    Application of Trust Fund........................... 48
Section 8.03.    Repayment to Company................................ 48

                                  ARTICLE IX

                      AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 9.01.    Without Consent of Holders.......................... 48
Section 9.02.    With Consent of Holders............................. 49
Section 9.03.    Compliance with Trust Indenture Act................. 51
Section 9.04.    Effect of Amendments and Supplements................ 51
Section 9.05.    Notation on or Exchange of Securities............... 51
Section 9.06.    Trustee to Sign Amendments, etc..................... 51

                                   ARTICLE X

                                 MISCELLANEOUS


Section 10.02.   Notices............................................. 52
Section 10.03.   Communication by Holders with Other Holders......... 53
Section 10.04.   Certificate and Opinion as to Conditions Precedent.. 54
Section 10.05.   Statements Required in Certificate or Opinion....... 54
Section 10.06.   When Treasury Securities Disregarded................ 55
Section 10.07.   Rules by Trustee and Agents......................... 55
Section 10.08.   Legal Holidays...................................... 55
Section 10.09.   Governing Law....................................... 55
Section 10.10.   No Adverse Interpretation of Other Agreements....... 55
Section 10.11.   No Recourse Against Others.......................... 55
Section 10.12.   Successors.......................................... 56
Section 10.13.   Duplicate Originals................................. 56
Section 10.14.   Table of Contents, Headings, etc.................... 56
Section 10.15.   Acts of Holders..................................... 56
</TABLE>

                                       v
<PAGE>
 
<TABLE> 
<S>                                                                                       <C> 
                                  ARTICLE XI

                       MEETINGS OF HOLDERS OF SECURITIES

Section 11.02.    Call, Notice and Place of Meetings..................................... 58
Section 11.03.    Persons Entitled to Vote at Meetings................................... 59
Section 11.04.    Quorum; Action......................................................... 59
Section 11.05.    Determination of Voting Rights; Conduct and Adjournment of Meetings.... 60
Section 11.06.    Counting Votes and Recording Action of Meetings........................ 61
</TABLE>

                                      vi
<PAGE>
 
          INDENTURE dated as of                   between TELE-COMMUNICATIONS, 
INC., a Delaware corporation ("Company"), and          , a      ("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 1

                  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, co-Registrar, Paying Agent, Conversion
Agent or Exchange 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.
<PAGE>
 
          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.

          Company means Tele-Communications, Inc., a Delaware corporation, until
a successor replaces it pursuant to the applicable provisions of this Indenture
and thereafter means the successor.

          Company Stock means the Tele-Communications, Inc. Common Stock, $1.00
par value, in such series as the same exists on the date of this Indenture or
hereafter and any other capital stock into which such Common Stock may
thereafter have been changed.

          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.

          Foreign Person shall have the meaning given to such term in Section
1.1441-1(c)(2) of the Treasury Regulations.

          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 

                                       2
<PAGE>
 
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.

          Lien means any mortgage, pledge, lien, security interest, or other
similar encumbrance.
    
          Officer means the Chairman of the Board, any Vice Chairman, 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 10.04 and 10.05.

          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 10.04 and 10.05.

          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.

                                       3
<PAGE>
 
          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, Purchase 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 10.06, a Security does not cease to be outstanding because the Company
or one of its Affiliates holds the Security.

                                       4
<PAGE>
 
          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.

          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 the
principal amount as set forth on the face of such debt security.

          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.

          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.

          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.

                                       5
<PAGE>
 
          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.


     Section 1.02.  Other Definitions.

<TABLE>
<CAPTION>
TERM                     DEFINED IN SECTION
<S>                      <C>
Act                             10.15
Bankruptcy Law                   6.01
Code                             9.01
Conversion Agent                 2.05
Custodian                        6.01
Event of Default                 6.01
Exchange Agent                   2.05
Legal Holiday                   10.08
Paying Agent                     2.05
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.

                                       6
<PAGE>
 
          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 II

                                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 

                                       7
<PAGE>
 
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.

                                                            , 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 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 

                                       8
<PAGE>
 
     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 

                                       9
<PAGE>
 
     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;

          (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;

                                      10
<PAGE>
 
          (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 denominations 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 or exchangeable;

          (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 Company Stock and the terms and
     conditions upon which such conversion shall be effected (including, without
     limitation, the initial conversion price or rate, adjustments to the
     conversion price or rate, the conversion period and any other provision
     relative to such obligation);

          (18) the obligation, if any, of the Company to permit the exchange of
     Securities of such series into other securities (whether or not issued by,
     or the obligation of, the Company) or a combination of cash, other
     securities and/or property, and the terms and conditions upon which such
     exchanges shall be effected (including, without limitation, the initial
     exchange price or rate, adjustments to the exchange price or rate, the
     exchange period and any other provision relative to such obligation);

          (19) 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;

          (20) if there is more than one Trustee, the identity of the Trustee
     and, if not the Trustee, the identity of each Registrar, Paying Agent,
     Conversion Agent or Exchange Agent with respect to the Securities of the
     series; and

          (21) whether, and the terms and conditions relating to when, the
     Company may satisfy certain of its obligations with respect to such
     Securities with regard to payment upon 

                                      11
<PAGE>
 
     maturity, or any redemption or required repurchase, or in connection with
     any exchange provisions by delivery to the Holders thereof securities
     (whether or not issued by, or the obligation of, the Company) or a
     combination of cash, other securities and/or property.

          (22) any other terms of a particular series 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 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 IV, V, VI and VIII (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.

                                      12
<PAGE>
 
     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
10.04 and 10.05 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, 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 certifications 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.

                                      13
<PAGE>
 
     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 

                                      14
<PAGE>
 
     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.

     Notwithstanding the provisions of Sections 2.01, 2.02, 10.04 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
10.04 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, 10.04 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.

                                      15
<PAGE>
 
     
     Section 2.05. Registrar, Paying Agent, Conversion Agent, Exchange 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"), an office or agency where Securities of
each series that is convertible may be presented for conversion ("Conversion
Agent") and an office or agency where Securities of each series that is
exchangeable may be presented for exchange ("Exchange 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 one or more
additional conversion agents and one or more additional exchange agents with
respect to any series. The term "Paying Agent" includes any additional paying
agent, the term "Conversion Agent" includes any additional conversion agent and
the term "Exchange Agent" includes any additional exchange 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, Conversion Agent or Exchange 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 and Exchange
Agent for any series that is exchangeable.

     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

                                      16
<PAGE>
 
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 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 10.02. 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:

                                      17
<PAGE>
 
                         CERTIFICATE OF AUTHENTICATION

This is one of the Securities of the series designated herein and referred to in
the within-mentioned Indenture.
 
                                                            , 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, 

                                      18
<PAGE>
 
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 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 

                                      19
<PAGE>
 
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 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, 

                                      20
<PAGE>
 
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 canceled 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

                                      21
<PAGE>
 
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.

     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.

                                      22
<PAGE>
 
     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; 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.

                                      23
<PAGE>
 
     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 10.04 and
10.05 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 Company delivers to
the Trustee the Security in global form together with written instructions
(which need not comply with Sections 10.04 and 10.05 and need not be accompanied
by an Opinion of Counsel) with regard to the reduction in the principal amount
of Securities

                                      24
<PAGE>
 
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 another 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,

                                      25
<PAGE>
 
purchase, conversion or cancellation, and may dispose of canceled Securities and
coupons as the Company directs, provided, however, that the Trustee shall not be
required to destroy such canceled 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 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.

                                      26
<PAGE>
 
     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.

     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 

                                      27
<PAGE>
 
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.

     Section 2.15. CUSIP Numbers.

     The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if the Company does so, the Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders; provided that any
such notice may state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any notice
of a redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.  The Company will promptly notify
the Trustee of any changes in the "CUSIP" numbers.

                                  ARTICLE III

                                  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

                                      28
<PAGE>
 
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
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.

                                      29
<PAGE>
 
     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 or Exchange Agent;

          (5) if applicable, that the right of the Holder to convert or exchange
     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 or exchange
     Securities called for redemption must satisfy the requirements for
     conversion or exchange 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;

          (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 10.02 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

                                      30
<PAGE>
 
the Officers' Certificate and Opinion of Counsel required pursuant to Section
10.04 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.

                                      31
<PAGE>
 
     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 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 and in exchange for the unredeemed portion
of the principal amount of the global Security so surrendered.

     Section 3.08. Conversion or Exchange 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 III, 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 or exchange 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 surrendered by such purchasers
for conversion or exchange, 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 or exchanged in accordance with the terms of such Securities, subject
to payment of the above amount as aforesaid. 

                                      32
<PAGE>
 
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 or exchange 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 or exchange 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 IV

                                   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.

     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 

                                      33
<PAGE>
 
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 , 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.

     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 

                                      34
<PAGE>
 
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 Foreign Persons 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. 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 (S)TIA (S) 314(a).

     Section 4.03. 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 

                                      35
<PAGE>
 
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 10.05.

     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 4.04. 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. Waiver of Certain Covenants.

     If so provided in the applicable supplemental indenture, the Company may
omit in any particular instance to comply with any term, provision or condition
of any covenant set forth in such supplemental indenture 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
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 4.06. 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 4.07. 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.

                                      36
<PAGE>
 
                                   ARTICLE V

                             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 entity unless (1)
the successor entity, which shall be an entity 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 VI

                             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;

                                      37
<PAGE>
 
          (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 60 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 

                                      38
<PAGE>
 
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(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.

     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.

                                      39
<PAGE>
 
     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 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 or
Exchange.

     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 or exchange
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 

                                      40
<PAGE>
 
right to convert or exchange, 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(l) 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 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

                                      41
<PAGE>
 
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 VII

                                    TRUSTEE

     All the provisions of this Article VII 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.

                                      42
<PAGE>
 
          (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 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.

                                      43
<PAGE>
 
     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 (S)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 (S)TIA (S) 313(c), a brief report dated as of such May 15
that complies with (S)TIA (S) 313(a). The Trustee also shall comply with (S)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 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

                                      44
<PAGE>
 
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(4) or (5) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.

     The provisions of this Section shall survive the termination of this
Indenture and the resignation or the removal of the Trustee.

     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

                                      45
<PAGE>
 
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 the Trustee
under this Indenture. A successor Trustee shall give notice in the manner
provided in Section 10.02 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 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 (S)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 (S)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.

     Trustee shall comply with (S)TIA (S) 311(a), excluding any creditor
relationship listed in (S) TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated.

                                      46
<PAGE>
 
                                 ARTICLE VIII

                            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 3.09),
have been delivered to the Trustee for cancellation; 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 canceled or delivered to the
Trustee for cancellation (other than any such Security or coupon referenced in
subclauses (i), (ii), (iii), (iv) or (v) of clause (1) above), 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 and 8.03 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.

                                      47
<PAGE>
 
     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 IX

                      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 Section 5.01;

                                      48
<PAGE>
 
          (3) to establish the form or terms of Securities of any series and any
     related coupons 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(22), 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 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;

          (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
     the Holder of any coupon; 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 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

                                      49
<PAGE>
 
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);

          (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

                                      50
<PAGE>
 
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.

                                      51
<PAGE>
 
                                   ARTICLE X

                                 MISCELLANEOUS

     Section 10.01. 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 10.02. 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:

               Tele-Communications, Inc.
               Terrace Tower II
               5619 DTC Parkway
               Englewood, Colorado 80111-3000
               Attention:  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.

     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 

                                      52
<PAGE>
 
     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 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.

                                      53
<PAGE>
 
     Section 10.03. Communication by Holders with Other Holders.

     Securityholders may communicate pursuant to (S)(S)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(S) TIA (S) 312(c).

     Section 10.04. 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 10.05. 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.

                                      54
<PAGE>
 
     Section 10.06. 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 10.07. Rules by Trustee and Agents.

     Subject to Section 10.15 and Article XI, the Trustee may make reasonable
rules for action by or a meeting of Securityholders of all series or any series.
The Registrar, Paying Agent, Conversion Agent or Exchange Agent may make
reasonable rules for its functions.

     Section 10.08. 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 10.09. Governing Law.

     The internal laws of the State of New York shall govern this Indenture, the
Securities and coupons.

     Section 10.10. 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 10.11. 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 

                                      55
<PAGE>
 
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 10.12. 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 10.13. 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 10.14. 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 10.15. 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 XI, 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 11.06.

                                      56
<PAGE>
 
     (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, 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 

                                      57
<PAGE>
 
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 XI

                       MEETINGS OF HOLDERS OF SECURITIES

     Section 11.01. 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 11.02. 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 11.01, 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 10.02, 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 11.01, 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.

                                      58
<PAGE>
 
     Section 11.03. 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. 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 11.04. 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 11.02(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 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 11.04, 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

                                      59
<PAGE>
 
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 11.05. 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 10.15 and the
appointment of any proxy shall be proved in the manner specified in Section
10.15 or by having the signature of the person executing the proxy witnessed or
guaranteed by any trust company, bank or banker authorized by Section 10.15 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 10.15 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 11.02(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 11.02 at which a quorum is present may be adjourned from time to time
by persons entitled to vote 

                                      60
<PAGE>
 
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 11.06. 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 11.02 and, if
applicable, Section 11.04. 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.

                                      61
<PAGE>
 
                                   SIGNATURES

Dated:            ,          TELE-COMMUNICATIONS, INC.
 
 
 
                             By:___________________________________
Attest:                                (Seal)
 
 
 
Dated:            ,                            , Trustee
 
 

                             By:___________________________________
Attest:                                (Seal)

                                      62

<PAGE>
 
                                                                     EXHIBIT 4.2
 
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                           TELE-COMMUNICATIONS, INC.
 
                                      AND
 
 
                                             , TRUSTEE
 
                               ----------------
                                   INDENTURE
                               DATED AS OF
 
                               ----------------
 
                      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; 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).................................................  4.02; 4.03; 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......................................................    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, Conversion Agent and Exchange 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
                Company Not to Make Payments with Respect to Securities in
 10.02.  Certain Circumstances............................................    33
 10.03.  Securities Subordinated to Prior Payment of All Senior Debt on
          Dissolution, Liquidation or Reorganization of Company...........    33
            Securityholders to be Subrogated to Right of Holders of Senior
 10.04.  Debt.............................................................    34
 10.05.  Obligation of the Company Unconditional..........................    34
          Trustee Entitled to Assume Payments Not Prohibited in Absence of
 10.06.  Notice...........................................................    35
           Application by Trustee of Monies or U.S. Government Obligations
 10.07.  Deposited with It................................................    35
 10.08.  Subordination Rights Not Impaired by Acts or Omissions of Company
          or Holders of Senior Debt.......................................    36
          Securityholders Authorize Trustee to Effectuate Subordination of
 10.09.  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
                                   Miscellaneous

 11.01.  Trust Indenture Act Controls.....................................    44
 11.02.  Notices..........................................................    44
 11.03.  Communication by Holders with Other Holders......................    44
 11.04.  Certificate and Opinion as to Conditions Precedent...............    44
 11.05.  Statements Required in Certificate or Opinion....................    45
 11.06.  When Treasury Securities Disregarded.............................    45
 11.07.  Rules by Trustee and Agents......................................    45
 11.08.  Legal Holidays...................................................    45
 11.09.  Governing Law....................................................    45
 11.10.  No Adverse Interpretation of Other Agreements....................    45
 11.11.  No Recourse Against Others.......................................    45
 11.12.  Successors.......................................................    46
 11.13.  Duplicate Originals..............................................    46
 11.14.  Table of Contents, Headings, etc. ...............................    46
 Signatures................................................................   47
</TABLE>
 
                                       5
<PAGE>
 
  INDENTURE dated as of     ,  , between TELE-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, co-Registrar, Paying Agent, Conversion Agent or
Exchange 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 Tele-Communications, Inc., a Delaware corporation, until a
successor replaces it pursuant to the applicable provisions of this Indenture
and thereafter means the successor.
 
  Company Stock means the Tele-Communications, Inc. Series A TCI Group Common
Stock, $1.00 par value, of the Company in such series 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.
 
  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, any Vice Chairman, 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.
 
                                       6
<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.
 
  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.
 
  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.
 
                                       7
<PAGE>
 
Section 1.02. Other Definitions.
 
<TABLE>
<CAPTION>
                                                                     DEFINED IN
              TERM                                                    SECTION
      <S>                                                            <C>
      Bankruptcy Law................................................    6.01
      Code..........................................................    9.01
      Conversion Agent..............................................    2.05
      Custodian.....................................................    6.01
      Debt..........................................................   10.01
      Exchange Agent ...............................................    2.05
      Event of Default..............................................    6.01
      Junior Subordinated Debt......................................    4.05
      Legal Holiday.................................................   11.08
      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 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
 
                                       8
<PAGE>
 
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
  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;
 
 
                                       9
<PAGE>
 
    (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 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
  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 or exchangeable;
 
    (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 Company 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 relative to such obligation);
 
    (14) the obligation, if any, of the Company to permit the exchange of
  Securities of such series into other securities (whether or not issued by,
  or the obligation of, the Company) or a combination of cash, other
  securities and/or property, and the terms and conditions, upon which such
  exchanges shall be effected (including, without limitation, the initial
  exchange price or rate, adjustments to the exchange price or rate, the
  exchange period and any other provision relative to such obligation;
 
    (15) whether, and the terms relating to when, the Company may satisfy
  certain of its obligations with respect to such Securities with regard to
  payment upon maturity, or any redemption or required repurchase, or in
  connection with any exchange provisions by delivery to the Holders thereof
  securities (whether or not issued by, or the obligation of, the Company) or
  a combination of cash, other securities and/or property; and
 
    (16) 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, and Eight (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.
 
                                      10
<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 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 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
 
                                      11
<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 have 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, 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.
 
  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
 
                                      12
<PAGE>
 
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 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 Conversion Agent and Exchange 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") an office or agency where Securities of
each series that is convertible may be presented for conversion ("Conversion
Agent") and an office or agency where Securities of each series that is
exchangeable may be presented for exchange ("Exchange 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, one or more
additional conversion agents and one or more additional exchange agents with
respect to any series. The term "Paying Agent" includes any additional paying
agent, the term "Conversion Agent" includes any additional conversion agent
and the term "Exchange Agent" includes any additional exchange 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, Conversion Agent or Exchange Agent, the
Trustee shall act as such.
 
  The Company initially appoints the Trustee as Registrar and Paying Agent for
each series, the Conversion Agent for any series that is convertible and the
Exchange Agent for any series that is exchangeable.
 
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
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 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
 
                                      13
<PAGE>
 
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
 
                                      14
<PAGE>
 
  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.
 
                                      15
<PAGE>
 
  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, Conversion Agent and Exchange
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
 
                                      16
<PAGE>
 
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 (16) 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 11.04 and
11.05 and need not be accompanied by an Opinion of Counsel.
 
                                      17
<PAGE>
 
  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.
 
                                 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) 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
 
                                      18
<PAGE>
 
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 or the current
  exchange price or rate;
 
    (4) the name and address of the Paying Agent and, if applicable, the
  Conversion Agent or Exchange Agent;
 
    (5) if applicable, that the right of the Holder to convert or exchange
  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 or exchange
  Securities called for redemption must satisfy the requirements for
  conversion or exchange 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
 
                                      19
<PAGE>
 
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 or Exchange Arrangement on Call for Redemption.
 
  In connection with any redemption of Securities, the Company may arrange for
the purchase and conversion or exchange 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
or exchange 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 surrendered by such purchasers for conversion or
exchange, 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 or
exchanged 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 or exchange 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
 
                                      20
<PAGE>
 
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 11.05.
 
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 (premium, if any) 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
 
                                      21
<PAGE>
 
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 entity unless
(1) the successor entity, which shall be an entity 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 principal, premium or any
  other amount (other than interest) 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;
 
                                      22
<PAGE>
 
    (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 60
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.
 
                                      23
<PAGE>
 
  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.
 
                                      24
<PAGE>
 
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:
 
                                      25
<PAGE>
 
    (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.
 
                                      26
<PAGE>
 
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;
 
                                      27
<PAGE>
 
    (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
 
                                      28
<PAGE>
 
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 and 8.03 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;
 
                                      29
<PAGE>
 
    (2) to comply with Section 5.01;
 
    (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(16), 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
 
                                      30
<PAGE>
 
    (8) make any change that materially adversely affects the right to
  convert or exchange any Security or that increases the conversion or
  exchange price or reduces the conversion or exchange 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 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;
 
                                      31
<PAGE>
 
    (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):
 
                                      32
<PAGE>
 
    (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
 
                                      33
<PAGE>
 
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
 
                                      34
<PAGE>
 
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.
 
                                      35
<PAGE>
 
                                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 shall be sufficiently given if in writing and
delivered in person or mailed by first-class mail addressed as follows:
 
    If to the Company:
      Tele-Communications, Inc.
      Terrace Tower II
      5619 DTC Parkway
      Englewood, Colorado 80111
              Attention: 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 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.
 
                                      36
<PAGE>
 
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 4.03) 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 11.06. 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 11.07. 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 11.08. 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 11.09. Governing Law.
 
  The internal laws of the State of New York shall govern this Indenture and
the Securities.
 
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 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.
 
                                      37
<PAGE>
 
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.
 
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.
 
                                      38
<PAGE>
 
                                   Signatures
 
Dated:
 
                                          Tele-Communications, Inc.
 
                                          By __________________________________
 
                                                                         (Seal)
 
Dated:
 
                                                       , Trustee
 
                                          By __________________________________
 
                                                                         (Seal)
 
                                       39

<PAGE>
 
                                                                     EXHIBIT 4.3
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                           TELE-COMMUNICATIONS, INC.
 
                                      AND
 
                                             , TRUSTEE
 
                               ----------------
                                   INDENTURE
                               DATED AS OF
 
                               ----------------
 
                          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; 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).................................................  4.02; 4.03; 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......................................................    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, Conversion Agent and Exchange 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>
 
                                       4
<PAGE>
 
<TABLE>
<CAPTION>
 Section                              Heading                                Page
 <C>     <S>                                                                 <C>
                                    ARTICLE TEN
                                   Subordination

 10.01.  Securities Subordinated to Senior Debt...........................    31
                Company Not to Make Payments with Respect to Securities in
 10.02.   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
          Trustee Entitled to Assume Payments Not Prohibited in Absence of
 10.06.  Notice...........................................................    34
           Application by Trustee of Monies or U.S. Government Obligations
 10.07.  Deposited with It................................................    34
 10.08.  Subordination Rights Not Impaired by Acts or Omissions of Company
          or Holders of Senior Debt.......................................    35
           Securityholders Authorize Trustee to Effective Subordination of
 10.09.  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
                                   Miscellaneous

 11.01.  Trust Indenture Act Controls.....................................    42
 11.02.  Notices..........................................................    43
 11.03.  Communication by Holders with Other Holders......................    43
 11.04.  Certificate and Opinion as to Conditions Precedent...............    43
 11.05.  Statements Required in Certificate or Opinion....................    43
 11.06.  When Treasury Securities Disregarded.............................    44
 11.07.  Rules by Trustee and Agents......................................    44
 11.08.  Legal Holidays...................................................    44
 11.09.  Governing Law....................................................    44
 11.10.  No Adverse Interpretation of Other Agreements....................    44
 11.11.  No Recourse Against Others.......................................    44
 11.12.  Successors.......................................................    44
 11.13.  Duplicate Originals..............................................    45
 11.14.  Table of Contents, Headings, Etc.................................    45
 Signatures................................................................   46
</TABLE>
 
                                       5
<PAGE>
 
  INDENTURE dated as of      ,   , between TELE-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, co-Registrar, Paying Agent, Conversion Agent or
Exchange 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 Tele-Communications, Inc., a Delaware corporation, until a
successor replaces it pursuant to the applicable provisions of this Indenture
and thereafter means the successor.
 
  Company Stock means the Tele-Communications, Inc. Series A TCI Group Common
Stock, $1.00 par value, of the Company in such series 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.
 
  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, any Vice Chairman, 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.
 
                                       6
<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.
 
  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.
 
  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 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.
 
                                       7
<PAGE>
 
Section 1.02. Other Definitions.
 
<TABLE>
<CAPTION>
             TERM                                            DEFINED IN SECTION
      <S>                                                    <C>
      Bankruptcy Law........................................        6.01
      Code..................................................        9.01
      Conversion Agent......................................        2.05
      Custodian.............................................        6.01
      Debt..................................................       10.01
      Exchange Agent........................................        2.05
      Event of Default......................................        6.01
      Legal Holiday.........................................       11.08
      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 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
 
                                       8
<PAGE>
 
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 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;
 
                                       9
<PAGE>
 
    (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 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
  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 or exchangeable;
 
    (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 Company 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 relative to such obligation);
 
    (14) the obligation, if any, of the Company to permit the exchange of
  Securities of such series into other securities (whether or not issued by,
  or the obligation of, the Company) or a combination of cash, other
  securities and/or property, and the terms and conditions, upon which such
  exchanges shall be effected (including, without limitation, the initial
  exchange price or rate, adjustments to the exchange price or rate, the
  exchange period and any other provision relative to such obligation;
 
    (15) whether, and the terms relating to when, the Company may satisfy
  certain of its obligations with respect to such Securities with regard to
  payment upon maturity, or any redemption or required repurchase, or in
  connection with any exchange provisions by delivery to the Holders thereof
  securities (whether or not issued by, or the obligation of, the Company) or
  a combination of cash, other securities and/or property; and
 
    (16) 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 and Eight (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.
 
                                      10
<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 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 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
 
                                      11
<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 have 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, 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
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 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 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
 
                                      12
<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, 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 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, Conversion Agent and Exchange 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"), an office or agency where Securities
of each series that is convertible may be presented for conversion
("Conversion Agent") and an office or agency where Securities of each series
that is exchangeable may be presented for exchange ("Exchange 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,
one or more conversion agents and one or more additional exchange agents with
respect to any series. The term "Paying Agent" includes any additional paying
agent, the term "Conversion Agent" includes any additional conversion agent
and the term "Exchange Agent" includes any additional exchange 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, Conversion Agent or Exchange Agent, the
Trustee shall act as such.
 
  The Company initially appoints the Trustee Registrar and Paying Agent for
each series, the Conversion Agent for any series that is convertible and the
Exchange Agent for any series that is exchangeable.
 
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
 
                                      13
<PAGE>
 
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
 
                                      14
<PAGE>
 
  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.
 
  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
 
                                      15
<PAGE>
 
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 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, Conversion Agent and
Exchange 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.
 
                                      16
<PAGE>
 
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 (16) 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 11.04 and
11.05 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
 
                                      17
<PAGE>
 
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.
 
                                 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
 
                                      18
<PAGE>
 
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 or the current
  exchange price or rate;
 
    (4) the name and address of the Paying Agent and, if applicable, the
  Conversion Agent or Exchange Agent;
 
    (5) if applicable, that the right of the Holder to convert or exchange
  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 or exchange
  Securities called for redemption must satisfy the requirements for
  conversion or exchange 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.
 
                                      19
<PAGE>
 
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 or Exchange Arrangement on Call for Redemption.
 
  In connection with any redemption of Securities, the Company may arrange for
the purchase and conversion or exchange 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
or exchange 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 surrendered by such purchasers for conversion or
exchange, 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 or
exchanged 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 or exchange 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
 
                                      20
<PAGE>
 
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
11.05.
 
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 entity unless
(1) the successor entity, which shall be an entity 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 principal, premium or any
  other amount (other than interest) 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,
 
                                      21
<PAGE>
 
      (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 60
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
 
                                      22
<PAGE>
 
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
 
                                      23
<PAGE>
 
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
 
                                      24
<PAGE>
 
  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
 
                                      25
<PAGE>
 
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.
 
                                      26
<PAGE>
 
  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
 
                                      27
<PAGE>
 
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 and 8.03 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 Section 5.01;
 
    (3) to establish the form or terms of Securities of any series as
  permitted by Sections 2.01 and 2.02;
 
                                      28
<PAGE>
 
    (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(16), 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 or exchange any Security or that increases the conversion or
  exchange price or reduces the conversion or exchange rate of any Security.
 
                                      29
<PAGE>
 
  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.
 
                                      30
<PAGE>
 
  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;
 
                                      31
<PAGE>
 
    (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
 
                                      32
<PAGE>
 
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
 
                                      33
<PAGE>
 
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.
 
                                      34
<PAGE>
 
                                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(e), such imposed duties shall control.
 
Section 11.02. 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:
      Tele-Communications, Inc.
      Terrace Tower II
      5619 DTC Parkway
      Englewood, Colorado 80111
              Attention: 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 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.
 
                                      35
<PAGE>
 
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 4.03) 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 11.06. 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 11.07. 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 11.08. 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 11.09. Governing Law.
 
  The internal laws of the State of New York shall govern this indenture and
the Securities.
 
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 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 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.
 
                                      36
<PAGE>
 
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.
 
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.
 
                                      37
<PAGE>
 
                                   Signatures
 
Dated:
 
                                          Tele-Communications, Inc.
 
                                          By __________________________________
 
                                                                         (Seal)
 
Dated:
 
                                                         , Trustee
 
                                          By __________________________________
 
                                                                         (Seal)
 
                                       38

<PAGE>
 
                                                                     EXHIBIT 4.4
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                               DEPOSIT AGREEMENT
 
                                     AMONG
 
                           TELE-COMMUNICATIONS, INC.
 
                                      AND
 
 
 
                                      AND
 
                        THE HOLDERS FROM TIME TO TIME OF
                    THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
 
                                DATED AS OF    ,
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
 
                               TABLE OF CONTENTS
 
                               ----------------
 
<TABLE>
<CAPTION>
 Section                              Heading                              Page
 <C>     <S>                                                               <C>
                                     ARTICLE I

 DEFINITIONS..............................................................   4

                                    ARTICLE II

 FORM OF RECEIPTS, DEPOSIT OF PREFERRED STOCK, EXECUTION AND DELIVERY,
 TRANSFER AND SURRENDER OF RECEIPTS.......................................   5
  2.1.   Form and Transferability of Receipts............................    5
           Deposit of Preferred Stock, Execution and Delivery of Receipts
  2.2.   in Respect Thereof..............................................    6
  2.3.   Redemption of Preferred Stock...................................    7
  2.4.   Transfer of Receipts............................................    8
  2.5.   Combination and Split-ups of Receipts...........................    8
  2.6.   Surrender of Receipts and Withdrawal of Preferred Stock.........    8
  2.7.   Limitations on Execution and Delivery, Transfer, Split-up,
         Combination, Surrender and Exchange of Receipts.................    9
  2.8.   Lost Receipts, etc..............................................    9
  2.9.   Cancellation and Destruction of Surrendered Receipts............    9
  2.10.  Conversion of Preferred Stock into Series A Stock...............    9

                                    ARTICLE III

 CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS AND THE COMPANY...............  11
  3.1.   Filing Proofs, Certificates and Other Information...............   11
  3.2.   Payment of Taxes or Other Governmental Charges..................   11
  3.3.   Representations and Warranties as to Preferred Stock............   11

                                    ARTICLE IV

 THE PREFERRED STOCK, NOTICES.............................................  12
  4.1.   Cash Distributions..............................................   12
  4.2.   Distributions Other Than Cash...................................   12
  4.3.   Subscription Rights, Preferences or Privileges..................   12
                Notice of Dividends; Fixing of Record Date for Holders of
  4.4.   Receipts........................................................   13
  4.5.   Voting Rights...................................................   13
                 Changes Affecting Preferred Stock and Reclassifications,
  4.6.   Recapitalizations, etc..........................................   13
  4.7.   Inspection of Reports...........................................   14
  4.8.   List of Receipt Holders.........................................   14

                                     ARTICLE V

 THE DEPOSITARY AND THE COMPANY...........................................  14
                  Maintenance of Offices, Agencies, Transfer Books by the
  5.1.   Depositary, the Registrar.......................................   14
  5.2.   Prevention of or Delay in Performance by the Depositary, the
         Depositary's Agents or the Company..............................   14
          Obligations of the Depositary, the Depositary's Agents, and the
  5.3.   Company.........................................................   15
                Resignation and Removal of the Depositary; Appointment of
  5.4.   Successor Depositary............................................   16
  5.5.   Corporate Notices and Reports...................................   16
  5.6.   Deposit of Preferred Stock by the Company.......................   16
  5.7.   Indemnification by the Company..................................   16
  5.8.   Fees, Charges and Expenses......................................   17
</TABLE>
 
                                       2
<PAGE>
 
<TABLE>
<CAPTION>
 Section                              Heading                               Page
 <C>     <S>                                                                <C>
                                     ARTICLE VI

 AMENDMENT AND TERMINATION.................................................  17
  6.1.   Amendment........................................................   17
  6.2.   Termination......................................................   17

                                    ARTICLE VII

 MISCELLANEOUS.............................................................  18
  7.1.   Counterparts.....................................................   18
  7.2.   Exclusive Benefits of Parties....................................   18
  7.3.   Invalidity of Provisions.........................................   18
  7.4.   Notices..........................................................   18
  7.5.   Depositary's Agents..............................................   19
  7.6.   Holders of Receipts Are Parties..................................   19
  7.7.   Governing Law....................................................   19
  7.8.   Headings.........................................................   19
</TABLE>
 
                                       3
<PAGE>
 
                               DEPOSIT AGREEMENT
 
  DEPOSIT AGREEMENT dated as of    , 199 , among TELE-COMMUNICATIONS, INC., a
Delaware corporation, (the "Company"),    , as Depositary (including any
successor, the "Depositary"), and all holders from time to time of Depositary
Receipts executed and delivered hereunder.
 
  WHEREAS, it is desired to provide, as hereinafter set forth in this Deposit
Agreement, for the deposit of up to    shares of [title of preferred stock]
(the "Preferred Stock"), of the Company with the Depositary, as agent for the
beneficial owners of the Preferred Stock, for the purposes set forth in this
Deposit Agreement and for the execution and delivery hereunder of the Receipts
(as defined below) evidencing Depositary Shares (as defined below) in respect
of the Preferred Stock so deposited; and
 
  WHEREAS, the Receipts are to be substantially in the form of the Depositary
Receipt annexed as Exhibit A, with appropriate insertions, modifications and
omissions, as hereinafter provided in this Deposit Agreement;
 
  NOW, THEREFORE, in consideration of the premises contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
 
                                   ARTICLE I
 
                                  Definitions
 
  The following definitions shall apply to the respective terms (in the
singular and plural forms of such terms) used in this Agreement and the
Depositary Receipts:
 
  "Business Day" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in The City of New York, New York or Hartford,
Connecticut are authorized or obligated by law or executive order to close.
 
  "Certificate of Designations" shall mean the Certificate of Designations,
Preferences, Rights and Limitations of the [title of preferred stock] par
value $0.01 per share, as filed with the Secretary of State of the State of
Delaware, establishing and setting forth the designations, rights, powers,
qualifications, limitations and restrictions of the Preferred Stock.
 
  "Certificate of Incorporation" shall mean the Restated Certificate of
Incorporation, as amended from time to time, of the Company.
 
  "Company" shall mean Tele-Communications, Inc., a Delaware corporation, and
its successors.
 
  "Deposit Agreement" shall mean this agreement, as the same may be amended,
modified or supplemented from time to time.
 
  "Depositary" shall mean        , as Depositary hereunder, and any successor
as Depositary hereunder.
 
  "Depositary's Office" shall mean the office of the Depositary in the city of
     , Connecticut, at which at any particular time its business in respect of
matters governed by this Deposit Agreement shall be administered, which at the
date of this Deposit Agreement is located at         ,         ,        .
 
  "Depositary Share" shall mean an interest in       of a share of the
Preferred Stock deposited with the Depositary hereunder, as evidenced by the
Receipts executed and delivered hereunder, and the same
 
                                       4
<PAGE>
 
proportional interest in any and all other property received by the Depositary
in respect of such share of Preferred Stock and held under this Deposit
Agreement. Subject to the terms of this Deposit Agreement, each owner of a
Depositary Share is entitled, proportionately, to all the rights, preferences
and privileges of the Preferred Stock represented by such Depositary Share,
including the dividend, voting and liquidation rights contained in the
Certificate of Designations, and to the benefits of all obligations of the
Company under the Certificate of Designations.
 
  "Depositary's Agent" shall mean an agent appointed by the Depositary as
provided, and for the purposes specified, in Section 7.5.
 
  "Preferred Stock" shall mean [title of preferred stock] par value $0.01 per
share, of the Company.
 
  "Receipt" or "Depositary Receipt" shall mean a Depositary Receipt executed
and delivered hereunder to evidence one or more Depositary Shares, whether in
definitive or temporary form.
 
  "Record holder" as applied to a Receipt shall mean the person in whose name
a Receipt is registered on the books maintained by the Depositary for such
purpose.
 
  "Registrar" shall mean any bank or trust company appointed to register
Receipts as herein provided.
 
  "Securities Act" shall mean the Securities Act of 1933, as amended.
 
  "Series A Stock" shall mean the Tele-Communications, Inc. Series A TCI Group
Common Stock, par value $1.00 per share, of the Company.
 
                                  ARTICLE II
 
                 Form of Receipts, Deposit of Preferred Stock,
          Execution and Delivery, Transfer and Surrender of Receipts
 
  Section 2.1. Form and Transferability of Receipts. Definitive Receipts shall
be engraved or printed or lithographed with steel-engraved borders and shall
be substantially in the form set forth in Exhibit A annexed to this Deposit
Agreement, with appropriate insertions, modifications and omissions, as
hereinafter provided. Pending preparation of definitive Receipts, the
Depositary, upon the written order of the Company or any holder of Preferred
Stock, as the case may be, delivered for deposit in compliance with Section
2.2, shall execute and deliver temporary Receipts which are printed,
lithographed, typewritten, mimeographed or otherwise substantially of the
tenor of the definitive Receipts in lieu of which they are executed and
delivered and with such appropriate insertions, omissions, substitutions and
other variations as the persons executing such Receipts may determine, as
evidenced by their execution of such Receipts. If temporary Receipts are
executed and delivered, the Company and the Depositary will cause definitive
Receipts to be prepared without unreasonable delay. After the preparation of
definitive Receipts, the temporary Receipts shall be exchangeable for
definitive Receipts upon surrender of the temporary Receipts at an office
described in the second to last paragraph of Section 2.2, without charge to
the holder. Upon surrender for cancellation of any one or more temporary
Receipts, the Depositary shall execute and deliver in exchange therefor
definitive Receipts representing the same number of Depositary Shares as
represented by the surrendered temporary Receipt or Receipts. Such exchange
shall be made at the Company's expense and without any charge therefor. Until
so exchanged, the temporary Receipts shall in all respects be entitled to the
same benefits under this Agreement, and with respect to the Preferred Stock
deposited hereunder, as definitive Receipts.
 
  Receipts shall be executed by the Depositary by the manual signature of a
duly authorized signatory of the Depositary; provided, however, that such
signature may be a facsimile if a Registrar (other than the Depositary)
 
                                       5
<PAGE>
 
shall have countersigned the Receipts by the manual signature of a duly
authorized signatory of the Registrar. No Receipt shall be entitled to any
benefits under this Deposit Agreement or be valid or obligatory for any
purpose unless it shall have been executed as provided in the preceding
sentence. The Depositary shall record on its books each Receipt executed as
provided above and delivered as hereinafter provided.
 
  Except as the Depositary may otherwise determine, Receipts shall be in
denominations of any number of whole Depositary Shares. All receipts shall be
dated the date of their execution.
 
  Receipts may be endorsed with or have incorporated in the text thereof such
legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or regulation or with the rules and regulations of any
securities exchange upon which the Preferred Stock or the Depositary Shares
may be listed to conform with any usage with respect thereto, or to indicate
any special limitations or restrictions to which any particular receipts are
subject by reason of the date of issuance of the Preferred Stock or otherwise.
 
  Ownership of any Receipt (and of the Depositary Shares evidenced by such
Receipt) that is properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement, or other instrument satisfactory to the
Depositary, shall be transferable by delivery; provided, however, that until a
Receipt shall be transferred on the books of the Depositary as provided in
Section 2.4, the Depositary and the Company may, notwithstanding any notice to
the contrary, treat the record holder thereof at such time as the absolute
owner thereof for the purpose of determining the person entitled to
distribution of dividends or other distributions or to any notice provided for
in this Deposit Agreement and for all other purposes.
 
  Section 2.2. Deposit of Preferred Stock, Execution and Delivery of Receipts
in Respect Thereof. Subject to the terms and conditions of this Deposit
Agreement, the Company or any holder of Preferred Stock may deposit shares of
Preferred Stock under this Deposit Agreement by delivery to the Depositary of
a certificate or certificates for the shares of Preferred Stock to be
deposited, properly endorsed or accompanied by a properly executed instrument
of transfer or endorsement in form satisfactory to the Depositary, together
with (i) all such certifications as may be required by the Depositary in
accordance with the provisions of this Deposit Agreement and (ii) a written
order directing the Depositary to execute and deliver to or upon the written
order of the person or persons stated in such order a Receipt or Receipts for
the number of Depositary Shares representing such deposited Preferred Stock.
 
  If required by the Depositary, Preferred Stock presented for deposit at any
time, whether or not the register of holders of Receipts is closed, shall also
be accompanied by an agreement or assignment, or other instrument satisfactory
to the Depositary, that will provide for the prompt transfer to the Depositary
or its nominee of any dividend or right to subscribe for additional Preferred
Stock or to receive other property that any person in whose name the Preferred
Stock is or has been registered may thereafter receive upon or in respect of
such deposited Preferred Stock, or in lieu thereof such agreement of indemnity
or other agreement as shall be satisfactory to the Depositary.
 
  Upon receipt by the Depositary of a certificate or certificates for the
shares of Preferred Stock to be deposited hereunder, together with the other
documents specified above, the Depositary shall, as soon as transfer and
registration can be accomplished, present such certificates to the registrar
and transfer agent of the Preferred Stock for transfer and registration in the
name of the Depositary or its nominee of the shares of Preferred Stock being
deposited. Deposited Preferred Stock shall be held by the Depositary in an
account to be established by the Depositary at the Depositary's Office.
 
  Upon receipt by the Depositary of a certificate or certificates for
Preferred Stock to be deposited hereunder, together with the other documents
specified above, the Depositary, subject to the terms and conditions of this
Deposit Agreement, shall execute and deliver to or upon the order of the
person or persons named in the written order delivered to the Depositary
referred to in the first paragraph of this Section 2.2 a Receipt or Receipts
for the number of whole Depositary Shares representing the Preferred Stock so
deposited and registered in such
 
                                       6
<PAGE>
 
name or names as may be requested by such person or persons. The Depositary
shall execute and deliver such Receipt or Receipts at the Depositary's Office,
except that, at the request, risk and expense of any person requesting such
delivery, such delivery may be made at such other place as may be designated
by such person. In each case, delivery will be made only upon payment by such
person to the Depositary of all taxes and other governmental charges and any
fees payable in connection with such deposit and the transfer of the deposited
Preferred Stock.
 
  The Company shall deliver to the Depositary from time to time such
quantities of Receipts as the Depositary may request to enable the Depositary
to perform its obligations under this Deposit Agreement.
 
  Section 2.3. Redemption of Preferred Stock. Whenever the Company shall elect
to redeem shares of Preferred Stock in accordance with the Certificate of
Designations it shall (unless otherwise agreed in writing with the Depositary)
give the Depositary in its capacity as Depositary notice of the date of such
proposed redemption of the Preferred Stock, which notice shall (i) be given
not less than    Business Days prior to the date the Depositary is to mail
notice of the redemption to the record holders of Receipts, in the case of a
redemption of all outstanding Depositary Shares, and not less than    calendar
days prior to the date the Depositary is to mail notice of the redemption to
the record holders of Receipts evidencing the Depositary Shares to be
redeemed, in the case of a partial redemption of outstanding Depositary
Shares, and (ii) be accompanied by a certificate from the Company stating that
such redemption of the Preferred Stock is in accordance with the provisions of
the Certificate of Designations. Such notice shall be in addition to the
notice required for redemption pursuant to the Certificate of Designations. On
the date of any such redemption of Preferred Stock, provided that the Company
shall then have deposited with the Depositary the redemption price of the
Preferred Stock to be redeemed, plus an amount sufficient to pay any accrued
and unpaid dividends thereon, the Depositary shall redeem the number of
Depositary Shares representing such redeemed Preferred Stock. Subject to the
penultimate sentence of this Paragraph, the Depositary, at the expense of the
Company, shall mail, first class postage prepaid, notice of the redemption of
Preferred Stock and the proposed simultaneous redemption of the Depositary
Shares representing the Preferred Stock held by the Depositary to be redeemed,
not less than    and not more than    days prior to the date fixed for
redemption of such Preferred Stock and Depositary Shares (the "Redemption
Date"), to the record holders of the Receipts evidencing the Depositary Shares
to be so redeemed, at the addresses of such holders as they appear on the
records of the Depositary; but neither failure to mail any such notice to one
or more such holders nor any defect in any notice to one or more such holders
shall affect the sufficiency of the proceedings for redemption as to other
holders. Each such notice shall state: (i) the Redemption Date; (ii) the
number of Depositary Shares to be redeemed and, if less than all the
Depositary Shares held by any such holder are to be redeemed, the number of
such Depositary Shares held by such holder to be so redeemed; (iii) the
redemption price, (iv) the place or places where Receipts evidencing
Depositary Shares are to be surrendered for payment of the redemption price
and (v) that dividends in respect of the shares of Preferred Stock represented
by the Depositary Shares to be redeemed will cease to accumulate from and
after such Redemption Date. Any such notices shall be mailed in the same
manner as notices of redemption of the Preferred Stock are required to be
mailed pursuant to section    of the Certificate of Designations and published
in the same manner as notices of redemption of the Preferred Stock are
required to be published pursuant to said section, if so required. In case
fewer than all the outstanding Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed shall be selected by lot or pro rata (as
nearly as may be) or by any other equitable method determined by the
Depositary to be consistent with the method determined by the Board of
Directors of the Company with respect to the Preferred Stock.
 
  Notice having been mailed and published, at the expense of the Company, by
the Depositary as aforesaid, from and after the Redemption Date (unless the
Company shall have failed to redeem the shares of Preferred Stock to be
redeemed by it, as set forth in the Company's notice provided for in the
preceding paragraph), the Depositary Shares called for redemption shall be
deemed no longer to be outstanding and all rights of the holders of Receipts
evidencing such Depositary Shares (except the right to receive the redemption
price) shall, to the extent of such Depositary Shares, cease and terminate.
Upon surrender in accordance with said notice of the Receipts evidencing such
Depositary Shares (properly endorsed or assigned for transfer, if the
Depositary shall
 
                                       7
<PAGE>
 
so require), such Depositary Shares shall be redeemed at a redemption price
per Depositary Share equal to one-     of the redemption price paid for a
share of Preferred Stock pursuant to the Certificate of Designations. The
foregoing shall be subject further to the terms and conditions of the
Certificate of Designations.
 
  If fewer than all of the Depositary Shares evidenced by a Receipt are called
for redemption, the Depositary will deliver to the holder of such Receipt upon
its surrender to the Depositary, together with the redemption price for the
Depositary Shares called for redemption, a new Receipt evidencing the
Depositary Shares evidenced by such prior Receipt and not called for
redemption.
 
  The Depositary shall not be required (a) to execute and deliver, transfer or
exchange any receipts for a period beginning at the opening of business 15
days next preceding any selection of Depositary Shares and Preferred Stock to
be redeemed and ending at the close of business on the day of the mailing of
notice of redemption of Depositary Shares or (b) to transfer or exchange for
another Receipt any Receipt evidencing Depositary Shares called or being
called for redemption in whole or in part, except as provided in the third
paragraph of this Section 2.3.
 
  Section 2.4. Transfer of Receipts. Subject to the terms and conditions of
this Deposit Agreement, the Depositary shall make transfers on its books from
time to time of Receipts upon any surrender thereof at the Depositary's Office
or such other office as the Depositary may designate for such purpose, by the
holder in person or by a duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer or endorsement, or
other instrument satisfactory to the Depositary, together with evidence of the
payment of any transfer taxes as may be required by law. Upon such surrender,
the Depositary shall execute a new Receipt or Receipts and deliver the same to
or upon the order of the person or persons entitled thereto evidencing the
same aggregate number of Depositary Shares evidenced by the Receipt or
Receipts surrendered.
 
  Section 2.5. Combination and Split-ups of Receipts. Upon surrender of a
Receipt or Receipts at the Depositary's Office or such other office as the
Depositary may designate for the purposes of effecting a split-up or
combination of Receipts, subject to the terms and conditions of this Deposit
Agreement, the Depositary shall execute and deliver a new Receipt or Receipts
in the authorized denominations requested evidencing the same aggregate number
of Depositary Shares evidenced by the Receipt or Receipts surrendered;
provided, however, that the Depositary shall not execute and deliver any
Receipt evidencing a fractional Depositary Share.
 
  [Section 2.6. Surrender of Receipts and Withdrawal of Preferred Stock. Any
holder of a Receipt or Receipts may withdraw any or all of the Preferred Stock
(but only in whole shares of Preferred Stock) represented by the Depositary
Shares evidenced by such Receipts and all money and other property, if any,
represented by such Depositary Shares by surrendering such Receipt or
Receipts, properly endorsed or accompanied by a properly executed instrument
of transfer or endorsement, or other instrument satisfactory to the
Depositary, at the Depositary's Office or such other office as the Depositary
may designate for such withdrawals. After such surrender, without unreasonable
delay, the Depositary shall deliver to such holder, or to the person or
persons designated by such holder as hereinafter provided, the whole number of
shares of Preferred Stock and other property, if any, represented by the
Depositary Shares evidenced by the Receipt or Receipts so surrendered for
withdrawal. If the Receipt or Receipts delivered by the holder to the
Depositary in connection with such withdrawal shall evidence a number of
Depositary Shares in excess of the number of whole Depositary Shares
representing the whole number of shares of Preferred Stock to be withdrawn,
the Depositary shall at the same time, in addition to such whole number of
shares of Preferred Stock and such money and other property, if any, to be
withdrawn, deliver to such holder, or (subject to Section 2.4) upon his order,
a new Receipt or Receipts evidencing such excess number of whole Depositary
Shares. Delivery of the Preferred Stock and such money and other property
being withdrawn may be made by the delivery of such certificates, documents of
title, and other instruments as the Depositary may deem appropriate, which, if
required by the Depositary, shall be properly endorsed or accompanied by
proper instruments of transfer.
 
 
                                       8
<PAGE>
 
  If the Preferred Stock and the money and other property being withdrawn are
to be delivered to a person or persons other than the record holder of the
Receipt or Receipts being surrendered for withdrawal of Preferred Stock, such
holder shall execute and deliver to the Depositary a written order so
directing the Depositary and the Depositary may require that the Receipt or
Receipts surrendered by such holder for withdrawal of such shares of Preferred
Stock be properly endorsed in blank or accompanied by a properly executed
instrument of transfer or endorsement in blank.
 
  The Depositary shall deliver the Preferred Stock and the money and other
property, if any, represented by the Depositary Shares evidenced by Receipts
surrendered for withdrawal at the Depositary's Office, except that, at the
request, risk and expense of the holder surrendering such Receipt or Receipts
and for the account of the holder thereof, such delivery may be made at such
other place as may be designated by such holder.]
 
  Section 2.7. Limitations on Execution and Delivery, Transfer, Split-up,
Combination, Surrender and Exchange of Receipts. As a condition precedent to
the execution and delivery, transfer, split-up, combination, surrender or
exchange of any Receipt, the Depositary, the Depositary's Agent or the Company
may require any or all of the following: (i) payment to it of a sum sufficient
for the payment (or, in the event that the Depositary or the Company shall
have made such payment, the reimbursement to it) of any tax or earlier
governmental charge with respect thereto (including any such tax or charge
with respect to the Preferred Stock being deposited or withdrawn or with
respect to [the Series A Stock or] other securities or property of the Company
being issued upon [conversion or] redemption); (ii) the production of proof
satisfactory to it as to the identity and genuineness of any signature; and
(iii) compliance with such regulations, if any, as the Depositary or the
Company may establish not inconsistent with the provisions of the Deposit
Agreement.
 
  The deposit of Preferred Stock may be refused, the delivery of Receipts
against Preferred Stock may be suspended, the transfer of Receipts may be
refused, and the transfer, split-up, combination, surrender or exchange of
outstanding Receipts may be suspended (i) during any period when the register
of holders of Receipts is closed, (ii) if any such action is deemed necessary
or advisable by the Depositary, any of the Depositary's Agents or the Company
at any time or from time to time because of any requirement of law or of any
government or governmental body or commission, or under any provision of this
Deposit Agreement, or (iii) except for the transfer of Receipts, with the
approval of the Company, for any other reason.
 
  Section 2.8. Lost Receipts, etc. In case any Receipt shall be mutilated or
destroyed or lost or stolen, the Depositary in its discretion may execute and
deliver a Receipt of like form and tenor in exchange and substitution for such
mutilated Receipt or in lieu of and in substitution for such destroyed, lost
or stolen Receipt; provided, however, that the holder thereof provides the
Depositary with (i) evidence satisfactory to the Depositary of such
destruction, loss or theft of such Receipt, of the authenticity thereof and of
his ownership thereof, (ii) reasonable indemnification satisfactory to the
Depositary and (iii) payment of any expense (including fees, charges and
expenses of the Depositary) in connection with such execution and delivery.
 
  Section 2.9. Cancellation and Destruction of Surrendered Receipts. All
Receipts surrendered to the Depositary or any Depositary's Agent shall be
cancelled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy such Receipts so
cancelled.
 
  Section 2.10. Conversion of Preferred Stock into Series A Stock. Receipts
may be surrendered with written instructions to the Depositary to instruct the
Company to cause the conversion of any specified number of shares, or
fractions of shares, of Preferred Stock represented by whole Depositary Shares
evidenced by such Receipts into whole shares of Series A Stock and cash for
any fractional share of Series A Stock at the conversion price then in effect
for the Preferred Stock pursuant to the Certificate of Designations as such
conversion price may be adjusted by the Company from time to time as provided
in the Certificate of Designations. Subject to the terms and conditions of
this Deposit Agreement and the Certificate of Designations, a holder of a
Receipt or Receipts evidencing Depositary Shares representing whole or
fractional shares of Preferred Stock may surrender such Receipt or Receipts at
the Depositary's Office or at such office or to such Depositary's Agent, as
the Depositary may designate for such purpose, together with a notice of
conversion duly
 
                                       9
<PAGE>
 
completed and executed, thereby directing the Depositary to instruct the
Company to cause the conversion of the number of shares, or fractions of
shares, of underlying Preferred Stock specified in such notice of conversion
into shares of Series A Stock, and an assignment of such Receipt or Receipts
to the Company or in blank, duly completed and executed. To the extent that a
holder delivers to the Depositary for conversion a Receipt or Receipts which
in the aggregate are convertible into less than one whole share of Series A
Stock, the holder shall receive payment in cash in lieu of such fractional
share of Series A Stock otherwise issuable, if more than one Receipt shall be
delivered for conversion at one time by the same holder, the number of whole
shares of Series A Stock issuable upon conversion thereof shall be computed on
the basis of the aggregate number of Depositary Shares represented by the
Receipts so delivered.
 
  Upon receipt by the Depositary of a Receipt or Receipts, together with
notice of conversion, duly completed and executed, directing the Depositary to
instruct the Company to cause the conversion of a specified number of shares
of Preferred Stock, and an assignment of such Receipt or Receipts to the
Company or in blank, duly completed and executed, the Depositary shall
instruct the Company (i) to cause the conversion of the number of shares, or
fractions of shares, of Preferred Stock represented by the Depositary Shares
evidenced by the Receipts so surrendered for conversion as specified in the
written notice to the Depositary and (ii) to cause the delivery to the holders
of such Receipts of a certificate or certificates evidencing the number of
whole shares of Series A Stock and the amount of money, if any, to be
delivered to the holders of Receipts surrendered for conversion in lieu of
fractional shares of Series A Stock otherwise issuable. The Company shall as
promptly as practicable after receipt thereof cause the delivery of (i) a
certificate or certificates evidencing the number of whole shares of Series A
Stock into which the Preferred Stock represented by the Depositary Shares
evidenced by such Receipt or Receipts has been converted, and (ii) any money
or other property to which the holder is entitled by reason of such
conversion. Upon such conversion, the Depositary (i) shall deliver to the
holder a Receipt evidencing the number of Depositary Shares, if any, that
equals that excess of the number of Depositary Shares evidenced by the
surrendered Receipt over the number of Depositary Shares evidenced by such
Receipt that has been so converted, (ii) shall cancel the Depositary Shares
evidenced by Receipts surrendered for conversion and (iii) shall deliver to
the Company or its transfer agent for the Preferred Stock for cancellation the
shares of Preferred Stock represented by the Depositary Shares evidenced by
the Receipts so surrendered and so converted. Upon the delivery of the shares
of Preferred Stock to be cancelled due to such conversion by the Depositary to
the Company, the Company shall deliver to the Depositary a certificate or
certificates evidencing the number of shares, or fractions of shares, of
Preferred Stock, if any, that equals the excess of the number of shares of
Preferred Stock evidenced by the surrendered certificate over the number of
shares of Preferred Stock evidenced by that certificate that has been so
converted.
 
  If Preferred Stock shall be called by the Company for redemption, the
Depositary Shares representing such Stock may be converted into Series A Stock
as provided in this Deposit Agreement until, but not after, the close of
business on the Redemption Date unless the Company shall fail to deposit with
the Depositary the amounts required to redeem the Preferred Stock held by the
Depositary, in which case the Depositary Shares representing such Preferred
Stock may continue to be converted into Series A Stock until, but not after,
the close of business on the date on which the Company deposits with the
Depositary such amounts as are required by the Certificate of Designations to
make full payment of the amounts payable upon such redemption. Upon receipt by
the Depositary of a Receipt or Receipts, together with a properly completed
and executed notice of conversion, representing any Preferred Stock called for
redemption, the shares of Preferred Stock held by the Depositary represented
by such Depositary Shares for which conversion is requested shall be deemed to
have been received by the Company for conversion as of immediately prior to
the close of business on the date of such receipt by the Depositary.
 
  Upon the conversion of any share of Preferred Stock for which a request for
conversion has been made by the holder of Depositary Shares representing such
share, all dividends in respect of such Depositary Shares shall cease to
accrue, such Depositary Shares shall be deemed no longer outstanding, all
rights of the holder of the Receipt with respect to such Depositary Shares
(except the right to receive the Series A Stock, any cash payable with respect
to any fractional shares of Series A Stock as provided herein and any cash
payable on account of
 
                                      10
<PAGE>
 
accrued dividends as provided herein and any Receipts evidencing Depositary
Shares not so converted) shall terminate, and the Receipt evidencing such
Depositary Shares shall be cancelled in accordance with Section 2.9 hereof.
 
  No fractional shares of Series A Stock shall be issuable upon conversion of
Preferred Stock underlying the Depositary Shares. If any holder of Receipts
surrendered with instructions to the Depositary for conversion of the
underlying Preferred Stock would be entitled to a fractional share of Series A
Stock upon such conversion, the Company shall cause to be delivered to such
holder an amount in cash for such fractional share as provided in the
Certificate of Designations.]
 
                                  ARTICLE III
 
          Certain Obligations of Holders of Receipts and the Company
 
  Section 3.1. Filing Proofs, Certificates and Other Information. Any person
presenting Preferred Stock for deposit or any holder of a Receipt may be
required from time to time to file such proof of residence or other
information, to execute such certificates and to make such representations and
warranties as the Depositary or the Company may reasonably deem necessary or
proper. The Depositary or the Company, as the case may be, may withhold or
delay the delivery of any Receipt, the transfer, redemption, conversion, or
exchange of any Receipt, the withdrawal of the Preferred Stock or money or
other property, if any, represented by the Depositary Shares evidenced by any
Receipt or the distribution of any dividend or other distribution until such
proof or other information is filed, such certificates are executed or such
representations and warranties are made.
 
  Section 3.2. Payment of Taxes or Other Governmental Charges. If any tax or
other governmental charge shall become payable by or on behalf of the
Depositary with respect to any Receipt, the Depositary Shares evidenced by
such Receipt, the Preferred Stock (or fractional interest therein) represented
by such Depositary Shares or any transaction referred to in Section 4.6, such
tax (including transfer, issuance or acquisition taxes, if any) or
governmental charge shall be payable by the holder of such Receipt. Until such
payment is made, transfer, redemption, conversion, or exchange of any Receipt
or any withdrawal of the Preferred Stock or money or other property, if any,
represented by the Depositary Shares evidenced by such Receipt may be refused,
any dividend or other distribution with respect to such Receipt or the
Preferred Stock represented by the Depositary Shares evidenced by such receipt
may be withheld and any part or all of the Preferred Stock or other property
represented by the Depositary Shares evidenced by such Receipt may be sold for
the account of the holder thereof (after attempting by reasonable means to
notify such holder prior to such sale). Any dividend or other distribution so
withheld and the proceeds of any such sale may be applied to any payment of
such tax or other governmental charge, the holder of such Receipt remaining
liable for any deficiency. The Depositary shall act as the withholding agent
for any payments, distributions, and exchanges made with respect to the
Depositary Shares and Receipts, and the Preferred Stock[, Series A Stock] or
other securities or assets represented thereby (collectively, the
"Securities"). The Depositary shall be responsible with respect to the
Securities for the timely (i) collection and deposit of any required
withholding or backup withholding tax, and (ii) filing of any information
returns or other documents with federal (and other applicable) taxing
authorities. In the event the Depositary is required to pay any such amounts,
the Company shall reimburse the Depositary for payment thereof upon the
request of the Depositary and the Depositary shall, upon the Company's request
and as instructed by the Company, pursue its rights against such holder at the
Company's expense.
 
  Section 3.3. Representations and Warranties as to Preferred Stock. Each
person depositing Preferred Stock under this Deposit Agreement shall be deemed
thereby to represent and warrant that such Preferred Stock and each
certificate therefor are valid and that the person making such deposit is duly
authorized to do so. Such representations and warranties shall survive the
deposit of the Preferred Stock and the execution and delivery of Receipts.
 
 
                                      11
<PAGE>
 
                                  ARTICLE IV
 
                         The Preferred Stock, Notices
 
  Section 4.1. Cash Distributions. Whenever the Depositary shall receive any
cash dividend or other cash distribution on the Preferred Stock, the
Depositary shall, subject to Section 3.2, distribute to record holders of
Receipts on the record date fixed pursuant to Section 4.4 such portions of
such sum as are, as nearly as practicable, proportionate to the respective
numbers of Depositary Shares evidenced by the Receipts held by such holders;
provided, however, that in case the Company or the Depositary shall be
required to withhold from any cash dividend or other cash distribution in
respect of the Preferred Stock an amount on account of taxes or as otherwise
required by law, regulation or court order, the amount made available for
distribution or distributed in respect of Depositary Shares shall be reduced
accordingly. The Depositary shall distribute or make available for
distribution, as the case may be, only such amount, however, as can be
distributed without attributing to any owner of Depositary Shares a fraction
of one cent and any balance not so distributable shall be held by the
Depositary (without liability for interest thereon) and shall be added to and
be treated as part of the next sum received by the Depositary for distribution
to record holders of Receipts then outstanding.
 
  Section 4.2. Distributions Other Than Cash. Whenever the Depositary shall
receive any distribution other than cash on the Preferred Stock, the
Depositary shall, subject to Section 3.2, distribute to record holders of
Receipts on the record date fixed pursuant to Section 4.4 such portions of the
securities or property received by it as are, as nearly as practicable,
proportionate to the respective numbers of Depositary Shares evidenced by the
Receipts held by such holders, in any manner that the Depositary and the
Company may deem equitable and practicable for accomplishing such
distribution. If, in the opinion of the Company after consultation with the
Depositary, such distribution cannot be made proportionately among such record
holders, or if for any other reason (including any requirement that the
Company or the Depositary withhold an amount on account of taxes or as
otherwise required by law, regulation or court order) the Depositary deems,
after consultation with the Company, such distribution not to be feasible, the
Depositary may, with the approval of the Company and subject to applicable
provisions of law, adopt such method as it deems equitable and practicable for
the purpose of effecting such distribution, including the sale (at public or
private sale) of the securities or property thus received, or any part
thereof, at such place or places and upon such terms as it may deem proper.
The net proceeds of any such sale shall, subject to Section 3.2, be
distributed or made available for distribution, as the case may be, by the
Depositary to record holders of Receipts as provided by Section 4.1 in the
case of a distribution received in cash.
 
  Section 4.3. Subscription Rights, Preferences or Privileges. If the Company
shall at any time offer or cause to be offered to the persons in whose names
Preferred Stock is registered on the books of the Company any rights,
preferences or privileges to subscribe for or to purchase any securities or
any rights, preferences or privileges of any other nature, such rights,
preferences or privileges shall in each such instance be made available by the
Depositary to the record holders of Receipts if the Company so directs in such
manner as the Company shall instruct (including by the execution and delivery
to such record holders of warrants representing such rights, preferences or
privileges); provided, however, that (a) if at the time of issue or offer of
any such rights, preferences or privileges the Company determines that it is
not lawful or feasible to make such rights, preferences or privileges
available to some or all holders of Receipts (by the execution and delivery of
warrants or otherwise) or (b) if and to the extent instructed by holders of
Receipts who do not desire to exercise such rights, preferences or privileges,
the Depositary shall then, if so instructed by the Company, and if applicable
laws and the terms of such rights, preferences or privileges so permit, sell
such rights, preferences or privileges of such holders at public or private
sale, at such place or places and upon such terms as it may deem proper, the
net proceeds of any such sale shall, subject to Section 3.2, be distributed by
the Depositary to the record holders of Receipts entitled thereto in
accordance with the withholding and fractional amount provisions of Section
4.1.
 
  If registration under the Securities Act of the securities to which any
rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold such securities, the Company shall promptly
file a registration statement pursuant to the Securities Act with respect to
such securities and use its best efforts and
 
                                      12
<PAGE>
 
take all steps available to it to cause such registration statement to become
effective sufficiently in advance of the expiration of such rights,
preferences or privileges to enable such holders to exercise such rights,
preferences or privileges. In no event shall the Depositary make available to
the holders of Receipts any right, preference or privilege to subscribe for or
to purchase any securities unless and until notified by the Company in writing
that such registration statement has become effective or that the offering and
sale of such securities to such holders are exempt from registration under the
provisions of the Securities Act.
 
  If any other action under the law of any jurisdiction or any governmental or
administrative authorization, consent or permit is required in order for such
rights, preferences or privileges to be made available to holders of Receipts,
the Company agrees with the Depositary that the Company will use its best
efforts to take such action or obtain such authorization, consent or permit
sufficiently in advance of the expiration of such rights, preferences or
privileges to enable such holders to exercise such rights, preferences or
privileges.
 
  Section 4.4. Notice of Dividends; Fixing of Record Date for Holders of
Receipts. Whenever any cash dividend or other cash distribution shall become
payable, or any distribution other than cash shall be made, or any rights,
preferences or privileges shall at any time be offered, with respect to the
Preferred Stock, or whenever the Depositary shall receive notice of (i) any
meeting at which holders of Preferred Stock are entitled to vote or of which
holders of Preferred Stock are entitled to notice or (ii) any election on the
part of the Company to call for redemption any shares of Preferred Stock, the
Depositary shall in each such instance fix a record date (which shall be the
same date as the record date fixed by the Company with respect to the
Preferred Stock) for the determination of the holders of Receipts (i) who
shall be entitled to receive such dividend, distribution, rights, preferences
or privileges or the net proceeds of the sale thereof, or to give instructions
for the exercise of voting rights at any such meeting or to receive notice of
such meeting or (ii) whose Depositary Shares are to be so redeemed.
 
  Section 4.5. Voting Rights. Upon issuance of notice of any meeting at which
the holders of Preferred Stock are entitled to vote, the Company shall direct
the Depositary, as soon as practicable thereafter, to mail to the record
holders of Receipts a notice, which shall be provided by the Company and which
shall contain (i) such information as is contained in such notice of meeting
(and, if applicable, such information as is provided together with such notice
of meeting), (ii) a statement that the holders of Receipts at the close of
business on a specified record date fixed pursuant to Section 4.4 will be
entitled, subject to any applicable provision of law, the Certificate of
Incorporation or the Certificate of Designations, to instruct the Depositary
as to the exercise of the voting rights pertaining to the amount of Preferred
Stock represented by their respective Depositary Shares and (iii) a brief
statement as to the manner in which such instructions may be given. Upon the
written request of a holder of a Receipt on such record date, the Depositary
shall endeavor insofar as practicable to vote or cause to be voted the amount
of Preferred Stock represented by the Depositary Shares evidenced by such
Receipt in accordance with the instructions set forth in such request. The
Company hereby agrees to take all reasonable action that may be deemed
necessary by the Depositary in order to enable the Depositary to vote such
Preferred Stock or cause such Preferred Stock to be voted. In the absence of
specific instructions from the holder of a Receipt, the Depositary will
abstain from voting to the extent of the Preferred Stock represented by the
Depositary Shares evidenced by such Receipt. After aggregating all voting
Depositary Shares, the Depositary will disregard for voting purposes any
fractional share of Preferred Stock remaining.
 
  Section 4.6. Changes Affecting Preferred Stock and Reclassifications,
Recapitalizations, etc. Upon any split-up, consolidation or any other
reclassification of Preferred Stock, or upon any recapitalization,
reorganization, merger, amalgamation or consolidation affecting the Company or
to which it is a party or sale of all or substantially all of the Company's
assets, the Depositary shall, upon the instructions of the Company, treat any
shares of stock or other securities or property (including cash) that shall be
received by the Depositary in exchange for or upon conversion of or in respect
of the Preferred Stock as new deposited property under this Deposit Agreement,
and Receipts then outstanding shall thenceforth represent the proportionate
interests of holders thereof in the new deposited shares of stock, other
securities or other property so received in exchange
 
                                      13
<PAGE>
 
for or upon conversion or in respect of such Preferred Stock. In any such case
the Depositary may, in its discretion, with the approval of the Company,
execute and deliver additional Receipts, or may call for the surrender of all
outstanding Receipts to be exchanged for new Receipts specifically describing
such new deposited shares, other securities or other property.
 
  Section 4.7. Inspection of Reports. The Depositary shall make available for
inspection by holders of Receipts at the Depositary's Office and at such other
places as it may from time to time deem advisable during normal business hours
any reports and communications received from the Company that are both
received by the Depositary as the holder of Preferred Stock and made generally
available to the holders of Preferred Stock by the Company.
 
  Section 4.8. List of Receipt Holders. Promptly upon request from time to
time by the Company and at the Company's expense, the Depositary shall furnish
to it a list, as of a recent date, of the names, addresses and holdings of
Depositary Shares of all persons in whose names Receipts are registered on the
books of the Depositary.
 
                                   ARTICLE V
 
                        The Depositary and the Company
 
  Section 5.1. Maintenance of Offices, Agencies, Transfer Books by the
Depositary, the Registrar. Upon execution of this Deposit Agreement in
accordance with its terms, the Depositary shall maintain (i) at the
Depositary's Office, facilities for the execution and delivery, transfer,
surrender and exchange, split-up and combination of Receipts and deposit and
withdrawal of Preferred Stock and (ii) at the offices of the Depositary's
Agents, if any, facilities for the delivery, transfer, surrender and exchange,
split-up, combination and redemption of Receipts and deposit and withdrawal of
Preferred Stock, all in accordance with the provisions of this Deposit
Agreement.
 
  The Depositary shall keep books at the Depositary's Office for the
registration and transfer of Receipts, which books during normal business
hours shall be open for inspection by the record holders of Receipts, as
provided by applicable law, and by the Company. The Depositary shall consult
with the Company upon receipt of any request for inspection. The Depositary
may close such books, at any time or from time to time, when deemed expedient
by it in connection with the performance of its duties hereunder.
 
  If the Receipts or the Depositary Shares evidenced thereby or the Preferred
Stock represented by such Depositary Shares shall be listed on the Nasdaq
National Market, the Depositary may, with the approval of the Company, appoint
a Registrar for registry of such Receipts or Depositary Shares in accordance
with the requirements of the Nasdaq National Market. Such Registrar (which may
be the Depositary if so permitted by the requirements of the Nasdaq National
Market) may be removed and a substitute registrar appointed by the Depositary
upon the request or with the approval of the Company. If the Receipts, such
Depositary Shares or such Preferred Stock are listed on one or more other
stock exchanges, the Company will, with the assistance or the Depositary,
arrange such facilities for the delivery, transfer, surrender and exchange of
such Receipts, such Depositary Shares or Preferred Stock as may be required by
law or applicable stock exchange regulations.
 
  Section 5.2. Prevention of or Delay in Performance by the Depositary, the
Depositary's Agents or the Company. Neither the Depositary nor any
Depositary's Agent nor the Company shall incur any liability to any holder of
any Receipt if, by reason of any provision of any present or future law or
regulation thereunder of the United States of America or of any other
governmental authority or, in the case of the Depositary or any Depositary's
Agent, by reason of any provision, present or future, of the Certificate of
Incorporation or the Certificate of Designations or, in the case of the
Company, the Depositary or any Depositary's Agent, by reason of any act of God
or war or other circumstance beyond the control of the relevant party, the
Depositary, any Depositary's Agent or the Company shall be prevented or
forbidden from doing or performing any act or thing
 
                                      14
<PAGE>
 
that the terms of this Deposit Agreement provide shall be done or performed;
nor shall the Depositary, any Depositary's Agent or the Company incur any
liability to any holder of a Receipt by reason of any nonperformance or delay,
caused as aforesaid, in the performance of any act or thing that the terms of
this Deposit Agreement provide shall or may be done or performed or by reason
of any exercise of, or failure to exercise, any discretion provided for in
this Deposit Agreement.
 
  Section 5.3. Obligations of the Depositary, the Depositary's Agents, and the
Company. Neither the Depositary nor any Depositary's Agent nor the Company
assumes any obligation or shall be subject to any liability under this Deposit
Agreement or any Receipt to holders of Receipts other than that each of them
agrees to use good faith in the performance of such duties as are specifically
set forth in this Deposit Agreement.
 
  Neither the Depositary nor any Depositary's Agent nor the Company shall be
under any obligation to appear in, prosecute or defend any action, suit or
other proceeding with respect to the Preferred Stock, Depositary Shares,
Receipts [or Series A Stock] that in its opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all expense and
liability be furnished as often as may be required.
 
  Neither the Depositary nor any Depositary's Agent nor the Company shall be
liable for any action or any failure to act by it in reliance upon the advice
of, or information from, legal counsel, accountants, any person presenting
Preferred Stock for deposit, any holder of a Receipt or any other person
believed by it in good faith to be competent to give such advice or
information. The Depositary, any Depositary's Agent and the Company may each
rely and shall each be protected in acting upon any written notice, request,
direction or other document believed by it to be genuine and to have been
signed or presented by the proper party or parties.
 
  The Depositary, its parent, affiliates, subsidiaries, officers, directors or
employees and any Depositary's Agent may own, buy, sell or deal in any class
of securities of the Company and its affiliates and Receipts or Depositary
Shares, or become pecuniarily interested in any transaction in which the
Company or its officers may be interested, or contract with or lend money to
the Company or any of its affiliates or officers, or otherwise act fully or as
freely as if it were not the Depositary or the Depositary's Agent hereunder.
The Depositary may also act as transfer agent or registrar of any of the
securities of the Company and its affiliates.
 
  It is intended that neither the Depositary nor any Depositary's Agent shall
be deemed to be an "issuer" of securities under the federal securities laws or
applicable state securities laws, it being expressly understood and agreed
that the Depositary and any Depositary's Agent are acting only in a
ministerial capacity as Depositary for the Preferred Stock; provided, however,
that the Depositary agrees to comply with all information reporting and
withholding requirements applicable to it under law or this Deposit Agreement
in its capacity as Depositary.
 
  The Depositary assumes no responsibility for the correctness of the
description that appears in the Receipts, which can be taken as a statement of
the Company summarizing certain provisions of this Deposit Agreement.
Notwithstanding any other provision herein or in the Receipts, the Depositary
makes no warranties or representations as to the validity, genuineness or
sufficiency of any Preferred Stock at any time deposited with the Depositary
hereunder or of the Depositary Shares, as to the validity or sufficiency of
this Deposit Agreement, as to the value of the Depositary Shares, or as to any
right, title or interest of the record holders of Receipts in and to the
Depositary Shares, except that the Depositary hereby represents and warrants
as follows: (i) the Depositary has been duly organized and is validly existing
and in good standing under the laws of the United States with full power,
authority and legal right under such laws to execute, deliver and carry out
the terms of this Deposit Agreement; (ii) this Deposit Agreement has been duly
authorized, executed and delivered by the Depositary; and (iii) this Deposit
Agreement constitutes a valid and binding obligation of the Depositary,
enforceable against the Depositary in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting enforcement of creditors rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law). The Depositary shall not be accountable for the use or application by
the Company of the Depositary Shares or the Receipts or the proceeds of the
sale thereof.
 
 
                                      15
<PAGE>
 
  Section 5.4. Resignation and Removal of the Depositary; Appointment of
Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by notice of its election to do so delivered to the Company, such
resignation to take effect upon the appointment of a successor depositary and
its acceptance of such appointment as hereinafter provided.
 
  The Depositary may at any time be removed by the Company by notice of such
removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor depositary and its acceptance of such appointment
as hereinafter provided.
 
  In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 45 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor depositary,
which shall be a bank or trust company, or an affiliate of a bank or trust
company having its principal office in the United States of America and having
a combined capital and surplus of at least $50,000,000. If a successor
depositary shall not have been appointed in 45 days, the resigning Depositary
may petition a court of competent jurisdiction to appoint a successor
depositary. Every successor depositary shall execute and deliver to its
predecessor and to the Company an instrument in writing accepting its
appointment hereunder, and thereupon such successor depositary, without any
further act or deed, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor and for all purposes shall be the
Depositary under this Deposit Agreement, and such predecessor, upon payment of
all sums due it and on the written request of the Company, shall promptly
execute and deliver an instrument transferring to such successor all rights
and powers of such predecessor hereunder, shall duly assign, transfer and
deliver all rights, title and interest in the Preferred Stock and any moneys
or property held hereunder to such successor and shall deliver to such
successor a list of the record holders of all outstanding Receipts and such
other records respecting the Receipts, the Depositary Shares and the Preferred
Stock as the successor shall require in order to perform its duties. Any
successor depositary shall promptly mail notice of its appointment to the
record holders of Receipts.
 
  Any corporation into or with which the Depositary may be merged,
consolidated or converted, or to which the Depositary transfers all or
substantially all of its corporate trust business, shall be the successor of
such Depositary without the execution or filing of any document or any further
act. Such successor depositary may execute the Receipts either in the name of
the predecessor depositary or in the name of the successor depositary.
 
  Section 5.5. Corporate Notices and Reports. The Company agrees that it will
deliver to the Depositary, and the Depositary will, promptly after receipt
thereof, and as directed by the Company transmit to the record holders of
Receipts, in each case at the most recent address recorded in the Depositary's
books, copies of all notices and reports (including financial statements)
required by law, by the rules of any national securities exchange or national
market system upon which the Preferred Stock, the Depositary Shares or the
Receipts are listed, or by the Certificate of Incorporation and the
Certificate of Designations to be furnished by the Company to holders of
Preferred Stock. Such transmission will be at the Company's expense and the
Company will provide the Depositary with such number of copies of such
documents as the Depositary may reasonably request. In addition, the
Depositary will transmit to the record holders of Receipts at the Company's
expense such other documents as may be requested by the Company.
 
  Section 5.6. Deposit of Preferred Stock by the Company. Neither the Company
nor any company controlled by the Company will at any time deposit any
Preferred Stock if such Preferred Stock is required to be registered under the
provisions of the Securities Act and no registration statement is at such time
in effect as to such Preferred Stock.
 
  Section 5.7. Indemnification by the Company. The Company shall indemnify
Depositary, any Depositary's Agent and any Registrar for, and hold each of
them harmless against, any loss, liability or expense (including reasonable
attorneys' fees) incurred without gross negligence or intentional misconduct
on the part of any such person, arising out of or in connection with this
Deposit Agreement and the Receipts, including the costs and expenses of any of
its duties under this Deposit Agreement or the Receipts. Anything in this
Agreement to the contrary notwithstanding, in no event shall Depositary, any
Depositary's Agent or Registrar be liable for
 
                                      16
<PAGE>
 
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits) even if Depositary, any
Depositary's Agent or Registrar has been advised of the likelihood of such
loss or damage and regardless of the form of the action. The obligations of
the Company to Depositary, any Depositary's Agent or Registrar shall survive
the termination of this Agreement.
 
  Section 5.8. Fees, Charges and Expenses. No fees, charges and expenses of
the Depositary or any Depositary's Agent hereunder or of any Registrar shall
be payable by any person other than the Company, except for any taxes and
other governmental charges and except as provided in this Deposit Agreement.
If the Depositary incurs fees, charges or expenses for which it is not
otherwise liable hereunder at the election of a holder of a Receipt or other
person, such holder or other person will be liable for such fees, charges and
expenses. All other fees, charges and expenses of the Depositary and any
Depositary's Agent hereunder and of any Registrar (including, in each case,
reasonable fees and expenses of counsel) incident to the performance of their
respective obligations hereunder will be paid from time to time upon
consultation and agreement between the Depositary and the Company as to the
amount and nature of such fees, charges and expenses.
 
                                  ARTICLE VI
 
                           Amendment and Termination
 
  Section 6.1. Amendment. The form of the Receipts and any provisions of this
Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect that they may
deem necessary or desirable. Any amendment that shall impose any fees, taxes
or charges payable by holders of Receipts (other than taxes and other
governmental charges, fees and other expenses provided for herein or in the
Receipts), or that shall otherwise prejudice any substantial existing right of
holders of Receipts, shall not become effective as to outstanding Receipts
until the expiration of 90 days after notice of such amendment shall have been
given to the record holders of outstanding Receipts. Every holder of an
outstanding Receipt at the time any such amendment becomes effective shall be
deemed, by continuing to hold such Receipt, to consent and agree to such
amendment and to be bound by this Deposit Agreement as amended thereby. In no
event shall any amendment impair the right, subject to the provisions of
Sections 2.3, 2.6, 2.7 and 2.10 and Article III, of any owner of any
Depositary Shares to surrender the Receipt evidencing such Depositary Shares
with instructions to the Depositary to deliver to the holder the Preferred
Stock and all money and other property, if any, represented thereby, or to
cause the conversion of the underlying Preferred Stock into Series A Stock and
cash for any fractional share amount, except in order to comply with mandatory
provisions of applicable law. The Depositary shall sign any amendment
authorized pursuant to this Section 6.1 if the amendment does not adversely
affect the rights, duties, liabilities or immunities of the Depositary. If it
does, the Depositary may but need not sign it. In signing such amendment the
Depositary shall be entitled to receive indemnity reasonably satisfactory to
it and to receive, and shall be fully protected in relying upon, an opinion of
counsel stating that such amendment is permitted by this Agreement, that all
conditions precedent, if any, provided for in this Agreement relating to the
proposed amendment have been complied with, and that such amendment complies
with all applicable laws.
 
  Section 6.2. Termination. Whenever so directed by the Company upon at least
five Business Days' prior notice, the Depositary will terminate this Deposit
Agreement, provided, that notice of such termination has been given by mailing
notice of such termination to the record holders of all Receipts then
outstanding at least 30 days prior to the date fixed in such notice for such
termination. The Depositary may likewise terminate this Deposit Agreement if
at any time 45 days shall have expired after the Depositary shall have
delivered to the Company a written notice of its election to resign and a
successor depositary shall not have been appointed and accepted its
appointment as provided in Section 5.4.
 
  If any Receipts shall remain outstanding after the date of termination of
this Deposit Agreement, the Depositary thereafter shall discontinue the
transfer of Receipts, shall suspend the distribution of dividends to the
holders thereof and shall not give any further notices (other than notice of
such termination) or perform any
 
                                      17
<PAGE>
 
further acts under this Deposit Agreement, except as hereinafter provided in
this paragraph and except that the Depositary shall continue to collect
dividends and other distributions pertaining to Preferred Stock and shall
continue to deliver the Preferred Stock and any money and other property
represented by Receipts, without liability for interest thereon, upon
surrender thereof by the holders thereof. At any time after the expiration of
two years from the date of termination, the Depositary may, subject to
applicable provisions of law, sell Preferred Stock then held hereunder at
public or private sale, at such place or places and upon such terms as it
deems proper and may thereafter hold the net proceeds of any such sale,
together with any money and other property held by it hereunder, without
liability for interest, for the benefit, pro rata in accordance with their
holdings, of the holders of Receipts that have not theretofore been
surrendered. After making such sale, the Depositary shall be discharged from
all obligations under this Deposit Agreement except to account for such net
proceeds and money and other property. Upon the termination of this Deposit
Agreement, the Company shall be discharged from all obligations under this
Deposit Agreement except for its obligations to the Depositary, any Depositary
Agent and any Registrar under Sections 5.7 and 5.8. In the event this Deposit
Agreement is terminated and a sufficient number of shares of Preferred Stock
remain outstanding, the Company hereby agrees to use its best efforts to cause
the shares of Preferred Stock to be split   to 1 (so that each Depositary
Share then represents one share of Preferred Stock) and to have the Preferred
Stock included for quotation on the Nasdaq National Market (unless the holders
of a majority of the outstanding shares of Preferred Stock shall consent to
the Company not effecting such listing).
 
                                  ARTICLE VII
 
                                 Miscellaneous
 
  Section 7.1. Counterparts. This Deposit Agreement may be executed by the
Company and the Depositary in separate counterparts, each of which
counterpart, when so executed and delivered, shall be deemed an original, but
all such counterparts taken together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Deposit Agreement by facsimile transmission shall be effective as delivery of
a manually executed counterpart of this Deposit Agreement. Copies of this
Deposit Agreement shall be filed with the Depositary and each Depositary's
Agent, if any, and shall be open to inspection during business hours at the
Depositary's Office and the respective offices of the Depositary's Agents, if
any, by any holder of a Receipt.
 
  Section 7.2. Exclusive Benefits of Parties. This Deposit Agreement is for
the exclusive benefit of the parties hereto, and their respective successors
hereunder, and shall not be deemed to give any legal or equitable right,
remedy or claim to any other person whatsoever.
 
  Section 7.3. Invalidity of Provisions. In case any one or more of the
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal, or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein or
therein shall in no way be affected, prejudiced or disturbed thereby.
 
  Section 7.4. Notices. Any notices to be given to the Company hereunder or
under the Receipts shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by first class mail, postage prepaid or
by facsimile transmission confirmed by letter, addressed to the Company at
Terrace Tower II, 5619 DTC Parkway, Englewood, Colorado 80111-3000, Attention:
General Counsel, or at any other place to which the Company may have
transferred its principal executive office.
 
  Any notices to be given to the Depositary hereunder or under the Receipts
shall be in writing and shall be deemed to have been duly given if personally
delivered or sent by first class mail, postage prepaid, or by telegram or
telex or telecopier confirmed by letter, addressed to the Depositary at the
Depositary's Office.
 
  Any notices given to any record holder of a Receipt hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by first class mail, postage prepaid, or
 
                                      18
<PAGE>
 
by telegram or telex or telecopier confirmed by letter, addressed to such
record holder at the most recent address of such record holder as it appears
on the books of the Depositary or, if such holder shall have timely filed with
the Depositary a written request that notices intended for such holder be
mailed to some other address, at the address designated in such request.
 
  Delivery of a notice sent by mail, or by telegram or telex or telecopier,
shall be deemed to be effected at the time when a duly addressed letter
containing the same (or a duly addressed letter confirming an earlier notice
in the case of a facsimile transmission, telegram or telex) is deposited,
postage prepaid, in a post office letter box. The Depositary or the Company
may, however, act upon any facsimile transmission received by it from the
other or from any holder of a Receipt, notwithstanding that such facsimile
transmission shall not subsequently be confirmed by letter as aforesaid.
Delivery of a notice delivered personally shall be deemed to be effected on
the date of delivery (or the date delivery is refused by the addressee upon
presentation).
 
  Section 7.5. Depositary's Agents. The Depositary may from time to time
appoint Depositary's Agents to act in any respect for the Depositary for the
purposes of this Deposit Agreement and may at any time appoint additional
Depositary's Agents and vary or terminate the appointment of such Depositary's
Agents. The Depositary will promptly notify the Company of any such action.
 
  Section 7.6. Holders of Receipts Are Parties. Notwithstanding that holders
of Receipts have not executed and delivered this Deposit Agreement or any
counterpart thereof, the holders of Receipts from time to time shall be deemed
to be parties to this Deposit Agreement and shall be bound by all of the terms
and conditions hereof and of the Receipts by acceptance of delivery of
Receipts.
 
  Section 7.7. Governing Law. This Deposit Agreement and the Receipts and all
rights hereunder and thereunder and provisions hereof and thereof shall be
governed by, and construed in accordance with, the law of the State of New
York without giving effect to principles of conflict of laws.
 
  Section 7.8. Headings. The headings of articles and sections in this Deposit
Agreement and in the form of the Receipt set forth in Exhibit A hereto have
been inserted for convenience only and are not to be regarded as a part of
this Deposit Agreement or the Receipts or to have any bearing upon the meaning
or interpretation of any provision contained herein or in the Receipts.
 
  IN WITNESS WHEREOF, Tele-Communications, Inc. and       have duly executed
this agreement as of the day and year first above set forth and all holders of
Receipts shall become parties hereto by and upon acceptance by them of
delivery of Receipts executed and delivered in accordance with the terms
hereof.
 
                                          Tele-Communications, Inc.
 
                                          By: _________________________________
                                            Name:
                                            Title:
 
                                          _____________________________________
                                          as Depositary,
 
                                          By: _________________________________
                                            Name:
                                            Title:
 
                                      19
<PAGE>
 
                                                                      EXHIBIT A
 
DEPOSITARY RECEIPT FOR DEPOSITARY SHARES, EACH REPRESENTING      OF A SHARE OF
        [TITLE OF UNDERLYING PREFERRED STOCK] PAR VALUE $0.01 PER SHARE
 
                                      OF
 
                           TELE-COMMUNICATIONS, INC.
            (INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE)
 
No.
 
                               DEPOSITARY SHARES
 
                                  CUSIP
 
          , as Depositary (the "Depositary"), hereby certifies that       is
the registered owner of       Depositary Shares (the "Depositary Shares"),
each Depositary Share representing one-hundredth of a share of       [title of
underlying preferred stock], par value $0.01 per share (the "Preferred
Stock"), of Tele-Communications, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), and the same
proportionate interest in any and all other property received by the
Depositary in respect of such shares of Preferred Stock and held by the
Depositary under the Deposit Agreement (as defined below). Subject to the
terms of the Deposit Agreement, each owner of a Depositary Share is entitled,
proportionately, to all the rights, preferences and privileges of the
Preferred Stock represented thereby, including the dividend, voting,
[conversion,] liquidation and other rights contained in the Certificate of
Designations, establishing the rights, preferences, privileges and limitations
of the Preferred Stock (the "Certificate of Designations"), copies of which
are on file at the office of the Depositary at which at any particular time
its business in respect of matters governed by the Deposit Agreement shall be
administered, which at the time of the execution of the Deposit Agreement is
located at      ,            , (the "Depositary's Office").
 
  THE DEPOSITARY IS NOT RESPONSIBLE FOR THE VALIDITY OF ANY DEPOSITED STOCK.
THE DEPOSITARY ASSUMES NO RESPONSIBILITY FOR THE CORRECTNESS OF THE
DESCRIPTION SET FORTH IN THIS RECEIPT, WHICH CAN BE TAKEN AS A STATEMENT OF
THE COMPANY SUMMARIZING CERTAIN PROVISIONS OF THE DEPOSIT AGREEMENT. UNLESS
EXPRESSLY SET FORTH IN THE DEPOSIT AGREEMENT, THE DEPOSITARY MAKES NO
WARRANTIES OR REPRESENTATIONS AS TO THE VALIDITY, GENUINENESS OR SUFFICIENCY
OF ANY STOCK AT ANY TIME DEPOSITED WITH THE DEPOSITARY UNDER THE DEPOSIT
AGREEMENT OR OF THE DEPOSITARY SHARES OR RECEIPTS (EXCEPT FOR ITS
COUNTERSIGNATURES THEREON), AS TO THE VALIDITY OR SUFFICIENCY OF THE DEPOSIT
AGREEMENT, AS TO THE VALUE OF THE DEPOSITARY SHARES OR AS TO ANY RIGHT, TITLE
OR INTEREST OF THE RECORD HOLDERS OF THE RECEIPTS IN AND TO THE DEPOSITARY
SHARES.
 
  The Company will furnish to any holder of a Receipt without charge, upon
request addressed to its executive office or the office of its transfer agent,
a statement or summary of the powers, designations, preferences and relative,
participating, optional or other special rights of each authorized class of
capital stock of the Company, and of each class and series of preferred stock
of the Company authorized to be issued, so far as the same may have been
fixed, and of the qualifications, limitations or restrictions of such
preferences and/or rights.
 
                                      A-1
<PAGE>
 
  This Depositary Receipt (the "Receipt") is continued on the reverse hereof
and the additional provisions therein set forth for all purposes have the same
effect as if set forth at this place.
 
Dated:
 
                                          _____________________________________
                                                Depositary and Registrar
 
                                          By: _________________________________
                                                  Authorized Signatory
 
 
                                      A-2
<PAGE>
 
                                [FORM OF REVERSE
 
                             OF DEPOSITARY RECEIPT]
 
  1. The Deposit Agreement. Depositary Receipts (the "Receipts"), of which this
Receipt is one, are made available upon the terms and conditions set forth in
the Deposit Agreement, dated as of     , 199  (the "Deposit Agreement") among
the Company, the Depositary and all holders from time to time of Receipts. The
Deposit Agreement (copies of which are on file at the Depositary's Office and
at the office of any Depositary's Agent) sets forth the rights of holders of
Receipts and the rights and duties of the Depositary. The statements made on
the face and the reverse of this Receipt are summaries of certain provisions of
the Deposit Agreement and are subject to the detailed provisions thereof, to
which reference is hereby made. In the event of any conflict between the
provisions of this Receipt and the provisions of the Deposit Agreement, the
provisions of the Deposit Agreement will govern.
 
  2. Definitions. Unless otherwise expressly herein provided, all defined terms
used herein shall have the meanings ascribed thereto in the Deposit Agreement.
 
  3. Redemption of Preferred Stock. Whenever the Company shall elect to redeem
shares of Preferred Stock in accordance with the Certificate of Designations,
it shall (unless otherwise agreed in writing with the Depositary) give the
Depositary in its capacity as Depositary the notice required by the Deposit
Agreement. The Depositary shall mail, first class postage prepaid, notice of
such redemption and the proposed simultaneous redemption of the number of
Depositary Shares representing the Preferred Stock held by the Depositary to be
redeemed, not less than   and not more than   days prior to the date fixed for
redemption of such Preferred Stock and Depositary Shares (the "Redemption
Date"), to the record holders of the Receipts evidencing the Depositary Shares
to be so redeemed, at the addresses of such holders as they appear on the
records of the Depositary; but neither failure to mail any such notice to one
or more such holders nor any defect in any notice to one or more such holders
shall affect the sufficiency of the proceedings for redemption as to other
holders. Each such notice shall state: (i) the Redemption Date; (ii) the number
of Depositary Shares to be redeemed and, if less than all the Depositary Shares
held by any such holder are to be redeemed, the number of such Depositary
Shares held by such holder to be so redeemed; (iii) the redemption price; (iv)
the place or places where Receipts evidencing Depositary Shares are to be
surrendered for payment of the redemption price; and (v) that dividends in
respect of the shares of Preferred Stock represented by the Depositary Shares
to be redeemed will cease to accumulate from and after such Redemption Date.
Any such notices shall be mailed in the same manner as notices of redemption of
the Preferred Stock are required to be mailed pursuant to Section   of the
Certificate of Designations and published in the same manner as notices of
redemption of the Preferred Stock are required to be published pursuant to said
section, if so required. In case fewer than all the outstanding Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed shall be
selected by lot or pro rata (as nearly as may be) or by any other equitable
method determined by the Depositary to be consistent with the method determined
by the Board of Directors of the Company with respect to the Preferred Stock.
 
  Notice having been mailed and published by the Depositary as aforesaid, from
and after the Redemption Date (unless the Company shall have failed to redeem
the shares of Preferred Stock to be redeemed by it, as set forth in the
Company's notice provided for above), the Depositary Shares called for
redemption shall be deemed no longer to be outstanding and all rights of the
holders of Receipts evidencing such Depositary Shares (except the right to
receive the redemption price) shall, to the extent of such Depositary Shares,
cease and terminate. Upon surrender in accordance with said notice of the
Receipts evidencing such Depositary Shares (properly endorsed or assigned for
transfer, if the Depositary shall so require), such Depositary Shares shall be
redeemed for a redemption price at a rate per Depositary Share equal to one-
of the redemption price delivered upon redemption of a share of Preferred Stock
pursuant to the Certificate of Designations. The foregoing shall be subject
further to the terms and conditions of the Certificate of Designations and the
Deposit Agreement.
 
  If fewer than all of the Depositary Shares evidenced by this Receipt are
called for redemption, the Depositary will deliver to the holder of this
Receipt upon its surrender to the Depositary, together with the
 
                                      A-3
<PAGE>
 
redemption price for the Depositary Shares called for redemption, a new
receipt evidencing the Depositary Shares evidenced by such prior Receipt and
not called for redemption.
 
  [4. Surrender of Receipts and Withdrawal of Preferred Stock. Upon surrender
of this Receipt to the Depositary at the Depositary's Office or such other
offices as the Depositary may designate, and subject to the provisions of the
Deposit Agreement, the holder hereof is entitled to withdraw, and to obtain
delivery of, to or upon the order of such holder, any or all of the Preferred
Stock (but only in whole shares of Preferred Stock) and any or all money and
other property, if any, at the time represented by the Depositary Shares
evidenced by this Receipt; provided, however, that, in the event this Receipt
shall evidence a number of Depositary Shares in excess of the number of
Depositary Shares representing the whole number of shares of Preferred Stock
to be withdrawn, the Depositary shall, in addition to such whole number of
shares of Preferred Stock and such money and other property, if any, to be
withdrawn, deliver, to or upon the order of such holder, a new Receipt or
Receipts evidencing such excess number of whole Depositary Shares.]
 
  [5. Conversion of Preferred Stock into Common Stock. Subject to the terms
and conditions of the Deposit Agreement and the Certificate of Designations,
this Receipt may be surrendered with written instructions to the Depositary to
instruct the Company to cause the conversion of any specified number of whole
shares of Preferred Stock represented by whole Depositary Shares evidenced
hereby into whole shares of Series A Stock, par value $1.00 per share ("Common
Stock"), and cash for any fractional share of Common Stock at the conversion
price then in effect for the Preferred Stock pursuant to the Certificate of
Designations as such conversion price may be adjusted by the Company from time
to time as provided in the Certificate of Designations. Subject to the terms
and conditions of the Deposit Agreement and the Certificate of Designations, a
holder of a Receipt or Receipts evidencing Depositary Shares representing
whole or fractional shares of Preferred Stock may surrender such Receipt or
Receipts at the Depositary's Office or at such office or to such Depositary's
Agents as the Depositary may designate for such purpose, together with a
notice of conversion duly completed and executed, thereby directing the
Depositary to instruct the Company to cause the conversion of the number of
shares, or fractions of shares, of underlying Preferred Stock specified in
such notice of conversion into shares of Common Stock, and an assignment of
such Receipt or Receipts to the Company or in blank, duly completed and
executed. To the extent that a holder delivers to the Depositary for
conversion a Receipt or Receipts which in the aggregate are convertible into
less than one whole share of Common Stock, the holder shall receive payment in
cash in lieu of such fractional share of Common Stock otherwise issuable. If
more than one Receipt shall be delivered for conversion at one time by the
same holder, the number of whole shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
Depositary Shares represented by the Receipts so delivered.
 
  If Preferred Stock shall be called by the Company for redemption, the
Depositary Shares representing such Preferred Stock may be converted into
Common Stock as provided in the Deposit Agreement until, but not after, the
close of business on the Redemption Date unless the Company shall fail to
deposit with the Depositary the amounts required to redeem the Preferred Stock
held by the Depositary, in which case the Depositary Shares representing such
Preferred Stock may continue to be converted into Common Stock until, but not
after, the close of business on the date on which the Company deposits with
the Depositary such amounts as are required by the Certificate of Designations
to make full payment of the amounts payable upon such redemption. Upon receipt
by the Depositary of a Receipt or Receipts, together with a properly completed
and executed notice of conversion, representing any Preferred Stock called for
redemption, the shares of Preferred Stock held by the Depositary represented
by such Depositary Shares for which conversion is requested shall be deemed to
have been received by the Company for conversion as of immediately prior to
the close of business on the date of such receipt by the Depositary.]
 
  6. Transfers, Split-ups, Combinations. Subject to Paragraphs 7, 8 and 9
below, this Receipt is transferable on the books of the Depositary upon
surrender of this Receipt to the Depositary at the Depositary's Office or such
other offices as the Depositary may designate, properly endorsed or
accompanied by a properly executed instrument of transfer or endorsement, and
upon such surrender the Depositary shall execute and deliver a Receipt to or
upon the order of the person entitled thereto, all as provided in and subject
to the Deposit
 
                                      A-4
<PAGE>
 
Agreement. This Receipt may be split into other Receipts or combined with
other Receipts into one Receipt evidencing the same aggregate number of
Depositary Shares evidenced by the Receipt or Receipts surrendered; provided,
however, that the Depositary shall not execute and deliver any Receipt
evidencing a fractional Depositary Share.
 
  7. Conditions to Signing and Delivery, Transfer, etc., of Receipts. Prior to
the execution and delivery, transfer, split-up, combination, surrender or
exchange of this Receipt, the Depositary, any of the Depositary's Agents or
the Company may require any or all of the following: (i) payment to it of a
sum sufficient for the payment (or, in the event that the Depositary or the
Company shall have made such payment, the reimbursement to it) of any tax or
other governmental charge with respect thereto (including any such tax or
charge with respect to Preferred Stock being deposited or withdrawn or with
respect to [Common Stock or] other securities or property of the Company being
issued upon [conversion or] redemption); (ii) the production of proof
satisfactory to it as to the identity and genuineness of any signature; and
(iii) compliance with such regulations, if any, as the Depositary or the
Company may establish not inconsistent with the Deposit Agreement. Any person
presenting Preferred Stock for deposit, or any holder of this Receipt, may be
required to file such proof of information, to execute such certificates and
to make such representations and warranties as the Depositary or the Company
may reasonably deem necessary or proper. The Depositary or the Company may
withhold or delay the delivery of any Receipt, the transfer, redemption[,
conversion] or exchange of any Receipt, the withdrawal of [the Preferred Stock
or] money or other property, if any, represented by the Depositary Shares
evidenced by this Receipt or the distribution of any dividend or other
distribution until such proof or other information is filed, such certificates
are executed or such representations and warranties are made.
 
  8. Suspension of Delivery, Transfer, etc. The deposit of Preferred Stock may
be refused, the delivery of Receipts against Preferred Stock may be suspended,
the transfer of Receipts may be refused and the transfer, split-up,
combination, surrender or exchange of this Receipt may be suspended (i) during
any period when the register of holders of Receipts is closed; (ii) if any
such action is deemed necessary or advisable by the Depositary, any of the
Depositary's Agents or the Company at any time or from time to time because of
any requirement of law or of any government or governmental body or
commission, or under any provision of the Deposit Agreement; or (iii) except
for the transfer of Receipts, with the approval of the Company, for any other
reason. [Except with respect to a conversion of Depositary Shares which may
occur pursuant to Section   of the Certificate of Designations,] the
Depositary shall not be required (a) to execute and deliver, transfer or
exchange any Receipts for a period beginning at the opening of business 15
days next preceding any selection of Depositary Shares and Preferred Stock to
be redeemed and ending at the close of business on the day of the mailing of
notice of redemption of Depositary Shares or (b) to transfer or exchange for
another Receipt any Receipt evidencing Depositary Shares called or being
called for redemption in whole or in part, except as provided in the second to
last paragraph of Paragraph 3 above.
 
  9. Payment of Taxes or other Governmental Charges. If any tax or other
governmental charge shall become payable by or on behalf of the Depositary
with respect to this Receipt, the Depositary Shares evidenced by this Receipt,
the Preferred Stock (or any fractional interest therein) represented by such
Depositary Shares or any transaction referred to in Section 4.6 of the Deposit
Agreement, such tax (including transfer, issuance or acquisition taxes, if
any) or governmental charge shall be payable by the holder hereof. Until such
payment is made, transfer, redemption, [conversion] or exchange of this
Receipt or any withdrawal of the Preferred Stock or money and other property,
if any, represented by the Depositary Shares evidenced by this Receipt may be
refused, any dividend or other distribution may be withheld and any part or
all of the Preferred Stock or other property represented by the Depositary
Shares evidenced by this Receipt may be sold for the account of the holder
hereof (after attempting by reasonable means to notify such holder prior to
such sale). Any dividend or other distribution so withheld and the proceeds of
any such sale may be applied to any payment of such tax or other governmental
charge, the holder of this Receipt remaining liable for any deficiency.
 
  10. Amendment. The form of the Receipts and any provision of the Deposit
Agreement may at any time and from time to time be amended by agreement
between the Company and the Depositary in any respect that they may deem
necessary or desirable. Any amendment that shall impose any fees, taxes or
charges payable by
 
                                      A-5
<PAGE>
 
holders of Receipts (other than taxes and other governmental charges, fees and
other expenses provided for herein or in the Deposit Agreement), or that shall
otherwise prejudice any substantial existing right of holders of Receipts,
shall not become effective as to outstanding Receipts until the expiration of
90 days after notice of such amendment shall have been given to the record
holders of outstanding Receipts. The holder of this Receipt at the time any
such amendment becomes effective shall be deemed, by continuing to hold this
Receipt, to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby. In no event shall any amendment impair the
right, subject to the provisions of Paragraphs 3, 4, 5, 6, 8, 9 and 10 hereof
and of Sections 2.3, 2.6, 2.7 and 2.10 and Article III of the Deposit
Agreement, of the owner of the Depositary Shares evidenced by this Receipt to
surrender this Receipt with instructions to the Depositary to deliver to the
holder the Preferred Stock and all money and other property, if any,
represented hereby, [or to cause the conversion of the underlying Preferred
Stock into Common Stock and cash for any fractional share amount], except in
order to comply with mandatory provisions of applicable law.
 
  11. Fees, Charges and Expenses. The Company will pay all fees, charges and
expenses of the Depositary, except for taxes (including transfer taxes, if
any) and other governmental charges and such charges as are expressly provided
in the Deposit Agreement to be at the expense of persons depositing Preferred
Stock, holders of Receipts or other persons.
 
  12. Ownership of Receipts. It is a condition of this Receipt, and every
successive holder hereof by accepting or holding the same consents and agrees,
that ownership of this Receipt (and of the Depositary Shares evidenced hereby)
when properly endorsed or accompanied by a properly executed instrument of
transfer or endorsement, is transferable by delivery; provided, however, that
until this Receipt shall be transferred on the books of the Depositary as
provided in Section 2.4 of the Deposit Agreement, the Depositary may,
notwithstanding any notice to the contrary, treat the record holder hereof at
such time as the absolute owner hereof for the purpose of determining the
person entitled to distribution of dividends or other distributions or to any
notice provided for in the Deposit Agreement and for all other purposes.
 
  13. Dividends and Distributions. Whenever the Depositary receives any cash
dividend or other cash distribution on the Preferred Stock, the Depositary
will, subject to the provisions of the Deposit Agreement, distribute such
portions of such sum to record holders of Receipts as are, as nearly as
practicable, proportionate to the respective numbers of Depositary Shares
evidenced by the Receipts held by such holders; provided, however, that in
case the Company or the Depositary shall be required to withhold and does
withhold from any cash dividend or other cash distribution in respect of the
Preferred Stock an amount on account of taxes or as otherwise required by law,
regulation or court order, the amount made available for distribution or
distributed in respect of Depositary Shares shall be reduced accordingly. The
Depositary shall distribute or make available for distribution, as the case
may be, only such amount, however, as can be distributed without attributing
to any owner of Depositary Shares a fraction of one cent and any balance not
so distributable shall be held by the Depositary (without liability for
interest thereon) and shall be added to and be treated as part of the next sum
received by the Depositary for distribution to record holders of Receipts then
outstanding.
 
  14. Subscription Rights, Preferences or Privileges. If the Company shall at
any time offer or cause to be offered to the persons in whose names Preferred
Stock is registered on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance, subject to the provisions of the
Deposit Agreement, be made available by the Depositary to the record holders
of receipts if the Company so directs in such manner as the Company shall
instruct.
 
  15. Notice of Dividends; Fixing of Record Date. Whenever any cash dividend
or other cash distribution shall become payable, any distribution other than
cash shall be made, or any rights, preferences or privileges shall at any time
be offered, with respect to the Preferred Stock, or whenever the Depositary
shall receive notice of (i) any meeting at which holders of Preferred Stock
are entitled to vote or of which holders of Preferred Stock are entitled to
notice or (ii) any election on the part of the Company to call for redemption
any shares of Preferred Stock, the Depositary shall in each such instance fix
a record date (which shall be the same date as the record
 
                                      A-6
<PAGE>
 
date fixed by the Company with respect to the Preferred Stock) for the
determination of the holders of Receipts (i) who shall be entitled to receive
such dividend, distribution, rights, preferences or privileges or the net
proceeds of the sale thereof, or to give instructions for the exercise of
voting rights at any such meeting or to receive notice of such meeting or (ii)
whose Depositary Shares are to be so redeemed.
 
  16. Voting Rights. Upon issuance of notice of any meeting at which the
holders of Preferred Stock are entitled to vote, the Company shall direct the
Depositary, as soon as practicable thereafter, to mail to the record holders
of Receipts a notice, which shall contain (i) such information as is contained
in such notice of meeting (and, if applicable, such information as is provided
together with such notice of meeting), (ii) a statement that the holders of
Receipts at the close of business on a specified record date determined as
provided in Paragraph 14 will be entitled, subject to any applicable provision
of law, the Certificate of Incorporation or the Certificate of Designations,
to instruct the Depositary as to the exercise of the voting rights pertaining
to the amount of Preferred Stock represented by their respective Depositary
Shares, and (iii) a brief statement as to the manner in which such
instructions may be given. Upon the written request of a holder of a Receipt
on such record date, the Depositary shall endeavor insofar as practicable to
vote or cause to be voted the amount of Preferred Stock represented by the
Depositary Shares evidenced by such Receipt in accordance with the
instructions set forth in such request. The Company has agreed to take all
reasonable action that may be deemed necessary by the Depositary in order to
enable the Depositary to vote such Preferred Stock or cause such Preferred
Stock to be voted. In the absence of specific instructions from the holder of
a Receipt, the Depositary will abstain from voting to the extent of the
Preferred Stock represented by the Depositary Shares evidenced by such
Receipt. After aggregating all voting Depositary Shares, the Depositary will
disregard for voting purposes any fractional share of Preferred Stock
remaining.
 
  17. Reports, Inspection of Transfer Books. The Depositary shall make
available for inspection by holders of Receipts at the Depositary's Office and
at such other places as it may from time to time deem advisable during normal
business hours any reports and communications received from the Company that
are both received by the Depositary as the holder of Preferred Stock and made
generally available to the holders of Preferred Stock by the Company. The
Depositary shall keep books at the Depositary's Office for the registration
and transfer of Receipts, which books during normal business hours will be
open for inspection by the record holders of receipts as provided by
applicable law.
 
  18. Liability of the Depositary, the Depositary's Agents and the
Company. Neither the Depositary nor any Depositary's Agent nor the Company
shall incur any liability to any holder of any Receipt if, by reason of any
provision of any present or future law or regulation of any governmental
authority or, in the case of the Depositary or any Depositary's Agent, by
reason of any provision, present or future, of the Restated Certificate of
Incorporation or the Certificate of Designations or, in the case of the
Company, the Depositary or any Depositary's Agent, by reason of any act of God
or war or other circumstance beyond the control of the relevant party, the
Depositary, any Depositary's Agent or the Company shall be prevented or
forbidden from doing or performing any act or thing that the terms of the
Deposit Agreement provide shall or may be done or performed; nor shall the
Depositary, any Depositary's Agent or the Company incur any liability to any
holder of a Receipt by reason of any nonperformance or delay, caused as
aforesaid, in the performance of any act or thing that the terms of the
Deposit Agreement provide shall or may be done or performed or by reason of
any exercise of, or failure to exercise, any discretion provided for in the
Deposit Agreement.
 
  19. Obligations of the Depositary, the Depositary's Agents and the
Company. Neither the Depositary nor any Depositary's Agent nor the Company
assumes any obligation or shall be subject to any liability hereunder or under
the Deposit Agreement to holders of Receipts other than that each of them
agrees to use good faith in the performance of such duties as are specifically
set forth in the Deposit Agreement. Neither the Depositary nor any
Depositary's Agent nor the Company shall be under any obligation to appear in,
prosecute or defend any action, suit or other proceeding with respect to
Preferred Stock, Depositary Shares, Receipts [or Common Stock] that in its
opinion may involve it in expense or liability, unless indemnity satisfactory
to it against all expense and liability be furnished as often as may be
required. Neither the Depositary nor any Depositary's Agent nor the Company
will be liable for any action or failure to act by it in reliance upon the
advice of or information
 
                                      A-7
<PAGE>
 
from legal counsel, accountants, any person presenting Preferred Stock for
deposit, any holder of a Receipt or any other person believed by it in good
faith to be competent to give such advice or information.
 
  20. Termination of Deposit Agreement. Whenever so directed by the Company
upon at least five Business Days' prior notice, the Depositary will terminate
the Deposit Agreement, provided that notice of such termination has been given
by mailing notice of such termination to the record holders of all Receipts
then outstanding at least 30 days prior to the date fixed in such notice for
such termination. The Depositary may likewise terminate the Deposit Agreement
if at any time 45 days shall have expired after the Depositary shall have
delivered to the Company a written notice of its election to resign and a
successor Depositary shall not have been appointed and accepted its
appointment as provided in Section 5.4 of the Deposit Agreement. Upon the
termination of the Deposit Agreement, the Company shall be discharged from all
obligations thereunder except for its obligations to the Depositary, any
Depositary's Agent and any Registrar under Sections 5.7 and 5.8 of the Deposit
Agreement.
 
  If any Receipts remain outstanding after the date of termination, the
Depositary thereafter shall discontinue all functions and be discharged from
all obligations as provided in the Deposit Agreement, except as specifically
provided therein.
 
  21. Governing Law. The Deposit Agreement and this Receipt and all rights
thereunder and hereunder and provisions thereof and hereof shall be governed
by, and construed in accordance with, the law of the State of New York without
giving effect to principles of conflict of laws.
 
  This Receipt shall not be entitled to any benefits under the Deposit
Agreement or be valid or obligatory for any purpose, unless this Receipt shall
have been executed manually or, if a Registrar for the Receipts (other than
the Depositary) shall have been appointed, by facsimile by the Depositary by
the signature of a duly authorized signatory and, if executed by facsimile
signature of the Depositary, shall have been countersigned manually by such
Registrar by the signature of a duly authorized signatory.
 
Dated:
 
                                          _____________________________________
                                                Depositary and Registrar
 
                                          By: _________________________________
                                                  Authorized Signatory
 
 
                                      A-8
<PAGE>
 
                             [NOTICE OF CONVERSION
 
  The undersigned holder of this Receipt for Depositary Shares hereby
irrevocably exercises the option to convert that number of shares, or
fractions of shares, of [title of underlying preferred stock] of the Company
represented by      Depositary Shares into shares of Common Stock of the
Company and cash for any fraction of Common Stock in accordance with the terms
of and subject to the conditions of the Preferred Stock, including the
Certificate of Designations in respect thereof and the Deposit Agreement, and
directs the Depositary to instruct the Company that the shares of Common Stock
deliverable upon such conversion be registered in the name of, and delivered
together with a check in payment for any fractional shares of Common Stock to,
the undersigned unless a different name has been indicated below. If the
shares of Common Stock are to be registered in the name of a person other than
the undersigned, the undersigned will pay all transfer and similar taxes
payable with respect thereto. If the number of shares of Preferred Stock,
represented by the number of Depositary Shares set forth above, is less than
the number of shares of Preferred Stock on deposit in respect of this Receipt,
the undersigned directs that the Depositary execute and deliver to the
undersigned, unless a different name is indicated below, a new receipt
evidencing Depositary Shares for the balance of such Preferred Stock not to be
converted.
 
Dated:
 
                                          Signature: __________________________
                                                        (              )
 
                                          NOTE: The signature on this notice
                                          of conversion must correspond with
                                          the name as written upon the face of
                                          this Receipt in every particular
                                          without alteration or enlargement or
                                          any change whatsoever, and must be
                                          guaranteed by a commercial bank,
                                          trust company, securities broker or
                                          dealer, credit union, savings
                                          association or other eligible
                                          guarantor institution which is a
                                          member of or participant in a
                                          signature guarantee program
                                          acceptable to the Depositary.
 
                                          Name: _______________________________
 
                                          Address: ____________________________
                                                     (Please print name and
                                                      address of Registered
                                                             Holder)
 
                                          Name: _______________________________
 
                                          Address: __________________________ ]
                                                     (Please indicate other
                                                    delivery instructions, if
                                                           applicable)
 
                                      A-9

<PAGE>
 
                                                                       EXHIBIT 5

                     [LETTERHEAD OF BAKER & BOTTS, L.L.P.]


July 15, 1998


Board of Directors
Tele-Communications, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111-3000


Gentlemen:

    This opinion letter is being delivered in connection with the registration
statement on Form S-3 (File No. 333-56635) (the "Registration Statement"), filed
by Tele-Communications, Inc., a Delaware corporation (the "Company"), pursuant
to the Securities Act of 1933, as amended (the "Act"), with respect to the
proposed offering from time to time of: (i) debentures, notes, bonds or other
evidences of indebtedness of the Company ("Debt Securities"), (ii) shares of the
Series Preferred Stock, par value $.01 per share, of the Company ("Series
Preferred Stock"), which may be issued in the form of depositary shares
evidenced by depositary receipts ("Depositary Shares") if the Company elects to
issue fractional interests in shares of a series of Series Preferred Stock,
(iii) shares of the Company's Tele-Communications, Inc. Series A TCI Group
Common Stock, par value $1.00 per share ("Series A TCI Group Common Stock"),
(iv) shares of the Company's Tele-Communications, Inc. Series A Liberty Media
Group Common Stock, par value $1.00 per share ("Series A Liberty Media Group
Common Stock"), (v) shares of the Company's Tele-Communications, Inc. Series A
TCI Ventures Group Common Stock, par value $1.00 per share ("Series A TCI
Ventures Group Common Stock"), and (v) shares of Series A TCI Group Common
Stock, Series A Liberty Media Group Common Stock or Series A TCI Ventures Group
Common Stock which may be issuable upon conversion of Debt Securities or upon
conversion of Series Preferred Stock (the Debt Securities, Series Preferred
Stock, Depositary Shares, Series A TCI Group Common Stock, Series A Liberty
Media Group Common Stock and Series A TCI Ventures Group Common Stock are
collectively referred to herein as the "Offered Securities"), or any combination
of the foregoing, at an aggregate initial offering price not to exceed $2.5
billion, at prices and on terms to be determined at or prior to the time of sale
thereof.

<PAGE>
 
Tele-Communications, Inc.                                          July 15, 1998
Page 2

     As described in the Registration Statement, the Series A TCI Group Common
Stock, the Series A Liberty Media Group Common Stock and the Series A TCI
Ventures Group Common Stock are authorized series of Common Stock of the
Company, shares of which are issuable in accordance with the Restated
Certificate of Incorporation of the Company, as amended (the "Restated
Certificate of Incorporation"). The Series Preferred Stock is issuable in series
in accordance with the Restated Certificate of Incorporation pursuant to
resolutions to be adopted by the Board of Directors of the Company, or an
authorized committee thereof, and set forth in one or more certificates of
designations (each a "Certificate of Designations") to be filed with the
Secretary of State of the State of Delaware (the "Delaware Secretary of State")
pursuant to Section 151 of the General Corporation Law of the State of Delaware.
The Depositary Shares are to be issued under a deposit agreement (the "Deposit
Agreement") to be entered into between the Company, a depositary to be named by
the Company (the "Depositary") and the holders from time to time of depositary
receipts evidencing Depositary Shares. The Company may issue, in series, senior
Debt Securities under an Indenture between the Company and The Bank of New York
as trustee (the "Senior Indenture"), senior subordinated Debt Securities under
an Indenture between the Company and a trustee to be named therein (the "Senior
Subordinated Indenture"), or subordinated Debt Securities under an Indenture
between the Company and a trustee to be named therein (the "Subordinated
Indenture"), or any combination of senior, senior subordinated and subordinated
Debt Securities. The Senior Indenture, the Senior Subordinated Indenture and the
Subordinated Indenture are herein referred to individually as an "Indenture" and
collectively as the "Indentures". The Indentures will be qualified under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").

     Certain terms of the Offered Securities to be issued from time to time will
be approved by the Board of Directors of the Company or by authorized committees
thereof, as part of the corporate action to be taken (the "Corporate
Proceedings") in connection with the issuance of such securities. In connection
with the issuance of any series of Debt Securities the Company and the trustee
under the Indenture covering such Debt Securities will enter into a supplemental
indenture to such Indenture (a "Supplemental Indenture"), setting forth specific
terms of such Debt Securities.

     In connection herewith, we have examined, among other things, the
originals, certified copies or copies otherwise identified to our satisfaction
as being copies of originals, of the Restated Certificate of Incorporation; the
By-Laws of the Company, as amended; resolutions adopted by the Company's Board
of Directors, including committees thereof, with respect to the filing of the
Registration Statement and related matters (collectively, the "Board
Resolutions"); the form of each Indenture; the form of underwriting agreement
for equity securities; the form of underwriting agreement for Debt Securities;
the form of Deposit Agreement; and such other documents, records, certificates
of public officials and questions of law as we deemed necessary or appropriate
for the purpose of this opinion. In rendering this opinion, we have relied, to
the extent we deemed such reliance appropriate, on certificates of officers of
the Company as to factual matters. We have assumed the authenticity of all
documents submitted to us as originals and the conformity to authentic original
<PAGE>
 
Tele-Communications, Inc.                                          July 15, 1998
Page 3

documents of all documents submitted to us as certified, conformed or
reproduction copies. We have further assumed that (i) the definitive Indentures
and Deposit Agreement will not differ materially from the forms of such
documents included as exhibits to the Registration Statement and (ii) there will
be no changes in applicable law between the date of this opinion and any date of
issuance of Offered Securities, or any date of issuance or delivery of shares of
Series A TCI Group Common Stock, Series A Liberty Media Group Common Stock or
Series A TCI Ventures Group Common Stock which may be issuable upon the
conversion of Series Preferred Stock or Debt Securities.

     Based upon the foregoing, we are of the opinion that:

     1.   When, in the case of shares of Series A TCI Group Common Stock, Series
A Liberty Media Group Common Stock or Series A TCI Ventures Group Common Stock,
all Corporate Proceedings have been completed, certificates representing such
shares of Series A TCI Group Common Stock, Series A Liberty Media Group Common
Stock or Series A TCI Ventures Group Common Stock (as applicable) have been duly
executed by the proper officers of the Company and the transfer agent and such
shares have been sold as contemplated by the Registration Statement, the
prospectus included therein and the applicable supplement to such prospectus,
such shares of Series A TCI Group Common Stock, Series A Liberty Media Group
Common Stock or Series A TCI Ventures Group Common Stock (as applicable) will be
duly authorized, validly issued, fully paid and non-assessable.

     2.   When, in the case of shares of a series of Series Preferred Stock, all
Corporate Proceedings have been completed, the applicable Certificate of
Designations is executed by the proper officers of the Company, delivered and
filed with the Delaware Secretary of State, certificates representing shares of
such series of Series Preferred Stock have been duly executed by the proper
officers of the Company and the transfer agent and such shares have been issued
and sold in accordance with the terms of the applicable Certificate of
Designations and as contemplated by the Registration Statement, the prospectus
included therein and the applicable supplement to such prospectus, such shares
of Series Preferred Stock will be duly authorized, validly issued, fully paid
and non-assessable.

     3.   When, in the case of Depositary Shares, the Deposit Agreement relating
to such Depositary Shares has been executed and delivered by the Company and the
Depositary, all Corporate Proceedings relating to such Depositary Shares and the
shares of Series Preferred Stock to be represented thereby have been completed,
the shares of Series Preferred Stock to be represented by such Depositary Shares
have been issued in accordance with Paragraph 2 above and delivered to the
Depositary against receipt of depositary receipts evidencing such Depositary
Shares, executed by the Depositary, and such Depositary Shares have been issued
and sold as contemplated by the Registration Statement, the prospectus contained
therein and the applicable supplement to such prospectus, such Depositary Shares
will be legal, valid and binding obligations of the Company, entitled to the
benefits of the Deposit Agreement relating to such Depositary Shares, except as
enforcement thereof
<PAGE>
 
Tele-Communications, Inc.                                          July 15, 1998
Page 4

may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other laws affecting the rights of creditors generally and except
that equitable remedies may not be available.

     4.   When, in the case of Debt Securities issued under any of the
Indentures, (i) the applicable Indenture (and, if applicable, any Supplemental
Indenture) has been executed and delivered by the parties thereto (and provided
that the trustee named therein is eligible to act as such under the Trust
Indenture Act) and been qualified under the Trust Indenture Act, (ii) the
definitive form and terms of such Debt Securities and of their issue and sale
have been duly established in accordance with the Board Resolutions, the
Corporate Proceedings and the provisions of the applicable Indenture (and any
Supplemental Indenture) so as not to violate any applicable law or agreement or
instrument then binding on the Company, (iii) such Debt Securities have been
duly executed by the proper officers of the Company and authenticated by the
Trustee or Trustees for the series to be issued in accordance with the
applicable Indenture (and any Supplemental Indenture) and (iv) such Debt
Securities have been issued and sold as contemplated in the Registration
Statement, the prospectus contained therein and the applicable supplement to the
prospectus, such Debt Securities will be legal, valid and binding obligations of
the Company, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and other laws
affecting the rights of creditors generally and except that equitable remedies
may not be available.

     5.   When, in the case of a series of Series Preferred Stock that is
convertible into shares of Series A TCI Group Common Stock, Series A Liberty
Media Group Common Stock or Series A TCI Ventures Group Common Stock, such
shares of Series Preferred Stock have been issued in accordance with Paragraph 2
above, shares of such series of Series Preferred Stock have been surrendered to
the Company for conversion in accordance with the applicable Certificate of
Designations and certificates representing the shares of Series A TCI Group
Common Stock, Series A Liberty Media Group Common Stock or Series A TCI Ventures
Group Common Stock (as applicable) issuable upon such conversion have been duly
executed by the proper officers of the Company and the transfer agent and
delivered against receipt of such shares of Series Preferred Stock such shares
of Series A TCI Group Common Stock, Series A Liberty Media Group Common Stock or
Series A TCI Ventures Group Common Stock (as applicable) will be duly
authorized, validly issued, fully paid and non-assessable.

     6.   When, in the case of any Debt Securities that are convertible into
shares of Series A TCI Group Common Stock, Series A Liberty Media Group Common
Stock or Series A TCI Ventures Group Common Stock, such Debt Securities have
been issued in accordance with Paragraph 4 above, such Debt Securities have been
surrendered to the Company or the conversion agent for conversion in accordance
with the applicable Indenture (and any applicable Supplemental Indenture) and
certificates representing the shares of Series A TCI Group Common Stock, 
Series A
<PAGE>
 
Tele-Communications, Inc.                                          July 15, 1998
Page 5

Liberty Media Group Common Stock or Series A TCI Ventures Group Common Stock
(as applicable) issuable upon such conversion have been duly executed by the
proper officers of the Company and the transfer agent and delivered against
receipt of such Debt Securities from shares of Series A TCI Group Common Stock,
Series A Liberty Media Group Common Stock or Series A TCI Ventures Group Common
Stock (as applicable) reserved therefor in accordance with the Board
Resolutions, such shares of Series A TCI Group Common Stock, Series A Liberty
Media Group Common Stock or Series A TCI Ventures Group Common Stock (as
applicable) will be duly authorized, validly issued, fully paid and non-
assessable.

     We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement (and to any registration statement that may be filed in
connection therewith pursuant to Rule 462(b) under the Act) and to the reference
to us contained therein under the heading "Legal Matters".  In giving the
foregoing consent, we do not admit that we are in the category of persons whose
consent is required under Section 7 of the Act, as amended, or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.

                              Very truly yours,



                              Baker & Botts, L.L.P.
                              

<PAGE>
 
                                                                    EXHIBIT 23.1

                        CONSENT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Tele-Communications, Inc.:

We consent to the incorporation by reference in the registration statement (No.
333-56635) on Form S-3, as amended (Amendment No. 1), of Tele-Communications,
Inc. of our reports, dated March 20, 1998, relating to the consolidated balance
sheets of Tele-Communications, Inc. and subsidiaries as of December 31, 1997 and
1996, 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, 1997, and all related financial statement schedules, which reports
appear in the December 31, 1997 Annual Report on Form 10-K of Tele-
Communications, Inc., and to the reference to our firm under the heading
"Experts" in the registration statement.

                                    KPMG Peat Marwick LLP

Denver, Colorado
July 10, 1998

<PAGE>
 
                                                                    EXHIBIT 23.2

                        CONSENT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Tele-Communications, Inc.:

We consent to the incorporation by reference in the registration statement (No.
333-56635) on Form S-3, as amended (Amendment No. 1), of Tele-Communications,
Inc. of our report, dated March 20, 1998, relating to the combined balance
sheets of TCI Group as of December 31, 1997 and 1996, and the related combined
statements of operations, equity (deficit), and cash flows for each of the years
in the three-year period ended December 31, 1997, which report appears in the
December 31, 1997 Annual Report on Form 10-K of Tele-Communications, Inc., and
to the reference to our firm under the heading "Experts" in the registration
statement. Our report covering the combined financial statements refers to the
effects of not consolidating TCI Group's interest in Liberty Media Group and the
TCI Ventures Group for all periods that TCI Group has an interest in Liberty
Media Group and TCI Ventures Group, respectively.

                                    KPMG Peat Marwick LLP

Denver, Colorado
July 10, 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 (No.
333-56635) on Form S-3, as amended (Amendment No. 1), of Tele-Communications,
Inc. of our report, dated March 20, 1998, relating to the combined balance
sheets of Liberty Media Group as of December 31, 1997 and 1996, and the related
combined statements of operations, equity, and cash flows for each of the years
in the three-year period ended December 31, 1997, which report appears in the
December 31, 1997 Annual Report on Form 10-K of Tele-Communications, Inc., and
to the reference to our firm under the heading "Experts" in the registration
statement.

                                    KPMG Peat Marwick LLP

Denver, Colorado
July 10, 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 (No.
333-56635) on Form S-3, as amended (Amendment No. 1), of Tele-Communications,
Inc. of our report, dated March 20, 1998, relating to the combined balance
sheets of TCI Ventures Group as of December 31, 1997 and 1996, and the related
combined statements of operations, equity, and cash flows for each of the years
in the three-year period ended December 31, 1997, which report appears in the
December 31, 1997 Annual Report on Form 10-K of Tele-Communications, Inc., and
to the reference to our firm under the heading "Experts" in the registration
statement .

                                    KPMG Peat Marwick LLP

Denver, Colorado
July 10, 1998

<PAGE>
 
                                                                    EXHIBIT 23.5

                        CONSENT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Telewest Communications plc:

We consent to the incorporation by reference in the registration statement (No.
333-56635) on Form S-3, as amended (Amendment No. 1), of Tele-Communications,
Inc. of our report, dated March 19, 1998, relating to the consolidated balance
sheet of Telewest Communications plc and subsidiaries as of December 31, 1997
and 1996, and the related consolidated statements of operations and cash flows
for each of the years in the three-year period ended December 31, 1997, which
report appears in the December 31, 1997 Annual Report on Form 10-K of Tele-
Communications, Inc., and to the reference to our firm under the heading
"Experts" in the registration statement.

                                    KPMG Audit Plc
                                    Chartered Accountants
                                    Registered Auditors

London, England
July 10, 1998

<PAGE>
 
                                                                    EXHIBIT 23.6

                         INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 1 to Registration Statement No. 333-
56635 of Tele-Communications, Inc. on Form S-3 of our report dated February 3,
1998, 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 emergence from the
development stage of Sprint Spectrum Holding Company, L.P. and subsidiaries)
incorporated by reference in the Annual Report on Form 10-K of Tele-
Communications, Inc. for the year ended December 31, 1997. We also consent to
the reference to us under the heading "Experts" in such Prospectus.

                                                      Deloitte & Touche LLP

Kansas City, Missouri
July 10, 1998


<PAGE>
 
                                                                    EXHIBIT 23.7

                        CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Cablevision Systems Corporation

We consent to the incorporation by reference in the registration statement (No.
333-56635) on Form S-3, as amended (Amendment No. 1), of Tele-Communications,
Inc. of our report, dated April 1, 1997, relating to the consolidated balance
sheets of Cablevision Systems Corporation and subsidiaries as of December 31,
1996 and 1995, and the related consolidated statements of operations,
stockholders' deficiency and cash flows for each of the years in the three-year
period ended December 31, 1996, and the related financial statement schedule,
which report appears in the Current Report on Form 8-K, as amended on
Form 8-K/A (Amendment No. 2), of Tele-Communications, Inc., dated March 6, 1998,
and to the reference to our firm under the heading "Experts" in the registration
statement.


                                    KPMG Peat Marwick LLP

Jericho, New York
July 10, 1998


<PAGE>
 
================================================================================


                                   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)


                             ----------------------


                           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 10th day of July, 1998.


                                         THE BANK OF NEW YORK



                                         By: /s/ MARY JANE SCHMALZEL
                                             ---------------------------
                                            Name:  MARY JANE SCHMALZEL
                                            Title: VICE PRESIDENT

                                      -4-
<PAGE>
                                                                       EXHIBIT 7
                                                                       ---------
                      Consolidated Report of Condition of

                              THE BANK OF NEW YORK

                    of 48 Wall Street, New York, N.Y. 10286
                     And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1998,
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....................                     $ 6,397,993
  Interest-bearing balances.............                       1,138,362
Securities:
  Held-to-maturity securities...........                       1,062,074
  Available-for-sale securities.........                       4,167,240
Federal funds sold and Securities pur-
  chased under agreements to resell.....                         391,650
Loans and lease financing
  receivables:
  Loans and leases, net of unearned
    income .............................      36,538,242
  LESS: Allowance for loan and
    lease losses .......................         631,725
  LESS: Allocated transfer risk
    reserve.............................               0
  Loans and leases, net of unearned
    income, allowance, and reserve                            35,906,517
Assets held in trading accounts.........                       2,145,149
Premises and fixed assets (including
  capitalized leases)...................                         663,928
Other real estate owned.................                          10,895
Investments in unconsolidated
  subsidiaries and associated
  companies.............................                         237,991
Customers' liability to this bank on
  acceptances outstanding...............                         992,747
Intangible assets.......................                       1,072,517
Other assets............................                       1,643,173
                                                             -----------
Total assets............................                     $55,830,236
                                                             ===========
 
LIABILITIES
Deposits:
  In domestic offices...................                     $24,849,054
  Noninterest-bearing ..................      10,011,422
  Interest-bearing .....................      14,837,632
  In foreign offices, Edge and
  Agreement subsidiaries, and IBFs......                      15,319,002
  Noninterest-bearing ..................         707,820
  Interest-bearing .....................      14,611,182
Federal funds purchased and Securities
  sold under agreements to repurchase.                         1,906,066
Demand notes issued to the U.S.                            
  Treasury..............................                         215,985
Trading liabilities.....................                       1,591,288
Other borrowed money:                                      
  With remaining maturity of one year                      
    or less.............................                       1,991,119
  With remaining maturity of more than                     
    one year through three years........                               0
  With remaining maturity of more than                     
    three years.........................                          25,574
Bank's liability on acceptances exe-                       
  cuted and outstanding.................                         998,145
Subordinated notes and debentures.......                       1,314,000
Other liabilities.......................                       2,421,281
                                                             -----------
Total liabilities.......................                      50,631,514
                                                             -----------
                                                           
EQUITY CAPITAL                                             
Common stock............................                       1,135,284
Surplus.................................                         731,319
Undivided profits and capital                              
  reserves..............................                       3,328,050
Net unrealized holding gains                               
  (losses) on available-for-sale                           
  securities............................                          40,198
Cumulative foreign currency transla-                       
  tion adjustments......................                     (    36,129)
                                                             -----------
Total equity capital....................                       5,198,722
                                                             -----------
Total liabilities and equity
  capital ..............................                     $55,830,236
                                                             ===========




   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.
                     -
   Thomas A. Renyi    | 
   Alan R. Griffith   |-    Directors
   J. Carter Bacot    | 
                     -


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